In today’s briefing:
- Toshiba (6502) – There Is Actual News, and There Are Datapoints Which Masquerade as News
- Recruit Buyback – A Temporary Support to Falling Share Price
- Softbank Group – The Most Important Number in Q2 Results May Be ARM Royalty Revenue
- Sumitomo Dainippon Pharma Co (4506 JP): Myovant Is Crucial for Post-Latuda Growth Momentum
- The Timing of the Mandatory Disclosure of Human Capital Information Should Not Be a Sticking Point
Toshiba (6502) – There Is Actual News, and There Are Datapoints Which Masquerade as News
- A week after JIP gets preferred status and we had rumoured bid prices, we now have an article saying JIC/Bain is still in it, and a new article today.
- Today’s “new” article says JIP’s bid price is what the first leak suggested, which is below ¥6,000/share. Other articles suggest bidders are finding that securing financing is tough.
- Investors should look at process and understand the difference between this one and most others. It matters. Some news is not news, other than telling you the dance has started.
Recruit Buyback – A Temporary Support to Falling Share Price
- Recruit Holdings (6098 JP) announced a buyback yesterday for a maximum of 42m (2.55% of total shares outstanding) shares for an aggregate of JPY150bn from the market.
- Recruit’s shares closed at JPY4,257 per share at the end of yesterday’s trading, and shares have moved up almost 5% during today’s trade following the buyback announcement.
- This is Recruit’s second buyback in 2022 where some of its shareholders reduced their stakes during the previous buyback (tender offer agreements) in January this year.
Softbank Group – The Most Important Number in Q2 Results May Be ARM Royalty Revenue
- We’ve been pessimistic on prospects for ARM and recent news flow and share price performance hasn’t helped but a decent report from TSMC eases some of our concerns
- Softbank needs high teens royalty revenue growth for ARM and TSMC as a bellwether (+30% for Q3 and Q4 guidance) is better than AMD or Nvidia
- We remain more conservative on valuation ($37bn) than Softbank assuming high single-digit growth and c. 43% EBITDA margins
Sumitomo Dainippon Pharma Co (4506 JP): Myovant Is Crucial for Post-Latuda Growth Momentum
- Sumitomo Dainippon Pharma Co (4506 JP) offered to acquire Myovant Sciences (MYOV US), which was rejected due to low valuation. The company is unlikely to revise its offer for Myovant.
- As Sumitomo’s in-house drug candidates are still in clinical stages, the company needs Myovant’s already marketed products to maintain its growth momentum post Latuda patent expiry.
- Sumitomo is not expected to sell its existing 52% stake in Myovant. This will ensure that Myovant’s marketed products Orgovyx and Myfembree should continue to remain as Sumitomo’s growth drivers.
The Timing of the Mandatory Disclosure of Human Capital Information Should Not Be a Sticking Point
- It is useful for statutory documents disclosing a company’s medium-to-long-term management strategy to include information on “human capital,” which plays a role in sustainable growth.
- If the mandatory timing of the information to be disclosed in annual securities report is accelerated, there is risk that the information will be similar to that of other companies.
- The government should not stick to 2023 for the mandatory inclusion in annual securities reports, but should give companies time to encourage them to deepen what they include.
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