Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/n-field-co-ltd" target="_blank" data-smartkarma-citation="entities:5150:1" rel="noopener">N Field Co Ltd (6077 JP)</a> has seen prodigious growth since its launch in 2003. Founded by then-39-year old Noguchi Kazuteru, who had spent 20 years as a nurse, the company has since its start specialized in home-visit nursing care. The field of nursing is not very well-paid and it is said one only gets to a certain seniority by having worked all three shifts (the day shift, the evening shift, and the overnight shift). 
Noguchi-san wanted to build a company where a nurse could have a decent career only working during the day and he founded the company with four other nurses in 2003. Noguchi-san had been working in the field of taking care of psychiatric patients so he thought that N Field could specialize in the outpatient nursing care of psychiatric and mental health patients who need assistance to continue treatment at home. 
In the 15th year of business (2017), the company reached ¥8.0bn of revenues, with revenues growing no less than 25%yoy in any of the previous 10 years (revenue was ¥480mm in 2009). Three years later in 2020, revenues were 46% higher. Top line growth seems expected to slow further the next couple of years, but it is not clear it needs to.
The company was listed on TSE Mothers in August 2013 and moved to TSE First Section in 2015. IN 2016, Noguchi-san gave up the role of CEO, passing it on to Takagi-san, who then passed it to Matayoshi-san in 2017, and the CEO is now Kubo-san. 
N Field has a specialty in outpatient nursing in the psychiatric and mental health fields. This is a growing field, and the company is growing quickly within the growing field. The company has become more efficient than ever as far as I can tell, and I expect that the company can grow organically for decades to come. 
<h3>The NEW News</h3>
Unison Capital has announced a Tender Offer to buy out the company at ¥1,200/share. This is below where the stock spent the five years from early 2014 to late 2018 when revenue growth slowed faster-than-expected.
There are a lot of investors who bought the stock at well above the Tender Offer Price but when the shares dropped through this Tender Offer Price on the way down in the last week of November 2018, they did not stop there. They fell to half that by late Q3 2019. Then in the covid-crash they fell further. The question is whether the shareholders who bought for growth give up here, or not.
This is an interesting deal. 
<div>
I am reminded of the last words (the last line below) of Mr. Partridge ("Old Turkey") in Edwin Lefèvre's Reminiscences of a Stock Operator after he had purchased a stock on the urging of a tipster, and the tipster proposed he sell the shares on a bounce, hoping for a "reaction" on which to buy them... 
</div>
<div>
<blockquote>
"I couldn’t think of selling that stock.” 
“You couldn’t?” asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers. “Why not?” And Elmer drew nearer.
“Why, this is a bull market!” The old fellow said it as though he had given a long and detailed explanation.
“That’s all right,” said Elmer, looking angry because of his disappointment. “I know this is a bull market as well as you do. But you’d better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself.”
“My dear boy,” said old Partridge, in great distress “my dear boy, if I sold that stock now I’d lose my position; and then where would I be?”
</blockquote>
</div>
<div>
With a stock growing top line 10+% and OP in the teens to 20+% with what appear to be blue-sky ahead of them (and what I see as a possibility that Japan will be willing to import nursing talent at lower-than-Japan cost), this could easily be seen as a position that the proverbial Mr Partridge would not want to sell. 
More below.
</div>

N Field Co Ltd (6077 JP) has seen prodigious growth since its launch in 2003. Founded by then-39-year old Noguchi Kazuteru, who had spent 20 years as a nurse, the company has since its start specialized in home-visit nursing care. The field of nursing is not very well-paid and it is said one only gets to a certain seniority by having worked all three shifts (the day shift, the evening shift, and the overnight shift). 
Noguchi-san wanted to build a company where a nurse could have a decent career only working during the day and he founded the company with four other nurses in 2003. Noguchi-san had been working in the field of taking care of psychiatric patients so he thought that N Field could specialize in the outpatient nursing care of psychiatric and mental health patients who need assistance to continue treatment at home. 
In the 15th year of business (2017), the company reached ¥8.0bn of revenues, with revenues growing no less than 25%yoy in any of the previous 10 years (revenue was ¥480mm in 2009). Three years later in 2020, revenues were 46% higher. Top line growth seems expected to slow further the next couple of years, but it is not clear it needs to.
The company was listed on TSE Mothers in August 2013 and moved to TSE First Section in 2015. IN 2016, Noguchi-san gave up the role of CEO, passing it on to Takagi-san, who then passed it to Matayoshi-san in 2017, and the CEO is now Kubo-san. 
N Field has a specialty in outpatient nursing in the psychiatric and mental health fields. This is a growing field, and the company is growing quickly within the growing field. The company has become more efficient than ever as far as I can tell, and I expect that the company can grow organically for decades to come. 
The NEW News
Unison Capital has announced a Tender Offer to buy out the company at ¥1,200/share. This is below where the stock spent the five years from early 2014 to late 2018 when revenue growth slowed faster-than-expected.
There are a lot of investors who bought the stock at well above the Tender Offer Price but when the shares dropped through this Tender Offer Price on the way down in the last week of November 2018, they did not stop there. They fell to half that by late Q3 2019. Then in the covid-crash they fell further. The question is whether the shareholders who bought for growth give up here, or not.
This is an interesting deal. 

I am reminded of the last words (the last line below) of Mr. Partridge ("Old Turkey") in Edwin Lefèvre's Reminiscences of a Stock Operator after he had purchased a stock on the urging of a tipster, and the tipster proposed he sell the shares on a bounce, hoping for a "reaction" on which to buy them... 



"I couldn’t think of selling that stock.” 
“You couldn’t?” asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers. “Why not?” And Elmer drew nearer.
“Why, this is a bull market!” The old fellow said it as though he had given a long and detailed explanation.
“That’s all right,” said Elmer, looking angry because of his disappointment. “I know this is a bull market as well as you do. But you’d better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself.”
“My dear boy,” said old Partridge, in great distress “my dear boy, if I sold that stock now I’d lose my position; and then where would I be?”



With a stock growing top line 10+% and OP in the teens to 20+% with what appear to be blue-sky ahead of them (and what I see as a possibility that Japan will be willing to import nursing talent at lower-than-Japan cost), this could easily be seen as a position that the proverbial Mr Partridge would not want to sell. 
More below.


N Field (6077) Take-Private by Unison Capital - Fast Growth Long Runway Asset Going Not So Rich

Today after the close, in a move where the headline surprised me somewhat, <a href="https://www.smartkarma.com/entities/mitsui-fudosan-co-ltd" target="_blank" data-smartkarma-citation="entities:565:1" rel="noopener">Mitsui Fudosan (8801 JP)</a> announced that it had met with Oasis Management - the largest shareholder in <a href="https://www.smartkarma.com/entities/tokyo-dome-corp" target="_blank" data-smartkarma-citation="entities:6421:1" rel="noopener">Tokyo Dome Corp (9681 JP)</a> upon which it is conducting a Tender Offer - and Yomiuri Shinbun Holdings (Mitsui Fudosan's future ownership partner) on the 7th of December and had asked for the support of Oasis in making the Tender Offer successful. The release today states... <blockquote>
In response, Oasis Management expressed its intention to endorse the Tender Offer and tender all shares of the common stock of Tokyo Dome held by funds managed by Oasis Management at the tender offer price (1,300 yen per share of common stock), and further mentioned to the Company that it is prepared to enter into a tender agreement with the Company subject to satisfactory completion of negotiation of the terms of the agreement and internal approval process.
On the basis of this discussion with Oasis Management, the Company will start discussions with Oasis Management towards the execution of a tender agreement.
</blockquote>The release mentions that Mitsui Fudosan has entered into an agreement with Yomiuri Shinbun Holdings to transfer 20% of the entity post-tender so YSH becomes a 20% holder. It leaves it there. This obviously changes things. I thought the bid cheap and said as much in <a href="https://www.smartkarma.com/insights/tokyo-dome-sells-itself-for-the-wrong-price" target="_blank" data-smartkarma-citation="insights:45799" rel="noopener">Tokyo Dome Sells Itself For the Wrong Price</a>. More below the fold.

Today after the close, in a move where the headline surprised me somewhat, Mitsui Fudosan (8801 JP) announced that it had met with Oasis Management - the largest shareholder in Tokyo Dome Corp (9681 JP) upon which it is conducting a Tender Offer - and Yomiuri Shinbun Holdings (Mitsui Fudosan's future ownership partner) on the 7th of December and had asked for the support of Oasis in making the Tender Offer successful. The release today states... 
In response, Oasis Management expressed its intention to endorse the Tender Offer and tender all shares of the common stock of Tokyo Dome held by funds managed by Oasis Management at the tender offer price (1,300 yen per share of common stock), and further mentioned to the Company that it is prepared to enter into a tender agreement with the Company subject to satisfactory completion of negotiation of the terms of the agreement and internal approval process.
On the basis of this discussion with Oasis Management, the Company will start discussions with Oasis Management towards the execution of a tender agreement.
The release mentions that Mitsui Fudosan has entered into an agreement with Yomiuri Shinbun Holdings to transfer 20% of the entity post-tender so YSH becomes a 20% holder. It leaves it there. This obviously changes things. I thought the bid cheap and said as much in Tokyo Dome Sells Itself For the Wrong Price. More below the fold. 

Oasis Agrees To Tender Tokyo Dome (9681) - This Changes Things

David Blennerhassett

Last Week in Event SPACE: Tokyo Dome, LG Corp, Kerry Express, Sogou, Adways

This is big news. 
Every now and then one finds a situation where a shareholder calls an EGM which is hostile to management of the company. Shareholders who hold a certain number/percentage of shares (300 trading units or 1% of shares) for a certain period of time. 
The background is that Oasis Management has, it claims, been a shareholder of <a href="https://www.smartkarma.com/entities/tokyo-dome-corp" target="_blank" data-smartkarma-citation="entities:6421:1" rel="noopener">Tokyo Dome Corp (9681 JP)</a> since 2018. They went "substantial" with a 5+% stake in December 2019, and then raised their stake to 9.6% by late January 2020, whereupon they published a website called <a href="https://www.abettertokyodome.com/a-better-tokyo-dome" target="_blank" rel="noopener">A Better Tokyo Dome</a> and posted a large <a href="https://static1.squarespace.com/static/5dd62b05f226644911c6d4e1/t/5efabd9b2d98f71482b79156/1593490878125/OASIS+-+A+Better+Tokyo+Dome+Presentation.pdf" target="_blank" rel="noopener">presentation</a> which is worthwhile reading. They called on better F&amp;B and improved digitalisation of signage. 
There was no movement on this in the public domain until July when Tokyo Dome put out a document promising a "better" Tokyo Dome (<a href="https://contents.xj-storage.jp/xcontents/AS01950/42158d25/3e80/408f/8966/4330ff2fd156/20200720165516344s.pdf" target="_blank" rel="noopener">Japanese</a>, <a href="https://contents.xj-storage.jp/xcontents/AS01950/8cc6746f/a7cd/4a57/bfd9/e1361a46e7f7/20200729135840184s.pdf" target="_blank" rel="noopener">English</a>) for watching games amid the covid-19 pandemic. That presentation included enhanced safety precautions/measures, more cleaning, re-designed flow of people in certain areas, and ALSO talked about improving F&amp;B and upgrading digital signage. 
In October, it was <a href="https://contents.xj-storage.jp/xcontents/AS01950/a500919b/8a12/4c0c/95dc/152de0c9fd48/20201020165058050s.pdf" target="_blank" rel="noopener">announced</a> that Oasis had demanded the company call an Extraordinary General Meeting of shareholders with the agenda item to remove three directors, including the President Tsutomu Nagaoka and external directors Nobuhiro Mori and Tomofumi Akiyama. A record date of 11 November was <a href="https://contents.xj-storage.jp/xcontents/AS01950/800a3884/9eaf/43f0/bdb9/f7dff0c28164/20201021100821979s.pdf" target="_blank" rel="noopener">set</a>. On the 11th of November, the date and location was <a href="https://contents.xj-storage.jp/xcontents/AS01950/71ce4fcb/5ddb/4ce2/aaa3/97cf60c5129c/20201111142946366s.pdf" target="_blank" rel="noopener">confirmed</a> and the Company <a href="https://contents.xj-storage.jp/xcontents/AS01950/1ea8dcbb/2f52/44de/8b79/8f2a723b3cbe/20201111144033325s.pdf" target="_blank" rel="noopener">filed</a> with the Tokyo District Court for the appointment of an inspector. On the 26th, the company sent out the <a href="https://contents.xj-storage.jp/xcontents/AS01950/5147f8e0/836d/4140/bc3c/752593ad0394/20201126092033012s.pdf" target="_blank" rel="noopener">Convocation Notice</a> including Oasis explanation of their demands. 
Last week, indeed the day after the convocation notice, it was announced that <a href="https://www.smartkarma.com/entities/mitsui-fudosan-co-ltd" target="_blank" data-smartkarma-citation="entities:565:1" rel="noopener">Mitsui Fudosan (8801 JP)</a> and Yomiuri Shinbun would launch a Tender Offer to take Tokyo Dome Corp private at JPY 1300/share. This is the same price that Oasis offered as a proposal to take Tokyo Dome private earlier this year - something disclosed in the Target Opinion Statement. 
The transaction would end up (post-transaction) with Mitsui Fudosan owning 80% and Yomiuri Shinbun - the closely-held owner of the Yomiuri Giants baseball team (and of course the paper) - owning 20%. 
Shares jumped through terms immediately, trading up to 10% through terms on the third day after announcement. 
<h2>Now there is NEW News</h2>
Shareholder proxy advisor ISS has released a report which suggests voting FOR the Oasis proposals to remove the three directors. 
This is big. It doesn't happen that often. 
The Company immediately released a <a href="https://contents.xj-storage.jp/xcontents/AS01950/94fc1d93/b2c0/42f1/8c5a/a01c2afd0d08/20201203143125720s.pdf" target="_blank" rel="noopener">document</a> called The Company’s Views Regarding ISS (Proxy-Advisory Firm)’s Recommendation of Supporting Proposed Agenda Items Submitted to the Company’s Extraordinary General Meeting of Shareholders (Shareholders’ Proposals). Shareholders should, of course read both documents. 
More discussion below the fold.

This is big news. 
Every now and then one finds a situation where a shareholder calls an EGM which is hostile to management of the company. Shareholders who hold a certain number/percentage of shares (300 trading units or 1% of shares) for a certain period of time. 
The background is that Oasis Management has, it claims, been a shareholder of Tokyo Dome Corp (9681 JP) since 2018. They went "substantial" with a 5+% stake in December 2019, and then raised their stake to 9.6% by late January 2020, whereupon they published a website called A Better Tokyo Dome and posted a large presentation which is worthwhile reading. They called on better F&amp;B and improved digitalisation of signage. 
There was no movement on this in the public domain until July when Tokyo Dome put out a document promising a "better" Tokyo Dome (Japanese, English) for watching games amid the covid-19 pandemic. That presentation included enhanced safety precautions/measures, more cleaning, re-designed flow of people in certain areas, and ALSO talked about improving F&amp;B and upgrading digital signage. 
In October, it was announced that Oasis had demanded the company call an Extraordinary General Meeting of shareholders with the agenda item to remove three directors, including the President Tsutomu Nagaoka and external directors Nobuhiro Mori and Tomofumi Akiyama. A record date of 11 November was set. On the 11th of November, the date and location was confirmed and the Company filed with the Tokyo District Court for the appointment of an inspector. On the 26th, the company sent out the Convocation Notice including Oasis explanation of their demands. 
Last week, indeed the day after the convocation notice, it was announced that Mitsui Fudosan (8801 JP) and Yomiuri Shinbun would launch a Tender Offer to take Tokyo Dome Corp private at JPY 1300/share. This is the same price that Oasis offered as a proposal to take Tokyo Dome private earlier this year - something disclosed in the Target Opinion Statement. 
The transaction would end up (post-transaction) with Mitsui Fudosan owning 80% and Yomiuri Shinbun - the closely-held owner of the Yomiuri Giants baseball team (and of course the paper) - owning 20%. 
Shares jumped through terms immediately, trading up to 10% through terms on the third day after announcement. 
Now there is NEW News
Shareholder proxy advisor ISS has released a report which suggests voting FOR the Oasis proposals to remove the three directors. 
This is big. It doesn't happen that often. 
The Company immediately released a document called The Company’s Views Regarding ISS (Proxy-Advisory Firm)’s Recommendation of Supporting Proposed Agenda Items Submitted to the Company’s Extraordinary General Meeting of Shareholders (Shareholders’ Proposals). Shareholders should, of course read both documents. 
More discussion below the fold. 

ISS Takes Umbrage with Tokyo Dome, Recommends Booting the CEO from the Board

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

We have examined the proposals made by Oasis in their A Better Tokyo Dome, one by one and generally find the suggestions to be a little one-sided, and in some cases a little optimistic about the ability to change typical Japanese customs around baseball. Nevertheless, on the opinion that Tokyo Dome could be noticeably better managed overall and that ¥1,300 looks exceedingly cheap, we wholeheartedly agree.

We have examined the proposals made by Oasis in their A Better Tokyo Dome, one by one and generally find the suggestions to be a little one-sided, and in some cases a little optimistic about the ability to change typical Japanese customs around baseball. Nevertheless, on the opinion that Tokyo Dome could be noticeably better managed overall and that ¥1,300 looks exceedingly cheap, we wholeheartedly agree.

Tokyo Dome – Assessing the Realism of Oasis Estimates

Japan

TOKYO DOME CORPORATION operates an air dome-type baseball stadium and an urban amusement center.  The Company also sells sundry goods and operates financing, hotels, real estate, restaurants, and convention and exhibition halls.

Tokyo Dome Corp (9681 JP)

N Field (6077) Take-Private by Unison Capital - Fast Growth Long Runway Asset Going Not So Rich

High growth psychiatric outpatient nursing care business N Field has growth like a weed. It continues to grow strongly. PE Fund Unison Capital...

Travis Lundy

Oasis Agrees To Tender Tokyo Dome (9681) - This Changes Things

Mitsui Fudosan announced Oasis Management - holder of nearly 10% of shares out (as of the last large shareholder filing) - has indicated an intent...

Travis Lundy

Last Week in Event SPACE: Tokyo Dome, LG Corp, Kerry Express, Sogou, Adways

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

ISS Takes Umbrage with Tokyo Dome, Recommends Booting the CEO from the Board

ISS has sided with Oasis in its fight to remove somewhat non-independent and "over-ripe" nominally independent directors at this month's EGM. This...

Travis Lundy

Tokyo Dome – Assessing the Realism of Oasis Estimates

We assess the realism of Oasis' proposed NP improving measures to find a mixed picture, but not one which obfuscates the view of an asset that is...

Mio Kato