In today’s briefing:
- Kawasaki Heavy Industries (7012 JP): Sell into Strength
- (Mostly) Asia-Pac M&A: Talkmed, Jilin Jiutai Bank, Insignia, Silk Logistics, Fengxiang, Nissin, VIOL
- Last Week In Event SPACE: Shibaura, HKBN, NWD, Yichang HEC
- Will Management that Incorporates Cost of Capital Be Fully Implemented 7 Years from Now, in 2028?
Kawasaki Heavy Industries (7012 JP): Sell into Strength
- KHI has retreated 12% from its June 30 high, but is still 69% above its April low, despite guiding for a decline in orders and weak profits in FY Mar-26.
- Orders from Japan’s Ministry of Defense are forecast to drop from ¥772.3 billion to ¥400 billion this fiscal year, while the overall profit of the Aerospace division drops 14%.
- The potential impact of U.S. tariffs on Power Sports & Engines is not factored into guidance, offsetting what otherwise seem to be conservative assumptions.
(Mostly) Asia-Pac M&A: Talkmed, Jilin Jiutai Bank, Insignia, Silk Logistics, Fengxiang, Nissin, VIOL
- I tally 43 – mostly firm, mostly Asia-Pac – arb transactions currently being discussed and analysed on Smartkarma.
- Two new deal were discussed on Smartkarma this week: Talkmed (TKMED SP)‘s Scheme and Jilin Jiutai Rural Comm Bank (6122 HK)‘s Hobson’s Choice
- Key updates/news took place on New World Resources (NWC AU), Insignia (IFL AU), Silk Logistics (SLH AU), Fengxiang (9977 HK),Domain (DHG AU), Nissin (9066 JP) and VIOL (335890 KS).
Last Week In Event SPACE: Shibaura, HKBN, NWD, Yichang HEC
- Given the METI extension on FEFTA review on Shibaura (6957 JP), risks are slightly higher. <¥5,900 was a good buy on an incremental basis. ¥5,970 is OK but not spectacular.
- As expected (at least by me) – I Squared has withdrawn its Offer for HKBN Ltd (1310 HK).
- Re: New World Development (17 HK), this “rescue package” announcement – ~HK$88.2bn – should come as no surprise, as the alternative situation (liquidation/bankruptcy) and the ensuing optics were not great.
Will Management that Incorporates Cost of Capital Be Fully Implemented 7 Years from Now, in 2028?
- Considering that it took seven years to finally begin reducing policy-held shares, it seems reasonable to assume that many companies will begin seriously incorporating capital costs into management in 2028.
- TSE states that while Prime Market has most companies whose initiatives are out of step with investors’ perspectives, companies whose initiatives are highly regarded by investors show superior stock performance.
- TSE appears to be placing its hopes on efficient market hypothesis. However, investors need to see increase in capital profitability that will convince them of the path to value creation.
💡 Before it’s here, it’s on Smartkarma
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