In today’s briefing:
- TSE Announces Market Structure Revisions: Still Much Ado About Nothing
- Softbank – The Credit Suisse Dispute
- TOPIX January 2022 FFW Rebalance – Much Nothing To Do
- TOPIX Inclusion: Net Protections (7383 JP)
- Yaskawa – Peak Out in Sight
- Japan’s Governance: How Far Has Corporate Governance Progressed in 2021(3)
- Nippon Paint Short Targets 917
- MonotaRO (3064): December Sales Announced.
- Torikizoku Holdings (3193): December Sales; Implications of Infection Spread
- Sony – Audio Visual Immersion
TSE Announces Market Structure Revisions: Still Much Ado About Nothing
- Today the TSE announced its long-awaited segmentation of the 3,777 stocks listed on the five major venues, and where they will move on 4 April 2022.
- TSE1 represented just under 98% of Japan’s float market cap as of today’s close. As some TSE1 members will move to TSE Standard, TSE Prime will represent 97+%.
- There are tiny changes to TOPIX because of the moves – roughly 3bp of flow per quarter starting Oct 2022. The FFW Model Revision will be far more interesting.
Softbank – The Credit Suisse Dispute
- The FT reports that Credit Suisse is increasingly aggressive in its dispute with Softbank over the lack of payment of funds to its clients related to Katerra and Greensill.
- Masayoshi Son apparently denies any knowledge of the Katerra deal which Credit Suisse is attempting to refute with documentation from Greensill.
- The flare up with one of its major previous financial partners is telling and the whole episode does not look good for Softbank’s governance image.
TOPIX January 2022 FFW Rebalance – Much Nothing To Do
- The January 2022 FFW rebalance is not very large – about US$225mm a side.
- 30% of the interest is in two names – Net Protections (7383 JP) as an add because of its recent IPO and Oracle Corp Japan (4716 JP) as a sell.
- This event may get overshadowed by the TSE Market Structure revamp announced the same day.
TOPIX Inclusion: Net Protections (7383 JP)
- Japan-Based Buy-Now-Pay-Later (“BNPL”) service provider Net Protections (7383 JP) (“NPH”) was listed in the First Section of the Tokyo Stock Exchange (TSE) on 15th December 2021.
- When a company gets listed on the TSE First Section, it subsequently gets included in the TOPIX Index requiring TOPIX-tracking funds to purchase the stock during an Inclusion Event.
- Usually, this presents interesting trading opportunities to generate sharp market-neutral returns in the space of few trading days. Below is a look at the details for NPH’s Inclusion Event.
Yaskawa – Peak Out in Sight
- Yaskawa’s stock has been broadly flattish since the beginning of 2021 despite an accelerating earnings profile.
- This is largely due to valuations remaining elevated at over 20x EV/EBIT.
- Thus, while we continue to favour the name vs. FA peers we remain cautious.
Japan’s Governance: How Far Has Corporate Governance Progressed in 2021(3)
- This article analyzes how changes in market capitalization correlate with changes in performance and corporate governance ratings.
- Note that the % change in market cap as of December 2020 and December 2021 for 1,704 companies confirms a positive correlation that is more significant with ROA than ROE.
- Companies that improved their Metrical score by 10 ppt or more increased their market capitalization the most, followed by companies that improved Metrical score by 5 ppt to 10 ppt.
Nippon Paint Short Targets 917
- Nippon Paint denotes a series of high conviction bear wedge patterns that will see a new low after gapping below pivotal support.
- Bear wedge break below 1,200 (with a nasty gap) is now sell/short resistance.
- 917 is viable base line support and the zone to prove for a bull cycle turn.
MonotaRO (3064): December Sales Announced.
Parent company sales in December were 16.678bn yen (+20.5% YoY), above the company’s target
The number of new customer acquisitions was 106.5 thousand accounts(-3.8% YoY), below the company’s target.
Jan-Dec cumulative parent sales were 182.467bn yen (+20.2% YoY), 97.7% vs. the full-year guidance of 186.759bn yen (+23.0% YoY)
Torikizoku Holdings (3193): December Sales; Implications of Infection Spread
- December sales data: Recovery continues, but still weaker than non-izakaya restaurants
- The number of stores at the end of December was 615 (unchanged MoM). The number of directly-owned stores was 384 (+1 MoM)
- Possible expansion of areas with shortened business hours requirements
Sony – Audio Visual Immersion
- Sony had some interesting panels at CES 2022 focusing on immersion in entertainment on both the audio and visual fronts.
- Following on from the PSVR2 announcement they help to outline Sony’s roadmap for driving forward entertainment technology.
- And of course there were some links to Epic and Unreal Engine…
Before it’s here, it’s on Smartkarma
