In today’s briefing:
- Weekly Deals Digest (26 Jan) – Seven & I, Shinko, Canvest, GAPack, Get Nice, Japfa, LG CNS, Guming
- Unloved Japan Roundup: Don’t Panic Ahead of Q3 Results Rush
- Nidec (6594 JP): Growth Prospects Improving
- Is Slower Management Decision Making of Japanese Companies Relate to Slower Growth of Market Cap?
Weekly Deals Digest (26 Jan) – Seven & I, Shinko, Canvest, GAPack, Get Nice, Japfa, LG CNS, Guming
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million, and Guming Holdings (GUM HK) seeks to raise US$300 million.
- Event-Driven developments: Seven & I Holdings (3382 JP), Shinko Electric Industries (6967 JP), Fuji Soft Inc (9749 JP), Japfa Ltd (JAP SP), Get Nice Financial Group Ltd (1469 HK).
Unloved Japan Roundup: Don’t Panic Ahead of Q3 Results Rush
- More than 40 potential turnaround stocks will report Q3 results in the coming weeks.
- The average spread between the lowest and highest street estimate for the stocks on our target list is a gaping 45%. This doesn’t mean what most people think it means.
- Rohm, Taiyo Yuden, Yamato, Hamamatsu, JFE, Tsuruha look nice, but we pass on Shiseido and Mazda.
Nidec (6594 JP): Growth Prospects Improving
- Outlook improving with rising demand for energy storage systems and near-line HDDs and water cooling modules for AI servers.
- 3Q results point to FY sales above and profits in line with management’s guidance. Proceeding toward acquisition of Makino Milling next fiscal year.
- At 17.5x projected earnings and 10x cash flow, the shares are at the bottom of their 10-year valuation range. Buy for the medium- to long term.
Is Slower Management Decision Making of Japanese Companies Relate to Slower Growth of Market Cap?
- Declining components from MSCI indexes will lead to less inflows from active as well as passive funds, and less transmission from the sell-side to global investors.
- Based on the assumption that the world’s top companies have grown in response to changes in the environment, Japanese companies may be relatively slow in making management decisions for growth.
- As benchmark adopters reduce their investments in Japanese equities, investors adopting investment strategies that are less concerned with benchmarks will have a greater presence than ever before.
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