Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>Shareholder proposals for AGMs in Japan are somewhat rare. Activist proposals rarer still. They only affect roughly 2% of companies with June AGMs and shareholder proposals are rarely passed, but they may reflect the pressure on a company, and when something has enough support, management may end up agreeing to it if not outright supporting it later on.</p><p>Activist fund Strategic Capital has made shareholder proposals to 6 companies (that we know of) in the past month or so, starting with <a href="https://www.smartkarma.com/entities/wakita-co-ltd" target="_blank" data-smartkarma-citation="entities:11924:1" rel="noopener">Wakita &amp; Co Ltd (8125 JP)</a> which has a May AGM, as discussed in <a href="https://www.smartkarma.com/insights/japan-activism-a-look-into-wakita-8125-jp-potential-pre-event" target="_blank" data-smartkarma-citation="insights:50034" rel="noopener">Japan Activism: A Look into Wakita (8125 JP) Potential Pre-Event</a> and <a href="https://www.smartkarma.com/entities/wakita-co-ltd" target="_blank" data-smartkarma-citation="entities:11924:1" rel="noopener">Wakita &amp; Co Ltd (8125 JP)</a> at the beginning of the month, and five more names announced on the 28th of April. </p><p>Those five names are <a href="https://www.smartkarma.com/entities/asanuma-corp" target="_blank" data-smartkarma-citation="entities:19612:1" rel="noopener">Asanuma Corp (1852 JP)</a>, <a href="https://www.smartkarma.com/entities/seikitokyu-kogyo-co-ltd" target="_blank" data-smartkarma-citation="entities:7819:1" rel="noopener">Seikitokyu Kogyo (1898 JP)</a>, <a href="https://www.smartkarma.com/entities/arisawa-mfg-co-ltd" target="_blank" data-smartkarma-citation="entities:18028:1" rel="noopener">Arisawa Mfg (5208 JP)</a>, <a href="https://www.smartkarma.com/entities/bunka-shutter-co-ltd" target="_blank" data-smartkarma-citation="entities:5903:1" rel="noopener">Bunka Shutter (5930 JP)</a>, and <a href="https://www.smartkarma.com/entities/kyokuto-boeki-kaisha-ltd" target="_blank" data-smartkarma-citation="entities:12884:1" rel="noopener">Kyokuto Boeki Kaisha (8093 JP)</a>.</p><p>This eclectic group is unified by balance sheet excess. In this case, net cash and securities of about 50% of market cap, a lack of borrowing, a lack of destination for the accumulated capital, BUT this case has its Very Interesting Aspects. </p><h2>So... <a href="https://www.smartkarma.com/entities/seikitokyu-kogyo-co-ltd" target="_blank" data-smartkarma-citation="entities:7819:1" rel="noopener">Seikitokyu Kogyo (1898 JP)</a> </h2><hr><p><em>Activist AGM Proposals so far this year are as follows (🤖 is Japanese language, 👹 is English):</em></p><table class="table table-striped"><tbody>
<tr>
<td style="width: 36px;">Date<br>Anncd</td>
<td style="text-align: center; width: 33.6px;">Ticker</td>
<td style="width: 122.4px;">Company</td>
<td style="width: 41.6px;">AGM</td>
<td style="width: 48px;">Proposal</td>
<td style="width: 187.2px;">Proposer</td>
<td style="width: 128px;">Smartkarma Insights</td>
</tr>
<tr>
<td style="width: 36px;">15 Apr</td>
<td style="text-align: center; width: 33.6px;">8918</td>
<td style="width: 122.4px;">Land</td>
<td style="width: 41.6px;">27 May</td>
<td style="width: 48px;"><a href="http://www.land.jp/pdf/20210415154419_1.pdf" target="_blank" rel="noopener">🤖</a></td>
<td style="width: 187.2px;">An individual</td>
<td style="width: 128px;"></td>
</tr>
<tr>
<td style="width: 36px;">23 Apr</td>
<td style="text-align: center; width: 33.6px;">8125</td>
<td style="width: 122.4px;">Wakita</td>
<td style="width: 41.6px;">27 May</td>
<td style="width: 48px;">
<a href="https://contents.xj-storage.jp/xcontents/81250/a6125b97/fbfe/4961/baac/116bc18b2917/140120210423498992.pdf" target="_blank" rel="noopener">🤖</a> , <a href="https://stracap.jp/english/wp-content/uploads/2021/04/To-Shareholder-of-WAKITA-CO.-LTD..pdf" target="_blank" rel="noopener">👹</a>
</td>
<td style="width: 187.2px;">Strategic Capital</td>
<td style="width: 128px;">
<a href="https://www.smartkarma.com/insights/japan-activism-a-look-into-wakita-8125-jp-potential-pre-event" target="_blank" rel="noopener">insight 1</a>, <a href="https://www.smartkarma.com/insights/wakita-rejects-stracap-s-shareholder-proposals" target="_blank" rel="noopener">insight 2</a>
</td>
</tr>
<tr>
<td style="width: 36px;">27 Apr</td>
<td style="text-align: center; width: 33.6px;">6815</td>
<td style="width: 122.4px;">Uniden</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;"><a href="http://www.uniden.co.jp/ir/news/dat/2021/information_20210427.pdf" target="_blank" rel="noopener">🤖</a></td>
<td style="width: 187.2px;">LIM Japan Event Master Fd</td>
<td style="width: 128px;"></td>
</tr>
<tr>
<td style="width: 36px;">28 Apr</td>
<td style="text-align: center; width: 33.6px;">.1852</td>
<td style="width: 122.4px;">Asanuma</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;">
<a href="https://www.asanuma.co.jp/ir/pdf/etc/20210428k.pdf" target="_blank" rel="noopener">🤖</a> , <a href="https://stracap.jp/english/proposal/2021_asanuma" target="_blank" rel="noopener">👹</a>
</td>
<td style="width: 187.2px;">Strategic Capital</td>
<td style="width: 128px;"><a href="https://www.smartkarma.com/insights/2021-japan-agm-activism-stracap-proposals-for-asanuma-corp-1852" target="_blank" rel="noopener">insight</a></td>
</tr>
<tr>
<td style="width: 36px;">28 Apr</td>
<td style="text-align: center; width: 33.6px;">8093</td>
<td style="width: 122.4px;">Kyokuto Boeki Kaisha</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;">
<a href="https://contents.xj-storage.jp/xcontents/AS01655/21124bce/241c/4a3a/8482/00305b8413e6/140120210428402431.pdf" target="_blank" rel="noopener">🤖</a> , <a href="https://stracap.jp/english/proposal/2021_kbk" target="_blank" rel="noopener">👹</a>
</td>
<td style="width: 187.2px;">Strategic Capital</td>
<td style="width: 128px;"></td>
</tr>
<tr>
<td style="width: 36px;">28 Apr</td>
<td style="text-align: center; width: 33.6px;">1898</td>
<td style="width: 122.4px;">Seikitokyu Kogyo</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;">
<a href="https://www.seikitokyu.co.jp/dev/wp-content/themes/twentysixteen/pdf/info/20210428.pdf" target="_blank" rel="noopener">🤖</a> , <a href="https://stracap.jp/english/proposal/2021_seikitokyu" target="_blank" rel="noopener">👹</a>
</td>
<td style="width: 187.2px;">Strategic Capital</td>
<td style="width: 128px;"></td>
</tr>
<tr>
<td style="width: 36px;">28 Apr</td>
<td style="text-align: center; width: 33.6px;">5208</td>
<td style="width: 122.4px;">Arisawa Mfg</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;"><a href="https://stracap.jp/english/proposal/2021_arisawa" target="_blank" rel="noopener">👹</a></td>
<td style="width: 187.2px;">Strategic Capital</td>
<td style="width: 128px;"></td>
</tr>
<tr>
<td style="width: 36px;">28 Apr</td>
<td style="text-align: center; width: 33.6px;">5930</td>
<td style="width: 122.4px;">Bunka Shutter</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;"><a href="https://stracap.jp/english/proposal/2021_bunkasutter" target="_blank" rel="noopener">👹</a></td>
<td style="width: 187.2px;">Strategic Capital</td>
<td style="width: 128px;"></td>
</tr>
<tr>
<td style="width: 36px;">28 Apr</td>
<td style="text-align: center; width: 33.6px;">2327</td>
<td style="width: 122.4px;">NS Solutions</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;">
<a href="https://ssl4.eir-parts.net/doc/2327/tdnet/1958513/00.pdf" target="_blank" rel="noopener">🤖</a> , </td>
<td style="width: 187.2px;">AVI Japan Opportunity Trust PLC</td>
<td style="width: 128px;"></td>
</tr>
<tr>
<td style="width: 36px;">30 Apr</td>
<td style="text-align: center; width: 33.6px;">4295</td>
<td style="width: 122.4px;">Faith</td>
<td style="width: 41.6px;">June</td>
<td style="width: 48px;"><a href="https://www.faith.co.jp/ir/pdf/20210430_ir.pdf" target="_blank" rel="noopener">🤖</a></td>
<td style="width: 187.2px;">RMB Capital Japan Oppty Fd</td>
<td style="width: 128px;"></td>
</tr>
</tbody></table>

Shareholder proposals for AGMs in Japan are somewhat rare. Activist proposals rarer still. They only affect roughly 2% of companies with June AGMs and shareholder proposals are rarely passed, but they may reflect the pressure on a company, and when something has enough support, management may end up agreeing to it if not outright supporting it later on.Activist fund Strategic Capital has made shareholder proposals to 6 companies (that we know of) in the past month or so, starting with Wakita &amp; Co Ltd (8125 JP) which has a May AGM, as discussed in Japan Activism: A Look into Wakita (8125 JP) Potential Pre-Event and Wakita &amp; Co Ltd (8125 JP) at the beginning of the month, and five more names announced on the 28th of April. Those five names are Asanuma Corp (1852 JP), Seikitokyu Kogyo (1898 JP), Arisawa Mfg (5208 JP), Bunka Shutter (5930 JP), and Kyokuto Boeki Kaisha (8093 JP).This eclectic group is unified by balance sheet excess. In this case, net cash and securities of about 50% of market cap, a lack of borrowing, a lack of destination for the accumulated capital, BUT this case has its Very Interesting Aspects. So... Seikitokyu Kogyo (1898 JP) Activist AGM Proposals so far this year are as follows (🤖 is Japanese language, 👹 is English):

Date Anncd
Ticker
Company
AGM
Proposal
Proposer
Smartkarma Insights


15 Apr
8918
Land
27 May
🤖
An individual



23 Apr
8125
Wakita
27 May

🤖 , 👹

Strategic Capital

insight 1, insight 2



27 Apr
6815
Uniden
June
🤖
LIM Japan Event Master Fd



28 Apr
.1852
Asanuma
June

🤖 , 👹

Strategic Capital
insight


28 Apr
8093
Kyokuto Boeki Kaisha
June

🤖 , 👹

Strategic Capital



28 Apr
1898
Seikitokyu Kogyo
June

🤖 , 👹

Strategic Capital



28 Apr
5208
Arisawa Mfg
June
👹
Strategic Capital



28 Apr
5930
Bunka Shutter
June
👹
Strategic Capital



28 Apr
2327
NS Solutions
June

🤖 , 
AVI Japan Opportunity Trust PLC



30 Apr
4295
Faith
June
🤖
RMB Capital Japan Oppty Fd




2021 Japan AGM Activism - StraCap Proposals for Seikitokyu Kogyo (1898) - A REALLY Cheap Company

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-road-co-ltd" target="_blank" data-smartkarma-citation="entities:12581:1" rel="noopener">Nippon Road (1884 JP)</a> has recommended a tender offer from <a href="https://www.smartkarma.com/entities/shimizu-corp" target="_blank" data-smartkarma-citation="entities:8530:1" rel="noopener">Shimizu Corp (1803 JP)</a> at JPY2,520, a 16.2% premium to the undisturbed price.</li>
<li>The offer represents an all-time high and is 26.0% higher than the 2022 partial tender offer price. However, it is light compared to peer multiples.</li>
<li>The offer is below the midpoint of the target IFA DCF valuation range. However, the required minority acceptance rate is not onerous, and this is a done deal. </li>
</ul>



Nippon Road (1884 JP) has recommended a tender offer from Shimizu Corp (1803 JP) at JPY2,520, a 16.2% premium to the undisturbed price.
The offer represents an all-time high and is 26.0% higher than the 2022 partial tender offer price. However, it is light compared to peer multiples.
The offer is below the midpoint of the target IFA DCF valuation range. However, the required minority acceptance rate is not onerous, and this is a done deal. 


Nippon Road (1884 JP): Shimizu Corp (1803 JP) Tender Offer Is Light but Likely Done

Japan

TOA ROAD CORP paves and maintains roads, plant, warehouse, and transportation facilities.  The Company produces and sells asphalt mixture and emulsion.   Toa ROAD also constructs infrastructure and buildings such as sports facilities. Additionally, the Company performs landscaping works.

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Toa Road Corp (1882 JP)

2021 Japan AGM Activism - StraCap Proposals for Seikitokyu Kogyo (1898) - A REALLY Cheap Company

StraCap has now made the same Shareholder Proposals on Seikitokyu Kogyo for 3 straight years. They make sense, but are likely to be rebuffed. But...

Travis Lundy

Nippon Road (1884 JP): Shimizu Corp (1803 JP) Tender Offer Is Light but Likely Done

The offer is below the midpoint of the target IFA DCF valuation range and peer multiples. However, the required minority acceptance rate is not...

Arun George

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