In today’s briefing:
- Shin-Etsu Chemical (4063) – OK Earnings, OK Forecast, But Ground-Breaking Buyback
- Renesas 1Q25: Cheap Stock That’s Bottoming Out
- Fujitsu General (6755 JP): Done Deal as Precondition Satisfied
- (Mostly) Asia-Pac M&A: Mayne Pharma, Piedmont/Sayona, Jamco, Makino Milling, Sinarmas, Dada Nexus
- Expect Gradual Improvement in the Quality of Listed Companies as More Companies Go Private
- Last Week in Event SPACE: GMO Internet, Hongkong Land, Shibaura Electronics, Millennium & Copthorne
Shin-Etsu Chemical (4063) – OK Earnings, OK Forecast, But Ground-Breaking Buyback
- Shin Etsu Chemical (4063 JP) reported FY earnings to beat January guidance for all four major measures, just slightly. They only guide 1 quarter out, and Q1 is up year-on-year…
- …in revenues, but down in OP and NP. Note: OP and NP guidance is nearly identical to what they guided for Q1 last year on ¥585bn revenues (vs ¥610bn now)
- The BIG news here is a Very Large Buyback. The company has long has huge piles of cash. This buyback (~90% of annual profit) starts to make use of it.
Renesas 1Q25: Cheap Stock That’s Bottoming Out
- Revenues are still declining by ~teens% YoY but margins shows signs of improvements as end-demand improves and utilization is low.
- Renesas doesn’t have an inventory problem and increasing revenues will lead to higher utilization and higher margins.
- As Renesas is showing signs of a bottom, the stock is very cheap, trading at -2 standard deviations or 11x 2025 EPS, 9x 2026 EPS.
Fujitsu General (6755 JP): Done Deal as Precondition Satisfied
- The precondition for Paloma Rheem Holdings’ tender offer for Fujitsu General (6755 JP) is satisfied. The offer is from 28 April to 28 May.
- Despite an arguably light offer and less than ideal process, this is a done deal due to a lack of opposition and no competing offer.
- At the last close and for a 5 June payment, the gross and annualised spreads are 1.3% and 14.1%, respectively.
(Mostly) Asia-Pac M&A: Mayne Pharma, Piedmont/Sayona, Jamco, Makino Milling, Sinarmas, Dada Nexus
- I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma.
- No new deals discussed on Smartkarma this week. Although Dickson Concepts (113 HK), Bright Smart (1428 HK), and Jilin Jiutai Bank (6122 HK) are suspended pursuant to the Takeovers Code.
- Key updates/news took place on Mayne Pharma (MYX AU), Piedmont (PLL AU)/Sayona (SYA AU), Jamco (7408 JP), Makino Milling (6135 JP), Sinarmas Land (SML SP), and Dada Nexus (DADA US).
Expect Gradual Improvement in the Quality of Listed Companies as More Companies Go Private
- Although it’ll take some time for quality of existing listed companies to improve, a gradual improvement in quality of companies is likely for the time being as more companies delist.
- The TSE’s “request” was not only for activist investors, but also for other investors who shared the view that the stock market should not be left in the doldrums.
- A certain number of companies that fail to meet TSE listing criteria will move to the regional stock exchanges, leading to a gradual improvement in the quality of the TSE.
Last Week in Event SPACE: GMO Internet, Hongkong Land, Shibaura Electronics, Millennium & Copthorne
- Negligible float, highly manipulatable, 150x+ forward earnings – yes, investors can afford NOT to have GMO Internet (4784 JP) in their portfolio.
- Hongkong Land (HKL SP) stamps its “recycling capital” motto and sells nine floors of One Exchange Square to HKEX (388 HK) for HK$6.3bn (US$810mn).
- Shibaura Electronics (6957 JP)asks Minebea Mitsumi (6479 JP) whether they intend to change the consideration terms. Minebea says it is “proceeding with its consideration“.
💡 Before it’s here, it’s on Smartkarma
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