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.

Equity Bottom-Up

<ul>
<li>Toshiba reported results on Friday which were just a touch above their revised February guidance at ¥3.35trn in revenue and ¥159bn in OP. </li>
<li>Guidance was poor with revenue of ¥3.3trn below consensus ¥3.4trn and OP of ¥170bn noticeably below consensus’ ¥202bn. </li>
<li>The nomination of directors was also postponed and some segments showed a marked deterioration in profitability.</li>
</ul>


Toshiba reported results on Friday which were just a touch above their revised February guidance at ¥3.35trn in revenue and ¥159bn in OP. 
Guidance was poor with revenue of ¥3.3trn below consensus ¥3.4trn and OP of ¥170bn noticeably below consensus’ ¥202bn. 
The nomination of directors was also postponed and some segments showed a marked deterioration in profitability.


Toshiba – Special Dividend Not Enough To Offset Negatives

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Global (DIDI US)</a> had serious data problems. It still listed itself, against the wishes of the regulators. Then it got in serious hot water. And it's been getting hotter. </li>
<li>
<a href="https://www.smartkarma.com/entities/ramsay-health-care-ltd" target="_blank" data-smartkarma-citation="entities:673:1" rel="noopener">Ramsay Health Care (RHC AU)</a> announced an unsolicited, non-binding Offer from KKR (and HISTA), at A$88.00/share, a 36.7% premium to last close, however, earnings have been left bedridden by the pandemic.</li>
<li>Post-Deal, <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> will look more like <a href="https://www.smartkarma.com/entities/sembcorp-industries-ltd" target="_blank" data-smartkarma-citation="entities:1087:1" rel="noopener">Sembcorp Industries (SCI SP)</a>. More engineering, less power generation infra assets, more other infra assets and more data centres. </li>
</ul>



DiDi Global (DIDI US) had serious data problems. It still listed itself, against the wishes of the regulators. Then it got in serious hot water. And it's been getting hotter. 

Ramsay Health Care (RHC AU) announced an unsolicited, non-binding Offer from KKR (and HISTA), at A$88.00/share, a 36.7% premium to last close, however, earnings have been left bedridden by the pandemic.
Post-Deal, Keppel Corp (KEP SP) will look more like Sembcorp Industries (SCI SP). More engineering, less power generation infra assets, more other infra assets and more data centres. 


Last Week in Event SPACE: Didi Global, Ramsay Health, Keppel Corp, Melco, Toshiba, Twitter

<ul>
<li>Toshiba announced yesterday that they would be soliciting proposals on strategic alternatives specifically mentioning privatisation. </li>
<li>The stock is up 3.5% on the news and had been up as much as 6.5% in a very weak market despite the news being well foreshadowed. </li>
<li>At the current price we believe there could be limited scope for a significant premium and much downside if tech turns over.</li>
</ul>


Toshiba announced yesterday that they would be soliciting proposals on strategic alternatives specifically mentioning privatisation. 
The stock is up 3.5% on the news and had been up as much as 6.5% in a very weak market despite the news being well foreshadowed. 
At the current price we believe there could be limited scope for a significant premium and much downside if tech turns over.


Toshiba – Market Reaction to Proposal Solicitation News Is a Great Short Opportunity

Travis Lundy

<ul>
<li>Toshiba announced that it will start a sale process by offering info, and running a two-round "strategic alternative" process. Info and non-binding proposals followed by due dili and binding proposals.</li>
<li>For me, this seems like "That One Piece Of News" which is required to make the range jump, and to get people into Now-We-Are-Going-To-Get-A-Deal. </li>
<li>We may not, of course, and it will be a long, complicated road. But this is a step change. Starting a beauty contest is a big deal.</li>
</ul>


Toshiba announced that it will start a sale process by offering info, and running a two-round "strategic alternative" process. Info and non-binding proposals followed by due dili and binding proposals.
For me, this seems like "That One Piece Of News" which is required to make the range jump, and to get people into Now-We-Are-Going-To-Get-A-Deal. 
We may not, of course, and it will be a long, complicated road. But this is a step change. Starting a beauty contest is a big deal.


Toshiba (6502) - Now We Have "That One Piece Of News"

<ul>
<li>Yesterday the Nikkei published an article featuring Bain MD Yuji Sugimoto who also featured heavily during their bid for Kioxia. </li>
<li>Sugimoto commented that in the event of a buyout there would be no break-up of Toshiba. </li>
<li>While plausibly a PR move directed at employees that stance raises the question of exactly how they would unlock value.</li>
</ul>


Yesterday the Nikkei published an article featuring Bain MD Yuji Sugimoto who also featured heavily during their bid for Kioxia. 
Sugimoto commented that in the event of a buyout there would be no break-up of Toshiba. 
While plausibly a PR move directed at employees that stance raises the question of exactly how they would unlock value.


Toshiba – Some Thoughts on the Bain Article

Japan

Toshiba Corporation manufactures and markets electrical and electronic products. The Company's products include digital products such as PCs and televisions, NAND flash memories, and system LSIs (large-scale integrated), as well as social infrastructures such as power generators, medical equipment, and home appliances.

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Toshiba Corp (6502 JP)

Toshiba – Special Dividend Not Enough To Offset Negatives

Toshiba results looked weak with profitability deterioration in many segments and weak guidance and a special dividend may not be enough to offset...

Mio Kato

Last Week in Event SPACE: Didi Global, Ramsay Health, Keppel Corp, Melco, Toshiba, Twitter

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

Toshiba – Market Reaction to Proposal Solicitation News Is a Great Short Opportunity

Toshiba stock is surprisingly up strong in a weak market after announcing news which should have been anticipated by the market. That pricing now...

Mio Kato

Toshiba (6502) - Now We Have "That One Piece Of News"

Toshiba has started a beauty contest process. There will be two stages, and the news on Stage I will only come after the AGM (Toshiba's pushback to...

Travis Lundy

Toshiba – Some Thoughts on the Bain Article

We examine the progress Kioxia has made under Bain's guidance and wonder whether a Toshiba purchase would be an attempt to salvage a failed Kioxia...

Mio Kato

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