In today’s briefing:
- Asics (7936) | Stepn into the Metaverse
- Tokyo Electron (8035) | Fundamentals Don’t Matter…for Now
- JAPAN ACTIVISM: Silchester Goes After Bk of Iwate – Cheaper Than Chips
- Japan’s Government: About an Article on Wage Disparity Between Men and Women
- Aisin – Low Margins But Volume Is Key
- MatsukiyoCocokara (3088) | Triple Booster of Merger Synergies, Domestic Recovery, & Tourism
Asics (7936) | Stepn into the Metaverse
- Asics reports Q1 results on 11 May – we expect a beat to consensus numbers
- We are bullish on Asics for the long term market share opportunity in China and margin expansion driven by digital
- The rather amazing tie-up with STEPN for NFTs highlights potential new ways to monetise Asics brand value
Tokyo Electron (8035) | Fundamentals Don’t Matter…for Now
- Tokyo Electron reports FY3/22 results on 12 May. We expect the company to meet guidance and analyst expectations
- But the outlook may disappoint. Management may guide FY3/23 more conservatively than analysts who are looking for operating profit to grow 20% to ¥700 bn
- Despite favorable industry conditions and strong outlook for WFE, we think that the stock could continue to de-rate
JAPAN ACTIVISM: Silchester Goes After Bk of Iwate – Cheaper Than Chips
- Silchester has written letters to four Japanese regional banks where they hold large stakes asking for higher dividends and payout ratios. It has proposed a special div AGM agenda item.
- Bank Of Iwate (8345 JP) is nearly 40% held by cross-holders and government-affiliated entities, and Real World Float is less than 50%. Winning at the AGM is tough.
- The collection of banks is mixed. But this one is cheap. Cheap as chips. Or cheaper.
Japan’s Government: About an Article on Wage Disparity Between Men and Women
- The Nikkei Newspaper on April 15 published an article about wage gap between men and women. I would like to discuss this issue, referring to surveys conducted by the government
- The direct cause of this issue is that there is disparity between men and women even among regular employees, and that large percentage of women are employed in non-regular labor.
- Indirect factors can be attributed to the working environment and legal system that tolerates the above. This problem is also connected to issues of human rights and diversity.
Aisin – Low Margins But Volume Is Key
- Aisin’s 4QFY22 was weak on margins with revenue of ¥1,049bn (+3.9% vs. consensus) and OP of ¥43bn (-33.4% vs. consensus).
- Guidance had a similar tone with the company projecting ¥4,450bn in revenue (+2.4% vs. consensus) but OP of ¥190bn (-29.6% vs. consensus) which we think is too conservative.
- While results were disappointing we expect volume growth to be the key catalyst next year and cheap valuations should support strong upside.
MatsukiyoCocokara (3088) | Triple Booster of Merger Synergies, Domestic Recovery, & Tourism
- Merger synergies such as integrated purchasing will result in higher gross margins. A more efficient cost structure and sales synergies will boost the bottom line
- We expect consumption to normalize in Japan as people get used to “living with covid.” Higher foot traffic will drive a resumption of high margin cosmetics
- Inbound travel should be partially normalized this year and we believe the market will quickly price this in once borders reopen. We see 21% upside
Before it’s here, it’s on Smartkarma
