Pasona: Odd Man Out In Set-Up Trade

The Pasona Group (2168 JP) story is not new - but worth repeating.

Pasona owns ~51% of Benefit One Inc (2412 JP) valued at ¥190bn, exceeding the market capitalisation of Pasona by 197%. The NAV discount and the implied negative stub have never been larger.

Benefit One's profit continues to grow, in stark contrast to flat to retracing earnings at the remaining unlisted operations. Management has guided an approach to improving underlying profits. Those efforts continue to fall short of expectations.

The simplest and easiest fix is to divest unrelated, non-core, loss-making unlisted operations. For the remaining unlisted segments, forward guidance as to profit forecasts, sustainability, KPIs and/or even budgets thereon would all be welcomed by investors as measures towards clarifying management's long-term vision. They would facilitate narrowing of the discount.

Until a concerted effort is made along these lines, Pasona is cheap. And will remain cheap. But at this extreme discount to NAV levels, I'd get involved.