Daily BriefsJapan

Daily Brief Japan: Advantest Corp, Softbank Group, KDDI Corp, ZOZO Inc, Takeda Pharmaceutical, Bank of Kyoto and more

In today’s briefing:

  • Advantest (6857) – Strong SoC Sales, Record Profits, Bullish Guidance, and a Buyback (+ Index Flow)
  • Softbank Group – BABA Pressure Has Didi Read Across but a 41% NAV Discount Provides Cushion
  • KDDI (Buy) – Q1 22 Results Reaction: Mixed Quarter as Consumer Predictably Weak
  • Zozo: Social Fashion Commerce, Omnichannel and New Ventures
  • Takeda 1Q: Top Line Beat Consensus – Development Pipeline Continues to Progress
  • When Will Kyoto Bank’s Policy Change?

Advantest (6857) – Strong SoC Sales, Record Profits, Bullish Guidance, and a Buyback (+ Index Flow)

By Travis Lundy

  • Advantest Corp (6857 JP) yesterday announced Q1 results, with Revenues/OP/NP at record levels, a H1 div hike of 30%, guidance well ahead of consensus, and a buyback.  
  • They also announced a Mid-Term Plan revision which shows forward guidance better than consensus. 
  • The buyback is smaller than the last one BUT float is not what you think it is. Understanding float dynamics here is key.

Softbank Group – BABA Pressure Has Didi Read Across but a 41% NAV Discount Provides Cushion

By Kirk Boodry

  • Alibaba is under pressure again with a direct read-across to Softbank
  • Worries on China regulation are bad news for another Softbank holding DIdi Global as it stands alongside Alibaba as a high-profile regulatory target
  • Alibaba weakness could drive risk pricing (CDS) and the discount  to NAV higher. A silver lining is that discount makes Softbank attractive for investors looking for indirect China exposure

KDDI (Buy) – Q1 22 Results Reaction: Mixed Quarter as Consumer Predictably Weak

By Kirk Boodry

  • Results for the quarter were mixed with a slight miss for profitability despite one-time gains for financial services taken in the quarter
  • Revenue erosion from a reduction in the Rakuten roaming service area was relatively modest whilst there are signs of improvement in erosion from mobile price cuts
  • KDDI will reimburse users ¥7bn (v Redex forecast of ¥10bn) for its network outage earlier this month; the operational impact won’t be clear until Q2 churn is reported

Zozo: Social Fashion Commerce, Omnichannel and New Ventures

By Michael Causton

  • Zozo recorded its highest profit ever last year, countering the sceptics once again. 
  • The company has shrugged off the uncertainties surrounding the departure of its founder and, while sticking to its core values, is looking for new growth beyond fashion e-commerce.
  • While there are some headwinds, Zozo has a solid set of strategies in place to offset these and find new growth streams.

Takeda 1Q: Top Line Beat Consensus – Development Pipeline Continues to Progress

By Shifara Samsudeen, ACMA, CGMA

  • Takeda Pharmaceutical (4502 JP)  reported 1QFY03/23 results yesterday. Reported revenue grew 2.4% YoY to JPY972.5bn (vs consensus JPY929.6bn) while OP decreased 39.4% YoY to JPY150.5bn (vs consensus JPY173.1bn).
  • Decline in OP was due to one-time gain from the sale of Japan diabetes portfolio of JPY131.4bn in 1Q last year, however, excluding this, OP increased 28.4% YoY in 1QFY03/2023.
  • Takeda’s share price dropped 1.5% at the end of today’s trading as investor sentiment has changed post earnings as some of the company’s key drugs have started experiencing generic erosion.

When Will Kyoto Bank’s Policy Change?

By Aki Matsumoto

  • The current shareholder structure of Kyoto Bank, where domestic financial institutions are the top shareholders and still continue to hold cross-shareholdings, will make it difficult to pass the shareholder proposal.
  • In environment of continued sluggish bank earnings, the dividend income from policy shareholdings and the huge unrealized gains on stocks are valuable assets for weathering this difficult business environment.
  • Kyoto Bank’s policy will change when the interest rate environment changes and earnings are expected to improve, or when the shareholder structure changes due to a significant reduction in cross-shareholdings.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars