Daily BriefsJapan

Daily Brief Japan: Rakuten, Relia Inc, Rakuten Bank , Dynam Japan Holdings and more

In today’s briefing:

  • Rakuten (4755) – TSE Neglects Its Ad Hoc Powers – Less Bigly Index But Biglier Non-Index
  • Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons
  • Rakuten Bank (5838 JP) – Attractive Versus Domestic Neobank Peers, with Added Technical Support
  • Japan Pachinko Sector Meets Secular Decline with Pivots in Strategy

Rakuten (4755) – TSE Neglects Its Ad Hoc Powers – Less Bigly Index But Biglier Non-Index

By Travis Lundy

  • The index announcements regarding the the changes to indices following the Rakuten (4755 JP) offering have been a bit weird. 
  • Some of that may have to do with timing. Some is just weird
  • The result is that there is less to buy this week than I previously expected, and the buying gets dragged out longer.

Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons

By Travis Lundy

  • In mid-January this year, Mitsui & Co Ltd (8031 JP) announced it would buy out minorities in Relia Inc (4708 JP) (longtime known as Moshi Moshi), a BPO/RPA/AI services company.
  • I said the deal was too cheap, with 44% upside to the midpoint of Target Advisor’s DCF fair value range. Investors needed to exercise their cowbell to get more.
  • Since then, TOPIX has returned ~15%, A peer basket 16%, H2 was possibly kitchen-sinked, but no Mar-2024 forecasts were provided. The Tender starts tomorrow. Noise is still warranted. 

Rakuten Bank (5838 JP) – Attractive Versus Domestic Neobank Peers, with Added Technical Support

By Victor Galliano

  • Rakuten Bank’s imminent TOPIX index inclusion is a further share price support, to a neobank with a fundamentally attractive outlook
  • Rakuten Bank trades on a LTM PE multiple of 10.9x, LTM PBV ratio of 1.5x and an ROE of 13.8%, the best ROE to PBV ratio of its neobank peers
  • Aside from its premium long-run growth prospects and low prospective PEG ratio, Rakuten Bank is also the lowest cost to serve Japanese neobank

Japan Pachinko Sector Meets Secular Decline with Pivots in Strategy

By Howard J Klein

  • Universal Entertainment and Dynam Japan bave moved off total dependence on pure historic pachinko revenue flows as total market continues to slide.
  • Universal’s move to the casino sector as a core profit center and Dynam’s strong hall closure strategy are keys to future of the sector.
  • Dynam has been fighting off inflationary headwinds in opperating costs of their halls and sharp depreciation of equipment responsible for profit decline.

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