Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

Environment, Social and Governance research

Hitachi Construction Machinery Co., Ltd. develops, manufactures, sells, and repairs construction machinery. The Company's products include hydraulic excavators, crawler cranes, wheel loaders, shield machines, and bulldozers. Hitachi Construction Machinery, a subsidiary of Hitachi, Ltd., markets its products worldwide through sales offices overseas.

<ul>
<li>Employment increased ahead of April’s jobs tax hike, and vacancies since then stayed high. Hours have also recovered despite depressed self-employment levels.</li>
<li>Firms appear to be focusing on retention, with bonus payments surging while regular pay growth slows. Nonetheless, wage settlements have been their highest since 2008.</li>
<li>This combination of rising wage deals and falling unemployment looks to be around a cyclical peak in underlying inflation pressures, probably pushing the BoE to hike in June.</li>
</ul>

Phil Rush

Chief Economist

<ul>
<li>Ong Choo Eng and his son Ong Eng Yaw, together with Roswell Assets, Dymon Asia Private Equity, and Crytalic Star have launched a voluntary Offer for <strong><a href="https://www.smartkarma.com/entities/hwa-hong-corp-ltd" target="_blank" data-smartkarma-citation="entities:6648:1" rel="noopener">Hwa Hong (HWAH SP)</a></strong>.</li>
<li>The S$0.37/share Offer is a nine-year high and a 27.6% premium to last close. It has not been declared final. </li>
<li>However, it appears not all of the founding members of the company are on the same page. The family fissure became public after the last independent director resigned this month. </li>
</ul>

David Blennerhassett

Pan-Asia Catalysts/Events

<ul>
<li>SMC 4QFY22 was in-line with consensus revenue estimates at ¥185bn, but missed at the OP level with ¥52.7bn (10% below consensus) in a now familiar pattern for the sector. </li>
<li>The company’s FY23 guidance was strong projecting revenue of ¥805bn (+4.5% vs. consensus) and OP of ¥265bn (+6.9% vs. consensus). </li>
<li>The problem is that this ignores the typical cyclicality for the company and we believe OP will in fact be down YoY.</li>
</ul>

Mio Kato

Japan/Asia Long-Short

<ul>
<li>The convenience store sector returned to growth last year but the outlook remains uncertain.</li>
<li>The big 3 chains still have a way to go to adjust to a new era of slower growth and the need for new ideas.</li>
<li>Even with new ideas on merchandising and services, the CVS sector remains saturated and the only real growth is overseas or in other formats.</li>
</ul>

Michael Causton

Japan Retail and Consumer Specialist

<ul>
<li>Aeon has finally published numbers on its e-commerce growth and performance.</li>
<li>It has a ¥1 trillion target for FY2025 and while this is still a far off target, Aeon is making progress. </li>
<li>Digital sales have doubled in the past two years and Aeon is now well ahead of Seven &amp; I which continues to fail to present a coherent e-commerce plan.</li>
</ul>

<ul>
<li>More important than the continuity of the Hitachi brand is how HCM can increase the competitive advantage of its products and how quickly it can respond to changes in market.</li>
<li>Changes in major shareholders and the presence of major shareholders have been shown to have statistically significant correlations in ROA, Tobin's q (and changes in market capitalization).</li>
<li>The existence of the Ownership factor doesn’t necessarily predict the future of HCM, but in construction equipment market with strong competition, having a reliable partner is encouraging in business decisions.</li>
</ul>

Aki Matsumoto

Executive Director

<ul>
<li>There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there is large short buildup on quite a few of the stocks.</li>
<li>Over the last month, the largest increase in shorts as a percentage of passive selling was on <a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc</a>, <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku</a>, <a href="https://www.smartkarma.com/entities/tokyo-century-corp" target="_blank" data-smartkarma-citation="entities:8053:1" rel="noopener">Tokyo Century Corp</a>, <a href="https://www.smartkarma.com/entities/sohgo-security-services-co" target="_blank" data-smartkarma-citation="entities:14181:1" rel="noopener">Sohgo Security Services</a>, <a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis Holdings</a>.</li>
<li>The deletions have underperformed the TOPIX by 22% over the last 6 months and by 10% over the last two months. Position for a bounce post implementation.</li>
</ul>

Brian Freitas

Pan-Asia Index Rebalances/Events/Delta One

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tabcorp-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6837:1" rel="noopener">Tabcorp Ltd (TAH AU)</a> will soon spin out its Lottery and Keno business, to be called <a href="https://www.smartkarma.com/entities/the-lottery-corporation-limited" target="_blank" data-smartkarma-citation="entities:35970:1" rel="noopener">The Lottery Corp (TLC AU)</a>. TAH shares go ex-TLC on 24 May.  </li>
<li>The question is where do they trade. What is in the price? What is not? What are the potential index implications?</li>
<li>This insight provides a grid of index implications and pro-forma valuations (EV/EBITDA, PER, Dividend Yield) for each and both and the combined entity.</li>
</ul>

Travis Lundy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/faith-inc" target="_blank" data-smartkarma-citation="entities:14455:1" rel="noopener">Faith Inc (4295 JP)</a> is a very smallcap contents management and platform business. As a business, one could give it a miss forever, but it is cash-rich. </li>
<li>The company is doing a very large buyback, and for someone who decided they'd be interested, there is a large block for sale. </li>
<li>The thing is... one would have to act quickly and aggressively.</li>
</ul>

<ul>
<li>KDIC is looking to sell around half of its remaining stake in Woori Financial Group (WFG).</li>
<li>This is almost a clean-up trade considering that KDIC had a stake of nearly 18% at the start of 2021 and will now be reduced to a less than 2%.</li>
<li>In this note, we will run the deal through our ECM framework.</li>
</ul>

Sumeet Singh

Head of Research, IPOs & Placements

<ul>
<li>The local media have mentioned that nearly 200,000 people in Korea have invested in Terra (Luna) and TerraUSD.</li>
<li>The combined market caps of Luna and TerraUSD at their peaks were nearly $60 billion and nearly $57.4 billion has been wiped out in the past week.</li>
<li>Consequently, in the coming weeks there could be some domino effect of people in Korea that have borrowed money to invest in these risky cryptos selling other assets.</li>
</ul>

Hitachi Construction Machinery

Japan's Governance: Hitachi Construction Machinery: Additional Notes and Ownership Factor