Daily BriefsJapan

Japan: NTT (Nippon Telegraph & Telephone), Appier Group Inc, Denso Corp, Canon Inc, Kura Sushi Inc, Skylark Co Ltd, Zenkoku Hosho and more

In today’s briefing:

  • NTT and NTT Data Reshuffle the Deckchairs and Everyone “Wins”
  • Appier – Explosive US Growth
  • NTT (Buy) – An Exciting Day for Data but Not Much Has Changed
  • Denso – Strong Overshoot Potential And Only Modest Execution Risk
  • Canon (7751) – Buyback Looks Small But Shareholder Structure Matters
  • Kura Sushi (2695): Detective Conan in April, Dragon Ball in May
  • Skylark Holdings (3197): April Sales on an Improving Trend; Over 1,000 Robots in Operation
  • Zenkoku Hosho (7164): FY3/22 OP Achieved Guidance, but Not Strong Enough; Credit Costs Remain Low

NTT and NTT Data Reshuffle the Deckchairs and Everyone “Wins”

By Travis Lundy

  • NTT (Nippon Telegraph & Telephone) (9432 JP) and NTT Data Corp (9613 JP) this morning announced a 1pm joint presser. Imaginations ran wild and NTT went up 12+%.
  • The reality is more subdued (as it should have been for a during-market-hours-presser) and it involves a restructuring of a small NTT subsidiary which happens to own NTT Data shares.
  • But it is still positive. It is something of a win-win for both parties.

Appier – Explosive US Growth

By Mio Kato

  • When we reviewed Appier’s 2021 results we rambled on about the US for about half of our note discussing explosive growth potential. 
  • We said that while Appier touted a >50% QoQ growth rate in the US we suspected it was actually closer to 100%. 
  • In 1Q it accelerated to >180% QoQ growth prompting the sell side to go all surprised Pikachu.

NTT (Buy) – An Exciting Day for Data but Not Much Has Changed

By Kirk Boodry

  • NTT and NTT Data will reorganize overseas assets into a new operating company run through NTT Data
  • The transaction results in little change for consolidated results at NTT Group although segment reporting may change and it will buy up to ¥100bn more of NTT Data
  • Restructuring could help unlock the potential of Dimension Data which has been a consistent laggard since NTT acquired it in FY11

Denso – Strong Overshoot Potential And Only Modest Execution Risk

By Mio Kato

  • Denso 4QFY22 revenue was strong at ¥1,506bn (+4.8% vs. consensus) but increases in raw material prices resulted in OP of just ¥85bn (-31.8% vs. consensus). 
  • The company’s FY23 guidance was conservative projecting just ¥6,350bn (+2.2% vs. consensus at +15.1% YoY) but OP guidance was for ¥560bn (+5.3% vs. consensus).  
  • We expect volume to grow further and the depreciating Yen should favourably impact ASPs next year.

Canon (7751) – Buyback Looks Small But Shareholder Structure Matters

By Travis Lundy

  • Canon Inc (7751 JP) on Monday announced a share buyback programme.
  • It isn’t very big. But it bears consideration because of other things going on. 
  • Shareholder structure is of much more importance than many investors appreciate. Here even more so.

Kura Sushi (2695): Detective Conan in April, Dragon Ball in May

By Mita Securities

  • Same-store sales were in line with the pre-pandemic levels, and our impression is neutral.
  • Same-store sales of other revolving sushi formats in April (compared to April 2021 and April 2019) were 105.3% and 104.2% for Sushiro (Food & Life Companies), 108.4% and 94.5% for Genki Sushi, and 103.7% and 87.1% for Kappa Sushi, respectively.
  • The number of stores at the end of April was 512 in Japan (+2MoM), 37 in the U.S. (+/-0 MoM), and 45 in Taiwan (+/-0 MoM)

Skylark Holdings (3197): April Sales on an Improving Trend; Over 1,000 Robots in Operation

By Mita Securities

  • Skylark Holdings (3197, the company) disclosed monthly data for April (on a preliminary basis). All of its restaurants resumed normal operations on March 22
  • April same-store sales were significantly higher than in April 2021. Although the sales are still weaker than the pre-pandemic levels, the situation has been improving.
  • Same-store sales were 110.6% vs. April 2021 (99.0% for March), 182.0% vs. April 2020 (92.8% for March), and 77.4% vs. April 2019 (71.0% for March)

Zenkoku Hosho (7164): FY3/22 OP Achieved Guidance, but Not Strong Enough; Credit Costs Remain Low

By Mita Securities

  • Compared to our forecast, operating revenue and the number of new guarantees executed were lower. On the other hand, credit-related expenses were lower than our assumption
  • The company’s OP guidance for FY3/23 is 40.970bn yen (+3.8% YoY), more conservative than our forecast of 43.137bn yen and the QUICK consensus forecast of 43.653bn yen
  • The company disclosed that it purchased two RMBS, etc. in FY3/22. The total amount of the underlying assets was 60bn yen.

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