In today’s briefing:
- The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
- Trial Holdings IPO: Trading Debut
- NEC (6701 JP): Generative AI (Part 2)
- Kobe Bussan: Expect More Growth
The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
- Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
- But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
- Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.
Trial Holdings IPO: Trading Debut
- Trial Holdings (5882 JP) priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.
- We previously discussed the IPO in Trial Holdings IPO: The Investment Case and Trial Holdings IPO: Valuation Thoughts.
- The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive.
NEC (6701 JP): Generative AI (Part 2)
- CEO Jensen Huang’s keynote address at Nvidia’s GTC event on March 18 was a reminder that generative AI is about building secure and reliable systems, not chatting up the future.
- NEC has spent three years developing its own AI supercomputer, creating the best performing Japanese-language large language model (LLM), and testing new AI products in-house before delivering them to clients.
- The introduction of generative AI and LLMs into business- and industry-specific solutions should provide meaningful additions to NEC’s telecom services, social infrastructure, aerospace and national security related businesses.
Kobe Bussan: Expect More Growth
- Discount cash and carry wholesaler/franchisor, Kobe Bussan, posted more record results for FY2023, a reflection of the demand for discount retailing.
- Net profits were down due to foreign exchange costs, but the company continues to expand to meet the growing demand for discount retailing,
- Kobe is also now building domestic factories to counter exchange rate fluctuations, and a new restaurant and food services arm with big potential to grow its wholesale business.
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