In today’s briefing:
- Kansai Paint (4613) – Huge Buyback Launched
- Softbank Group – Semiconductor Weakness Expands Discount
- Japanese Companies Targeted by Activist Investors Not Thinking of Cash Allocation, Corporate Value?
- Zenkoku Hosho (7164): Capital and Business Alliance with Shisoushin
Kansai Paint (4613) – Huge Buyback Launched
- Kansai Paint (4613 JP) today announced a very large buyback.
- Given the shareholder structure, the 11.2% buyback may not have the direct market impact that one might think, but there are still ways to play this.
- Kansai Paint starts from a near 5-year low against three of four large competitors. And we have accretion and likely cross-holding unwinding. It’s not a bad story.
Softbank Group – Semiconductor Weakness Expands Discount
- Tech weakness has not only eroded the underlying asset value but raised concerns on leverage and the potential for an ARM IPO. The discount expanded by 4pp in one week
- The timing and pricing of an ARM IPO looks more precarious as the semiconductor sector fell 13% over two days and is now down 34% from all-time highs
- Currency tailwinds have provided some offset with an unprecedented dollar move mimiting downside in Softbank shares to 8% YTD versus a 24% decline for the $-based ADR
Japanese Companies Targeted by Activist Investors Not Thinking of Cash Allocation, Corporate Value?
- I discuss the article with the argument that “Companies that have moved to take drastic shareholder returns in response to activist investors’ proposals have seen their share prices rise conspicuously.
- When the stocks continues to slump and there are no positive factors to be found in a company’s performance, corporate actions such as TOBs and shareholder returns are the focus.
- Companies that move aggressively to shareholder returns only after being proposed by activist investors have’t given much thought to cash allocation, cost of capital, and corporate value (shareholder return) before.
Zenkoku Hosho (7164): Capital and Business Alliance with Shisoushin
- On June 13, Zenkoku Hosho (7164, the company) announced that it would enter into a capital and business alliance with Shikoku Sougou Shinyou (Shisoushin)
- Shisoushin is a guarantee company established as a joint venture of the second-tier regional banks in Shikoku, and is engaged in the business of guaranteeing mortgages and consumer loans
- The company now plans to acquire a 19.5% stake in Shisoushin
Before it’s here, it’s on Smartkarma
