In today’s briefing:
- Tsuruha (3391) – Welcia (3141) Future Merger Ratio – Pounding the Table
- Japanese Big Cap Banks – Revisiting Interest Rate Sensitivities
- Goodyear Tire To Divest Dunlop In Favor Of Sumitomo Rubber
- ETF Sale Won’t Be Concluded Soon, but as Long as BOJ Keeps Holding Them, the Problems Will Persist
- Astellas Pharma (4503 JP): Xtandi & Forex Lead To Guidance Revision, Impairment Losses One Off Burnt
Tsuruha (3391) – Welcia (3141) Future Merger Ratio – Pounding the Table
- In late December, a Jiji article said Tsuruha & Welcia would look to integrate by end-2025, now that they no longer need SEC approval. Odd language, but we’ll take it.
- That means we look to what might happen between here and there. The companies will hire Legal and Financial Advisors, wait until both report FY, then start negotiating.
- What has been the long-term trend and the trend of the last two years is different. It’s worthwhile looking at valuations and expectations to decide how to trade. It’s good.
Japanese Big Cap Banks – Revisiting Interest Rate Sensitivities
- BoJ raised rates to 0.5% at its January policy meeting and BoJ Governor Kazuo Ueda hinted at more rate hikes; BoJ’s new Outlook Report forecasts higher core inflation in 2025
- We reiterate our core recommendations Resona and Mizuho for their leverage to higher interest rates, their low LDRs, their high levels of cash at the BoJ and their modest valuation
- We also keep our buys on Concordia and Shizuoka, for their leverage to higher interest rates and LDRs below 90%, along with their attractive valuations highlighted by low PEGs
Goodyear Tire To Divest Dunlop In Favor Of Sumitomo Rubber
- Transaction valued at around US$701 million in cash proceeds
- Goodyear to hold ground in Europe until the end of 2025
- Goodyear joins Dutch research body TNO for crash mitigation
ETF Sale Won’t Be Concluded Soon, but as Long as BOJ Keeps Holding Them, the Problems Will Persist
- Since dividend income and unrealized gains on ETFs have significant impact on BOJ’s finances, the sales of ETF will be discussed, considering BOJ’s overall balance sheet and income/expenses as well.
- There’re unexamined issues, whether the central bank’s purchase of stocks was really good thing, whether it distorted the secondary market, and whether management reforms were delayed by underpinning the stocks.
- BOJ can move on to the issue of ETF disposition when the impact of policy rate hikes is recognized and the market stabilizes, but until then the problems will persist.
Astellas Pharma (4503 JP): Xtandi & Forex Lead To Guidance Revision, Impairment Losses One Off Burnt
- Astellas Pharma (4503 JP) revised FY25 revenue guidance upward to ¥1900B on robust Xtandi performance and favourable forex movement. Core profits and margins will also see upward revisions and expansions.
- The company will record an impairment charge of ¥176B for intangible assets this fiscal. As a result, FY25 operating profit on reported basis will come down to ¥11B from ¥80B.
- Recently, Astellas has received approval for Vyloy and label expansion approval for Padcev in China. Label expansion application for Izervay in the U.S. has been accepted by the FDA.
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