Daily Brief Japan: Kokusai Electric , Shinko Electric Industries, Sumitomo Mitsui Financial Group (Sponsored Adr) and more

In today’s briefing:

Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening
Shinko Electric (6967 JP): JIC’s Tender Offer on the Home Stretch
Sumitomo Mitsui Financial Group’s Ruthless Expense Overhaul

Kokusai Electric (6525 JP): Lock-Up Expiry, Index Deletion, Index Inclusion – It’s All Happening

The lock-up on KKR HKE ends next week, Kokusai Electric (6525 JP) should be deleted from a global index end-February and could be added to the NKY INDEX in March.
There has been a buildup of shorts in Kokusai Electric (6525 JP) as the stock has underperformed the Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) by a lot.
The global index deletion in February could provide an entry point into a long position ahead of the announcement of the Nikkei 225 (NKY INDEX) changes in March.

Shinko Electric Industries (6967 JP)’s tender offer from a JIC alliance is at JPY5,920. Today’s update notes that JIC has satisfied the regulatory precondition.
The tender offer is expected to commence in mid-February. The Board will continue to recommend it because it remains attractive.
Deal fatigue (announced in December 2023) and Ibiden’s derating will nudge shareholders to accept. At the last close and for an end-of-March payment, the gross/annualised spread was 0.7%/3.9%.

Sumitomo Mitsui Financial Group (SMFG) presented a mixed set of results for the fiscal year ended in March 2017, with several positives but also notable challenges.
The company’s profit attributable to owners of the parent came in at JPY 706.5 billion, an increase of JPY 59.8 billion from the previous year, partly due to the tax effects associated with adopting a consolidated corporate tax system.
This tax benefit, however, will not recur, impacting future profitability metrics.

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