In today’s briefing:
- 3D Launches Partial Tender Offer on NTT UD REIT (8956)
- NTT UD REIT (8956 JP): 3D’s Unsolicited Partial Tender Offer
- Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade
- Japan Pure Chemical (4973 JP): Q3 FY03/25 flash update
- Improved Governance Tends to Raise Reason to Buy Japanese Stocks when Corporate Profit Is Lackluster
3D Launches Partial Tender Offer on NTT UD REIT (8956)
- Seemingly out of the blue, Singapore-based activist investment fund 3D Investment Partners has launched a partial tender offer at a small premium on NTT UD REIT Investment Corporation (8956 JP).
- 3DIP currently owns 2.2% and at maximum, will own 15.00% of the REIT units outstanding less treasury units. It intends to own the units for “pure investment purposes.”
- “Shareholder” structure is different for J-REITs vs companies. And this J-REIT has an interesting future possibility. But…
NTT UD REIT (8956 JP): 3D’s Unsolicited Partial Tender Offer
- 3D has announced an unsolicited partial tender offer for NTT UD REIT Investment Corporation (8956 JP) at JPY131,890 per unit, a 10.0% premium to the undisturbed price.
- The minimum number of units to be purchased is 115,279 (7.80% ownership ratio), and the maximum number of units to be purchased is 189,128 (12.80% ownership ratio).
- The modest premium and an implied P/NAV <1x suggest a lightish offer. 3D will have to rethink terms as shares are trading through terms.
Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade
- With 3 days left in the review period, Fast Retailing (9983 JP) has a 11.29% weight in the Nikkei 225 (NKY INDEX). That means double capping in March.
- If Fast Retailing (9983 JP) underperforms the other index stocks by 1.8% from now to the close on 31 January, there will only be a single level of capping.
- Double capping will result in big selling on Fast Retailing (9983 JP) and big inflows into the other index constituents. Smaller impact for single level capping.
Japan Pure Chemical (4973 JP): Q3 FY03/25 flash update
- Revenue reached JPY10.1bn, a 15.4% YoY increase, with operating profit at JPY417mn, up 46.4% YoY.
- Net income surged 259.1% YoY, mainly due to gains from the sale of company-held shares.
- Sales of plating chemicals for AI servers and data centers remained strong, while industrial equipment demand was sluggish.
Improved Governance Tends to Raise Reason to Buy Japanese Stocks when Corporate Profit Is Lackluster
- Overseas investors have sold off heavily in Japanese equities since July, and it’ll interesting to see the trading trends in January, which will reflect their asset allocation for the year.
- Overseas investors buy Japanese equities when they expect the management of Japanese companies to change and improve their profitability and growth potential.
- Benchmark investors who have reduced their investment weighting in Japanese equities may return to their investment weighting if they expect a relative improvement in Japanese equity investment performance in 3Q.
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