Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>Shiseido’s share price dropped 70% over the past six years, compared to a 110% gain by Topix, but the stock just crossed its 200-day MAV. Time for another look?  </li>
<li>In our view, the stock lacks most of the required criteria for a successful turnaround, and reeks of all the important criteria for failure. </li>
<li>Shiseido’s stock already prices in a 50% earnings recovery. To be compelling, the forecast needs to be 4 standard deviations above the mean, or the price needs to decline 30%.  </li>
</ul>


Shiseido’s share price dropped 70% over the past six years, compared to a 110% gain by Topix, but the stock just crossed its 200-day MAV. Time for another look?  
In our view, the stock lacks most of the required criteria for a successful turnaround, and reeks of all the important criteria for failure. 
Shiseido’s stock already prices in a 50% earnings recovery. To be compelling, the forecast needs to be 4 standard deviations above the mean, or the price needs to decline 30%.  


Why Shiseido (4911) Never Worked as a Turnaround Stock

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/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> has announced the pre-condition for Sukanto Tanoto’s HK$23.50 voluntary offer is satisfied. The composite document will be despatched on or before 11 March. </li>
<li>The offeror has received irrevocables from <a href="https://www.smartkarma.com/entities/essity-ab" target="_blank" data-smartkarma-citation="entities:28203:1" rel="noopener">Essity (ESSITYB SS)</a> and Mr Li, representing 72.62% of outstanding shares, which satisfies the 50% minimum acceptance condition.</li>
<li>Including irrevocables, the offeror currently represents 80.31% of outstanding shares. The offeror intends to exercise compulsory acquisition rights. The tight 0.4% gross spread reflects a done deal. </li>
</ul>



Vinda International (3331 HK) has announced the pre-condition for Sukanto Tanoto’s HK$23.50 voluntary offer is satisfied. The composite document will be despatched on or before 11 March. 
The offeror has received irrevocables from Essity (ESSITYB SS) and Mr Li, representing 72.62% of outstanding shares, which satisfies the 50% minimum acceptance condition.
Including irrevocables, the offeror currently represents 80.31% of outstanding shares. The offeror intends to exercise compulsory acquisition rights. The tight 0.4% gross spread reflects a done deal. 


Vinda International (3331 HK): Pre-Condition Satisfied

<ul>
<li>On 21 February, <a href="https://www.bloomberg.com/news/articles/2024-02-21/esr-owners-said-to-mull-options-for-5-billion-logistics-firm?embedded-checkout=true" target="_blank" rel="noopener">Bloomberg reported</a> that due to the steep share price declines, major <a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a> shareholders are considering options for their stakes, including ESR’s privatisation.</li>
<li>The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation. </li>
<li>The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation. </li>
</ul>


On 21 February, Bloomberg reported that due to the steep share price declines, major ESR Group (1821 HK) shareholders are considering options for their stakes, including ESR’s privatisation.
The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation. 
The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation. 


ESR Group (1821 HK): Evaluating a Potential Privatisation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> has announced a pre-conditional voluntary offer from Sukanto Tanoto at HK$23.50 per scheme share, a 7.8% premium to the undisturbed price (26 April). </li>
<li>The pre-condition relates to China SAMR and Japan Fair Trade Commission approval. The offer is conditional on the offeror and concert parties representing more than 50% of voting rights.</li>
<li>Irrevocables ensure the satisfaction of the minimum acceptance condition but also rule out a competing proposal. The timing of China SAMR approval is the key risk. </li>
</ul>



Vinda International (3331 HK) has announced a pre-conditional voluntary offer from Sukanto Tanoto at HK$23.50 per scheme share, a 7.8% premium to the undisturbed price (26 April). 
The pre-condition relates to China SAMR and Japan Fair Trade Commission approval. The offer is conditional on the offeror and concert parties representing more than 50% of voting rights.
Irrevocables ensure the satisfaction of the minimum acceptance condition but also rule out a competing proposal. The timing of China SAMR approval is the key risk. 


Vinda International (3331 HK): Pre-Conditional Voluntary Offer at HK$23.50

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> is potentially a leading candidate for inclusion in the Nikkei 225 in September. </li>
<li>There are other technical reasons to think it is not. </li>
<li>This insight looks at the issue of why it might be a leading candidate and why it might not be. </li>
</ul>



Mercari Inc (4385 JP) is potentially a leading candidate for inclusion in the Nikkei 225 in September. 
There are other technical reasons to think it is not. 
This insight looks at the issue of why it might be a leading candidate and why it might not be. 


Nikkei 225 Sep 2023 Review - The Mercari Conundrum

Japan

UNICHARM CORPORATION is a manufacturer of sanitary napkins and baby products. Products include infant & adult diapers, household cleaning wipes, and feminine hygienic products.  The Company also produces pet food and pet toiletries as well as operates educational and finance businesses.

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Unicharm Corp (8113 JP)

Why Shiseido (4911) Never Worked as a Turnaround Stock

Shiseido's stock may have crossed its 200-day MAV, but it lacks the criteria for a successful turnaround and may still be overpriced.

Michael Allen

Vinda International (3331 HK): Pre-Condition Satisfied

The composite document will be despatched on or before 11 March. Irrevocables ensure the satisfaction of the minimum acceptance condition. The...

Arun George

ESR Group (1821 HK): Evaluating a Potential Privatisation

The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR...

Arun George

Vinda International (3331 HK): Pre-Conditional Voluntary Offer at HK$23.50

Irrevocables ensure the satisfaction of the minimum acceptance condition but also rule out a competing proposal. The timing of China SAMR approval...

Arun George

Nikkei 225 Sep 2023 Review - The Mercari Conundrum

Mercari is either a leading candidate for Nikkei 225 inclusion in September 2023. Or it is not. It depends on how you mash the data, interpret the...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

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Why Shiseido (4911) Never Worked as a Turnaround Stock

​Shiseido's stock may have crossed its 200-day MAV, but it lacks the criteria for a successful turnaround and may still be overpriced.

Michael Allen

Vinda International (3331 HK): Pre-Condition Satisfied

The composite document will be despatched on or before 11 March. Irrevocables ensure the satisfaction of the minimum acceptance condition. The...

Arun George

ESR Group (1821 HK): Evaluating a Potential Privatisation

The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR...

Arun George

Vinda International (3331 HK): Pre-Conditional Voluntary Offer at HK$23.50

Irrevocables ensure the satisfaction of the minimum acceptance condition but also rule out a competing proposal. The timing of China SAMR approval...

Arun George

Nikkei 225 Sep 2023 Review - The Mercari Conundrum

Mercari is either a leading candidate for Nikkei 225 inclusion in September 2023. Or it is not. It depends on how you mash the data, interpret the...

Travis Lundy

Shiseido's stock may have crossed its 200-day MAV, but it lacks the criteria for a successful turnaround and may still be overpriced.