Daily BriefsJapan

Daily Brief Japan: Mitsui & Co Ltd, M3 Inc, Zojirushi Corp and more

In today’s briefing:

  • Mitsui & Co (8031) Q3 – Big Profit, New Bigger Buyback, Some Index Selling; and Competition
  • M3: Slow Down in Pharma Marketing a Significant Downside Risk
  • Unreasonable Company Opposition, but No Change in Outlook for Shareholder Proposals to Be Rejected

Mitsui & Co (8031) Q3 – Big Profit, New Bigger Buyback, Some Index Selling; and Competition

By Travis Lundy

  • Mitsui & Co Ltd (8031 JP) reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.
  • Also like Q2, they announced a buyback – this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.
  • This creates interesting index flows over the next several months, and other trading cos have live buybacks too.

M3: Slow Down in Pharma Marketing a Significant Downside Risk

By Shifara Samsudeen, ACMA, CGMA

  • M3 Inc (2413 JP) reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).
  • In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.
  • Though m3 has made a large no. of M&A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.

Unreasonable Company Opposition, but No Change in Outlook for Shareholder Proposals to Be Rejected

By Aki Matsumoto

  • Zojirushi’s low profitability and numerical targets are at the root of the problem with this shareholder proposal, which required disclosure of cost of capital to verify reasonableness of the targets.
  • To ensure transparency of BOD, it would have required individual disclosure of director compensation, divestment of policy shareholdings, and elimination of takeover defenses, which are issues of corporate governance practices.
  • When % foreign shareholders reaches 30% level, companies tend to eliminate takeover defense. Since Zojirushi’s % foreign shareholders is 20%, the shareholder proposal will be very likely to be rejected.

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