In today’s briefing:
- Toshiba (6502) – Funding Possibly Re-Secured, Deal Possibly In Play,
- Anycolor (5032 JP) Shows Its Colours – Great Quarter Guys! and TOPIX-Bound
- Japan Post Bank (7182) – The Flow Calendar
- Samco (6387) | Specialist in Silicon Carbide Equipment for Power Chips
- Trial Holdings IPO: The Bear Case
- MonotaRo: Hasn’t Been This Cheap For Quite a Long Time
- Japan’s E-Commerce Wars: Rakuten Fighting Hard as Amazon Japan Becomes No. 2 Retailer
- The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is….
Toshiba (6502) – Funding Possibly Re-Secured, Deal Possibly In Play,
- Bloomberg has an article today after the close saying Toshiba Corp (6502 JP)‘s board will meet tomorrow to discuss the JIP bid, and the Special Committee will give its recommendations.
- The article suggests the Board may proceed with a vote. If they do, an announced bid could come as early as the afternoon.
- The world is quite volatile now, and funding is probably more precious today than yesterday. But a bid is too. All in all, I see no reason for a position.
Anycolor (5032 JP) Shows Its Colours – Great Quarter Guys! and TOPIX-Bound
- Anycolor (5032 JP) reported Q3 results today. 9mo Revenue is now above the lower end of original forecasts for the full-year. 9mo OP is 25% higher than the original mid-range.
- The net profit forecast is now up 51% from the original mid-range, and up 128% on the year. The stock has cratered. Badly.
- It is now 19x April 2023 earnings for 90% revenue growth and 150% Net Profit growth and 40% OPM in the last quarter. Go figure.
Japan Post Bank (7182) – The Flow Calendar
- The near-term Supply/Demand Balance is helped or hurt – depending on how well the deal has been placed to retail, by overseas bank turmoil.
- Quality of placement to retail is tough to know from outside. We have near-term offsets with both index demand and dividend looming.
- The biggest near-term differentiator in possible supply/demand outcomes is, of course, in the hands of the TSE Index team. And we just don’t know.
Samco (6387) | Specialist in Silicon Carbide Equipment for Power Chips
- Samco is a beneficiary of rising power semiconductor investment for electric vehicles
- The company is focused on SPE equipment for the growing silicon carbide power chip market
- New investment from the likes of Mitsubishi Electric should drive structural growth for SiC equipment
Trial Holdings IPO: The Bear Case
- Trial Holdings (5882 JP), a discount store operator in Japan, is seeking to raise US$380 million at the IPO reference price of JPY2,000. Pricing on 26 March.
- In Trial Holdings IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The key elements of the bear case rest on bottom quartile gross and operating margin, mid-tier FCF generation and unusual cash collection cycle.
MonotaRo: Hasn’t Been This Cheap For Quite a Long Time
- After surging past 20.0x consensus FY+2 EV/OP multiple in 2012-2013, MonotaRO Co Ltd (3064 JP)’s consensus FY+2 EV/OP has fallen below 20.0x on one very rare occasion.
- We see no major change in the fundamentals of MonotaRo aside from a temporary hike in Opex through concurrently running old and new distribution centres for the past 3 quarters.
- Currently trading at 22.5x consensus FY+2 OP, we think this is a good opportunity to benefit from the company’s depressed valuation.
Japan’s E-Commerce Wars: Rakuten Fighting Hard as Amazon Japan Becomes No. 2 Retailer
- The big online malls continue to grow at higher rates than many branded e-commerce stores, meaning consecutive annual gains in market share.
- Amazon’s lead now seems to be widening while Rakuten is also pulling ahead of Z Holdings, which continues to struggle with poor integration of assets, and we see little upside.
- Amazon is now Japan’s 2nd biggest retailer but, despite its problems in Mobile, Rakuten is proving a relentless competitor in e-commerce and we remain bullish on its e-commerce prospects.
The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is….
- TSE will require companies with P/Bs below 1x to disclose improvement plans, urging them to shift to management that reflects an awareness of their cost of capital and stock price.
- The good thing about this TSE request is that “cost of capital” will be widely recognized by companies. Companies can no longer easily reject shareholder proposals regarding cost of capital.
- It should also be an opportunity for management to evaluate its own corporate value and compare it to market value and consider whether it should remain listed or go private.
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