In today’s briefing:
- MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day
- Bank of Kyoto (8369) Surprises With a Cross-Holding Sale Plan (Albeit Small)
- About an Article on TSE Reorganization
- Otsuka Holdings (4578 JP) 1Q22: Global Products Continued Double-Digit Revenue Growth
- Fast Fitness Japan (7092): Confusion over Election of Directors
MSCI Japan Index Rebalance: Short Build Up Continues as We Near Implementation Day
- There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there was large short buildup prior to announcement of the changes.
- Shorts have continued to increase to increase over the last week and there could be a reversal over the next few days as shorts start to cover.
- Buying the deletions in the next few days and hedging with Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) futures could provide superior risk adjusted returns.
Bank of Kyoto (8369) Surprises With a Cross-Holding Sale Plan (Albeit Small)
- Bank of Kyoto (8369 JP) has been the poster child for “deep value” Japan traders and occasional wannabe activists. It has a huge equity portfolio which dwarfs market cap.
- Every year, twice a year (end of May and early December) Bank of Kyoto (8369 JP) releases a document for a meeting with analysts and press called Information Meeting.
- This year’s is a little different in that it proposes sales of 10% of its equity portfolio. It’s “small” but worth thinking about.
About an Article on TSE Reorganization
- I discussed the points of the Nikkei article on the prime market created by the TSE’s market reorganization.
- Looking at the prime market as a whole, it is not significantly different from the TSE 1st Section. However, there were aspects where individual companies made progress in their efforts.
- Since prime market has companies with small market capitalizations and depressed valuations, it is desirable to discuss increasing the quality companies that enhance profitability, growth potential and corporate governance.
Otsuka Holdings (4578 JP) 1Q22: Global Products Continued Double-Digit Revenue Growth
- Otsuka Holdings (4578 JP) started 2022 on a strong note, with 13% y/y revenue growth in Q1. Growth was driven by four global products, which contributed 36% of total revenue.
- Otsuka has terminated its global license agreements with Akebia Therapeutics related to vadadustat for the treatment of renal anemia and recorded an impairment loss of ¥24 billion.
- Despite the impairment losses related to vadadustat, Otsuka reiterated 2022 guidance and expects double-digit growth in operating and net profits.
Fast Fitness Japan (7092): Confusion over Election of Directors
- Fast Fitness Japan announced that 1) on April 25, it had received a letter from three of its major shareholders jointly proposing the election of directors and 2) on May 23, the company’s board of directors decided to oppose the shareholder proposal
- The shareholder proposal was submitted in response to the board’s April 14 decision regarding director candidates
- Despite the company’s solid fundamentals, such disruption in the governing structure could be an additional risk factor for the stock price in the near term
Before it’s here, it’s on Smartkarma
