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
- 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
- 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
- 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%
- 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
- 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
- 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
- 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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