In today’s briefing:
- Toyo Construction (1890) Tries a Different Tactic – FEFTA!
- Mitsui OSK(9104): Ex-Div – The Last Straw…
- Japan Real Estate Investment (8952 JP) : Offering Could Be a Catalyst for Outperformance Vs Peers
- Trial Holdings IPO – Sector Lagging Margins Warrant a Discount
- Rakuten: 17% More Points in 2022
- Terumo Corp (4543 JP): Sequential Decline Expected in Q4; Stronger Yen to Weigh on Performance
- Japan Real Estate Investment Corp Placement – An Acquisition Out of the Blue
Toyo Construction (1890) Tries a Different Tactic – FEFTA!
- This morning, Reuters is reporting that Toyo Construction (1890 JP) has asked the Japanese government to investigate alleged breaches of the Foreign Exchange and Foreign Trade Act by YFO.
- Why? The Very Japanese family office of Nintendo’s founding family used Cayman entities to purchase Toyo shares and Toyo was re-labeled as having businesses in “Core Sectors” in October 2021.
- Toyo has also repeated its complaint about changed “intentions” on large shareholder filings. That bit of the complaint is 10 months old. A closer look at the details within.
Mitsui OSK(9104): Ex-Div – The Last Straw…
- Mitsui OSK is up 460% since June 2020. Almost gravity defying. Strong Container profits have lead to high dividends. Now Shareholders hang on for one more big payoff
- Container rates have just about to reverted to pre-pandemic levels. Utilization is falling; Capacity coming on; Customers using spot. All points to potential losses next year for Containers and ONE
- We expect a major profit decline=>div cut; How far could share price fall ? See the share price vs Shanghai Container Index correlation below. We are bearish Mitsui OSK.
Japan Real Estate Investment (8952 JP) : Offering Could Be a Catalyst for Outperformance Vs Peers
- Today after market close, one of Japan’s largest office JREITs Japan Real Estate Investment (8952 JP) announced a US$150mn follow-on equity offering to fund their recent acquisition of two properties.
- The primary offer quantity will be 35,200 units and there is an over-allotment quantity of 2,464 units.
- In this insight, we take a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.
Trial Holdings IPO – Sector Lagging Margins Warrant a Discount
- Trial Holdings (5882 JP) is looking to raise up to US$393m in its Japan IPO.
- TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
- In this note, we talk about implied valuations in the IPO price range
Rakuten: 17% More Points in 2022
- Loyalty points offer a significant incentive for consumers when deciding where to buy and many surveys confirm that points are a key factor in selection of online store.
- With inflation biting, the big loyalty programmes are promoting points as a way to save on future purchases.
- Rakuten is by far the largest provider (10 pts above anyone else) and is enjoying strong growth – which could help adoption of its mobile store.
Terumo Corp (4543 JP): Sequential Decline Expected in Q4; Stronger Yen to Weigh on Performance
- Terumo Corp (4543 JP) raised FY23 revenue guidance due to greater than expected depreciation of Yen. However, excluding Fx, revenue growth expectation has been lowered to 5% from 6% earlier.
- New guidance implies Q4FY23 revenue of ¥197B (-8% QoQ) and operating profit of ¥28.5B (-24% QoQ). Terumo assumed exchange rate of ¥130/USD for Q4FY23, similar level realized in Q1FY23.
- Terumo has reduced FY23 operating and net profit guidance by ¥10B and ¥8.5B, respectively due to higher-than-expected inflation. Excluding Fx, operating profit is expected to decline 2% in FY23.
Japan Real Estate Investment Corp Placement – An Acquisition Out of the Blue
- Japan Real Estate Investment (8952 JP) is looking to raise around US$140m (JPY18.3bn) through a follow-on offering to acquire one new property and an additional co-ownership interest in another property.
- The deal is a large one to digest at 10 days of three month ADV while there will be a dilution of approximately 2.7% of TSO (assuming overallotment option exercised).
- In this note, we will look at the assets to be acquired, impact on forecast and portfolio, and run the deal through our framework.
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