In today’s briefing:
- Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
- [Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback
- Goldlion Holdings (533 HK): Chairman’s Scheme Privatisation Is a Done Deal
- China Consumption Weekly (16 Dec 2024): Alibaba, Meituan, Mixue, Green Tea
- Isetan Shinjuku to Hit ¥424 Billion
- Carlsberg/Britvic: Deal Cleared, Spread
- Is the High Volatility of Japanese Equities Only Due to Their Small Market Capitalization?
Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
- Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025…
- Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
- Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.
[Japan Activism] Exedy (7278) – Murakami-San Selling into the Buyback
- Exedy Corp (7278 JP) announced a big buyback. Murakami-san did not sell the first pop. The shares fell. Exedy started buying back and the shares went up. Now Murakami’s selling.
- Today after the close, Murakami Group companies announced that City Index Elevens had started selling. They sold 1.25% of shares out in 6 trading days to 16 December.
- I expect they sold another 2% in the past week through today. Shares tanked today. This is not a good signal. And it comes earlier than I expected.
Goldlion Holdings (533 HK): Chairman’s Scheme Privatisation Is a Done Deal
- On 17 December, Goldlion Holdings (533 HK) announced a scheme offer from Mr Tsang (Chairman/CEO) at HK$1.5232 per share, a 71.1% premium to the undisturbed price of HK$0.89 (20 November).
- The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The shareholder with a blocking stake is a seller.
- The offer is reasonable compared to peer multiples and historical trading ranges. At the last close and for a late April payment, the gross/annualised spread is 7.3%/22.7%.
China Consumption Weekly (16 Dec 2024): Alibaba, Meituan, Mixue, Green Tea
- Alibaba sells 100% equities in Intime Department Store to Youngor.
- Meituan plans to shorten delivery workers’ work hours due to sudden death cases.
- Mixue, the lowest price fresh drink provider, began to raise its prices.
Isetan Shinjuku to Hit ¥424 Billion
- Isetan-Mitsukoshi has gone from being the most cautious forecaster among the big department store retailers to the most optimistic.
- This is largely on the back of previously unimaginable sales records at its main stores, especially Isetan Shinjuku.
- All of which is bringing in piles of profit, with projections of exceeding its previous average profit by four times.
Carlsberg/Britvic: Deal Cleared, Spread
- Carlsberg’s acquisition offers a 36% premium to Britvic’s June 2024 closing price and captures £2.10/share in taxed and capitalized synergies, ensuring value realization for shareholders.
- Regulatory Approvals: The UK Competition and Markets Authority (CMA) and the European Commission cleared the transaction by December 17, 2024, confirming no further probes.
- Low Deal Risk: All regulatory approvals secured; with a 0.68% spread (6.91% annualized), and closure expected by January 16, 2025, recommendation is long and tender.
Is the High Volatility of Japanese Equities Only Due to Their Small Market Capitalization?
- In addition to many manufacturing companies that are sensitive to economic cycles, TSE is also characterized by many companies with sluggish operating cash flow growth.
- Low interest rates in Japan can also be a factor in high volatility. As the volatility of low interest rates increases, corporate value volatility is likely to increase as well.
- Some overseas investors pay attention to the equity spread over JGB yields. As the risk of rising interest rates in Japan increases, they are likely to unwind their futures positions.
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