In today’s briefing:
- Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback
- NIFTY50 Index Rebalance Preview: High Probability Add; Impact Higher than the Headline Numbers
- Japan Post Holdings – Silly Guidance And A Not So Silly Buyback
- Kintetsu World Express (9375 JP) Tender Offer by Parent – Too Cheap But Tough To Block
- Brambles (BXB AU): Where Could CVC’s Bid Come In?
- Horiba (6856 JP): Semiconductor Division Leads Upward Revision for FY Dec-22
Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback
- Japan Post Holdings (6178 JP) and its two main components Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP) reported excellent earnings for the year to March 2022…
- ….but not so excellent forecasts for the year to March 2023. Some of that is conservative. Some is “finger-in-the-air”, and some of it is the vagaries of insurance sales accounting.
- But they all pay high dividends and Japan Post Holdings announced a ¥200bn buyback. And remember, there will likely Never Be Another JPH Equity Offering, Ever Again. Ever.
NIFTY50 Index Rebalance Preview: High Probability Add; Impact Higher than the Headline Numbers
- We are past the halfway mark in the review period of the NIFTY Index (NIFTY INDEX) September rebalance. We see one potential change which should be announced end August.
- There is a high probability of Adani Enterprises (ADE IN) being included in the index, while either Shree Cement (SRCM IN) or Hero Motocorp (HMCL IN) will be deleted.
- The impact of passive fund trading on the stocks is high in terms of days of ADV, but very high in terms of delivery volume.
Japan Post Holdings – Silly Guidance And A Not So Silly Buyback
- Japan Post Holdings beat by 1.5% at the revenue line and 1% at the NP line with each of the three major businesses beating guidance slightly.
- Guidance was, as usual, for NP to decline YoY and at ¥400bn was slightly below consensus at ¥428bn.
- The more important news was a buyback for ¥200bn or 7.6% of outstanding shares.
Kintetsu World Express (9375 JP) Tender Offer by Parent – Too Cheap But Tough To Block
- Kintetsu Group Holdings Co L (9041 JP) has announced a Tender Offer to acquire the shares in Kintetsu World Express (9375 JP) that it doesn’t hold (it controls 47%)
- This is not a done deal, but they only need about 20% of the remaining 53%.
- At a 40% premium to last after a great year, this is still being done at the wrong price. But it will likely get done
Brambles (BXB AU): Where Could CVC’s Bid Come In?
- Brambles Ltd (BXB AU) is in preliminary discussions for CVC to acquire all shares in the company. Media speculation indicates the bid would be at an Enterprise Value > A$20bn.
- Brambles Ltd (BXB AU) trades cheaper than its peers and a bid at an EV/EBITDA of 9x would imply a buyout price of A$12.84/share, a 23.1% premium to last close.
- At the last traded price of A$11.58/share, there is upside. Especially if other private equity investors enter the fray. Buy on weakness; hedge market risk with ASX200 futures.
Horiba (6856 JP): Semiconductor Division Leads Upward Revision for FY Dec-22
- Sales of semiconductor equipment are running ahead of guidance. Management now sees a considerably stronger 2H and 19% operating profit growth in FY Dec-22 as a whole.
- In the longer term, Japan – U.S. semiconductor cooperation should benefit Horiba and other companies in the Japanese semiconductor industry.
- Selling at 10.5x new EPS guidance for FY Dec-22. Not meaningfully cheap if a down-cycle is coming, but attractive if it is not imminent and security concerns support demand.
Before it’s here, it’s on Smartkarma
