Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>In early May 2022, <a href="https://www.smartkarma.com/entities/yamada-denki-co-ltd" target="_blank" data-smartkarma-citation="entities:641:1" rel="noopener">Yamada Denki (9831 JP)</a> launched a GINORMOUS buyback program. I <a href="https://www.smartkarma.com/insights/yamada-denki-ginormous-buyback-to-dramatically-boost-eps-and-roe" target="_blank" rel="noopener">wrote</a> about it suggesting the company meant business. The stock popped outright and vs Peers.</li>
<li>Then it fell back, and has only recently started moving back up. Surprising given buyback dynamics but it may have been overhang. If so, that overhang should be gone now.</li>
<li>And the stock is cheap, a chunk of the register is sticky, so this could get squeezier now.</li>
</ul>


In early May 2022, Yamada Denki (9831 JP) launched a GINORMOUS buyback program. I wrote about it suggesting the company meant business. The stock popped outright and vs Peers.
Then it fell back, and has only recently started moving back up. Surprising given buyback dynamics but it may have been overhang. If so, that overhang should be gone now.
And the stock is cheap, a chunk of the register is sticky, so this could get squeezier now.


Yamada Denki (9831) Buyback Progress Strong But Big Impact To Come

<ul>
<li>The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.</li>
<li>It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review - twice a year rather than once.</li>
<li>More interestingly, they also change the "High Liquidity" definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.</li>
</ul>


The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.
It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review - twice a year rather than once.
More interestingly, they also change the "High Liquidity" definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.


Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

David Blennerhassett

<ul>
<li>If Silchester's activism towards <a href="https://www.smartkarma.com/entities/shiga-bank-ltd" target="_blank" data-smartkarma-citation="entities:18665:1" rel="noopener">Shiga (8366 JP)</a> &amp; <a href="https://www.smartkarma.com/entities/chugoku-bank-ltd" target="_blank" data-smartkarma-citation="entities:11177:1" rel="noopener">Chugoku (8382 JP)</a> is going to be fought, it is going to be fought in the Japanese media, not in the AGM convocation. </li>
<li>The idea that the <a href="https://www.smartkarma.com/entities/agl-energy-ltd" target="_blank" data-smartkarma-citation="entities:554:1" rel="noopener">AGL Energy Ltd (AGL AU)</a> de-merger could be thwarted is something which could dampen spirits on the stock near-term</li>
<li>
<a href="https://www.smartkarma.com/entities/hitachi-transport-system-ltd" target="_blank" data-smartkarma-citation="entities:2395:1" rel="noopener">Hitachi Transport System (9086 JP)</a> as a risk arb situation is trading wide. It should trade tighter. </li>
</ul>


If Silchester's activism towards Shiga (8366 JP) &amp; Chugoku (8382 JP) is going to be fought, it is going to be fought in the Japanese media, not in the AGM convocation. 
The idea that the AGL Energy Ltd (AGL AU) de-merger could be thwarted is something which could dampen spirits on the stock near-term

Hitachi Transport System (9086 JP) as a risk arb situation is trading wide. It should trade tighter. 


Last Week in Event SPACE: Hitachi Transport, Shiga Bank, CP Food, AGL, Woodside/BHP, Yamada Denki

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yamada-denki-co-ltd" target="_blank" data-smartkarma-citation="entities:641:1" rel="noopener">Yamada Denki (9831 JP)</a> reported <a href="https://www.yamada-holdings.jp/ir/kessan/2022/220506.pdf" target="_blank" rel="noopener">earnings</a> (Revs -7.6% (slight beat), OP -28.6% (slight miss), NP -2.4% (slight miss)), and slightly upbeat forecasts to Mar-2023 (Revs +4.6%, OP +12.5%, NP +2.9%) </li>
<li>They also <a href="https://www.yamada-holdings.jp/lang-en/pdf/press/220506_1e.pdf" target="_blank" rel="noopener">announced</a> an unchanged dividend at ¥18/share, and a VERY BIG BUYBACK. This is one of the largest, most aggressive, on-market buyback programs I have ever seen.</li>
<li>Previous buybacks have been duds. Yamada Denki is not playing around this time. This time it will be a buy.</li>
</ul>



Yamada Denki (9831 JP) reported earnings (Revs -7.6% (slight beat), OP -28.6% (slight miss), NP -2.4% (slight miss)), and slightly upbeat forecasts to Mar-2023 (Revs +4.6%, OP +12.5%, NP +2.9%) 
They also announced an unchanged dividend at ¥18/share, and a VERY BIG BUYBACK. This is one of the largest, most aggressive, on-market buyback programs I have ever seen.
Previous buybacks have been duds. Yamada Denki is not playing around this time. This time it will be a buy.


Yamada Denki - GINORMOUS Buyback To Dramatically Boost EPS and ROE

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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>
<a href="https://www.smartkarma.com/entities/yamada-denki-co-ltd" target="_blank" data-smartkarma-citation="entities:641:1" rel="noopener">Yamada Denki (9831 JP)</a>’s recovery during the last two years went unnoticed as the market though that the recovery was a temporary thing driven by COVID-19.</li>
<li>The company’s OP has increased by more than 3.0x from the FY19 level but the share price is currently at ¥386.0 per share, 27% below the FY19 price.  </li>
<li>At ¥85.0bn regular OP, we think Yamada Denki should trade north of ¥660.0 per share, which suggests an upside of over 70%.</li>
</ul>



Yamada Denki (9831 JP)’s recovery during the last two years went unnoticed as the market though that the recovery was a temporary thing driven by COVID-19.
The company’s OP has increased by more than 3.0x from the FY19 level but the share price is currently at ¥386.0 per share, 27% below the FY19 price.  
At ¥85.0bn regular OP, we think Yamada Denki should trade north of ¥660.0 per share, which suggests an upside of over 70%.


Yamada Denki: 70+% Upside With 65% of The Medium Term OP Target

Japan

Yamada Holdings Co., Ltd. operates as a holding company. The Company, through its subsidiaries, sells home appliances and offers various services for housing, furniture and interior, remodeling, real estate, insurance, finance, and others. Yamada Holdings provides its services throughout Japan.

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Yamada Holdings (9831 JP)

Yamada Denki (9831) Buyback Progress Strong But Big Impact To Come

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Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

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Travis Lundy

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David Blennerhassett

Yamada Denki - GINORMOUS Buyback To Dramatically Boost EPS and ROE

Yamada Denki (9831) just announced better-than-consensus guidance, and a HUGE buyback implying a DPS hike. This will move a lot and will still be...

Travis Lundy

Yamada Denki: 70+% Upside With 65% of The Medium Term OP Target

Although, the company’s OP increased from ¥38.3bn in FY20 to ¥92.1bn in FY21, the share price movement suggests that the market is expecting this...

Oshadhi Kumarasiri

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