In today’s briefing:
- Softbank (9984 JP): Relying on Arm Strength and JPY Weakness
- Recruit: HR Tech Top Line Further Declines; No Big Impact From Indeed Plus in the Near Term
- Merger Arb Mondays (12 Feb) – JSR, Benefit One, Lawson, Welbe, YSK, Hollysys, Silver Lake
- EQD | The Nikkei 225 Rally Can Continue But Resistance Is Near…
Softbank (9984 JP): Relying on Arm Strength and JPY Weakness
- We believe that Arm is now valued as a “growth at any price” stock; with nearly half of SoftBank group’s equity value reliant on Arm, NAV downside risk is rising
- The risk of JPY appreciation is real, whilst SVF2 remains very exposed to financing costs, with 85% of its equity value in private companies
- Softbank shares trade at a 55%+ discount to the estimated NAV; yet the downside risks to Arm’s valuation, along with the potential JPY appreciation, should keep the discount wide
Recruit: HR Tech Top Line Further Declines; No Big Impact From Indeed Plus in the Near Term
- Recruit Holdings (6098 JP) reported 3QFY03/2024 results on Friday. Revenues decreased YoY due to decline in HR Tech revenues, while Adj. EBITDA for the quarter increased YoY. Both Beat consensus estimates.
- Weakening of labour markets and new pricing model have impacted HR Tech revenues, while cut down on investments have helped improve HR Tech margins.
- The company has launched Indeed Plus to help improve earnings, which we don’t expect to have a major impact on Recruit Holdings (6098 JP) ’s earnings in the near term.
Merger Arb Mondays (12 Feb) – JSR, Benefit One, Lawson, Welbe, YSK, Hollysys, Silver Lake
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Welbe Inc (6556 JP), Probiotec Ltd (PBP AU), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), Genetron Holdings Ltd (GTH US), Lithium Power International (LPI AU).
- Lowest spreads – Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), QV Equities Ltd (QVE AU), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), Irc Ltd (1029 HK).
EQD | The Nikkei 225 Rally Can Continue But Resistance Is Near…
- The Nikkei 225 (NKY INDEX) has been rising for 2 weeks and it is starting to be overbought.
- The index may rise for another week (this week) according to our models, then the chances for a WEEKLY pullback will become substantial.
- Look at resistance targets in the 37200-37900 price area to place SHORT trades, target 1 week, then close the trade.
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