SoftBank to Benefit from Sprint T-Mobile Merger if It Goes Ahead; FVE Increased to JPY 12,300

Softbank's Pivot from Telecoms Gains Momentum

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

Equity Bottom-Up

Historically, SoftBank's NAV discount has been one of the largest in the world. There were many explanations for this, from tax treatment issues to the firm's debt position, but the most often cited explanation was the firm's investment in Alibaba. Following its IPO, Alibaba represented a massive chunk of the net asset value of SoftBank, but it was also a highly divisive stock and opinions polarized as to whether Alibaba's shares were headed higher or lower. The result was that for many global investors, SoftBank became a non-trade. If you liked Alibaba's stock, you bought Alibaba, if you didn't, there was no point in owning SoftBank.
This pattern resulted in SoftBank shares going up when Alibaba went up, just not by enough to match the increase in net asset value, and therefore allowing the Holdco discount to widen. So when Alibaba's shares started heading south, it was naturally assumed that SoftBank shares would follow suit, albeit at a safe distance.
This they did for a bit, but then stopped and reversed. While Alibaba shares continued lower, as Washington threatened China with ever more tariffs, SoftBank shares broke above ¥10,000 for the first time since November, and - just short of ¥11,000 - they are at their highest level since the Dot Com Bubble.
This report looks at what has changed and whether we can expect the discount to continue to narrow, or once again, widen.

Historically, SoftBank's NAV discount has been one of the largest in the world. There were many explanations for this, from tax treatment issues to the firm's debt position, but the most often cited explanation was the firm's investment in Alibaba. Following its IPO, Alibaba represented a massive chunk of the net asset value of SoftBank, but it was also a highly divisive stock and opinions polarized as to whether Alibaba's shares were headed higher or lower. The result was that for many global investors, SoftBank became a non-trade. If you liked Alibaba's stock, you bought Alibaba, if you didn't, there was no point in owning SoftBank.
This pattern resulted in SoftBank shares going up when Alibaba went up, just not by enough to match the increase in net asset value, and therefore allowing the Holdco discount to widen. So when Alibaba's shares started heading south, it was naturally assumed that SoftBank shares would follow suit, albeit at a safe distance.
This they did for a bit, but then stopped and reversed. While Alibaba shares continued lower, as Washington threatened China with ever more tariffs, SoftBank shares broke above ¥10,000 for the first time since November, and - just short of ¥11,000 - they are at their highest level since the Dot Com Bubble.
This report looks at what has changed and whether we can expect the discount to continue to narrow, or once again, widen.

Why SoftBank's (9984 JP) Holdco Discount Is Narrowing

Softbank Group

Why SoftBank's (9984 JP) Holdco Discount Is Narrowing