Daily Brief Japan: Toshiba Corp, Seven & I Holdings and more

In today’s briefing:

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely

Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
If no deal, there’s downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
I don’t see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.

Since the second of Jun Toshiba is down 14.7% while TOPIX is up 0.7%.
This underperformance against TOPIX and industry peers suggests that some of the implied acquisition premium has dissipated.
With reasonable potential for some form of bid coming through we consider the news about Japan Industrial Partners growing its consortium.

After raising guidance yet again in 1QFY23 through stronger than expected performance in the overseas business, Seven & I is scheduled to release Q2 results on 6th October 2022.
We are optimistic that 2QFY23 could provide the platform for Seven & I to break the ¥6,100 level, at which the share-price has been stuck for the first 9-months 2022.
This is because, we are seeing a significant improvement in Seven & I’s domestic performance while, North America is carrying the growth momentum that been there since the Speedway-acquisition.

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