Daily BriefsJapan

Daily Brief Japan: Medley, AXXZIA Inc, SUMCO Corp, Japan Post Bank, Honda Motor, ARTERIA Networks Corp, Daiei Kankyo and more

In today’s briefing:

  • Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month
  • AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February
  • Sumco (3436) | Bargain Basement
  • Japan Post Bank – Unrealized Gains Down 95%
  • Honda Motor ADR: Initiation of Coverage – Recent JVs & Key Drivers
  • Arteria Networks (Buy) – Q2 22 Results Reaction: Core Business Growth Intact
  • Daiei Kankyo Pre-IPO – Peer Comparison and Thoughts on Valuation

Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month

By Travis Lundy

  • A year ago, TSE Growth-listed Medley (4480 JP) said they would “make preparations” for a listing on TSE Prime. Last month, Janaghan Jeyakumar, CFA had it at “Almost Ready.”
  • Today they announced they would list on TSE Prime on 28 November which means a TOPIX Inclusion at end-December. 
  • Shareholder structure and stock bias matter a lot in this case. It’s very much worth looking at the details.

AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February

By Travis Lundy

  • Just under two weeks ago, AXXZIA Inc (4936 JP) announced it had on that day (9 November) applied to move to TSE Prime from TSE Growth. 
  • It’s an interesting one because of the strange differential between “tradable shares” and “float.”
  • After some study, I think this could be a TOPIX inclusion at end-Feb 2023, but there are steps to take between now and then. 

Sumco (3436) | Bargain Basement

By Mark Chadwick

  • Sumco is a pure play wafer maker that is geared into demand for cutting edge 300mm wafers
  • Sumco is attractive given weak sentiment towards tech, attractive valuation, strong profitability and long-term earnings drivers
  • With the stock down 12% YTD, we believe the stocks is undervalued and see at least 20% upside from here

Japan Post Bank – Unrealized Gains Down 95%

By Daniel Tabbush

  • Japan Post Bank continues to see cratering net interest income
  • The company’s significant US CLO exposure is not supporting profit
  • Total unrealized gains on securities are down 95% in the past six months

Honda Motor ADR: Initiation of Coverage – Recent JVs & Key Drivers

By Baptista Research

  • This is our first report on global automobile behemoth, Honda Motors.
  • The Shanghai lockdown and semiconductor supply shortage resulted in a drop in unit sales and automobile production of Honda in the quarter, mainly in North America and China.
  • However, despite soaring raw material costs and a drop in automobile unit sales, the sales of motorcycle units were up which led to the revenue beat.

Arteria Networks (Buy) – Q2 22 Results Reaction: Core Business Growth Intact

By Kirk Boodry

  • Favorable industry trends like work from home and expanding mobile data usage are helping drive Arteria revenue growth
  • Headline profits are down but core OP is up when one-time gains last year are stripped out and quarterly results will start to look better in H2 when fully lapped
  • Management says macro concerns such as inflation and power costs are manageable and FY targets remain unchanged

Daiei Kankyo Pre-IPO – Peer Comparison and Thoughts on Valuation

By Sumeet Singh

  • Daiei Kankyo (9336 JP) , a waste management company, aims to raise around US$280m in its Japan IPO.
  • Daiei Kankyo is involved in the waste management and related businesses in Japan. The core of its operations consists of its waste management and recycling business.
  • In our previous note, we looked at the company’s past performance. In this note, we undertake a peer comparison and talk about valuations.

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