This Week’s Most Interesting Stories
More Corporate Action
Deal activity picked up in the second half of last year, after the pandemic put a temporary pause on corporate deal making. Bankers are expecting that surge to continue into 2021 as more companies look to shore up balance sheets and offload non core assets. Corporate Governance pressures are also forcing companies to re-evaluate their parent-child structures and cross-shareholdings. Small caps stocks in particular, could benefit from such corporate actions, given such low valuations. Let’s not forget the activists that went easy on boards last year, are likely to want to get things moving too.
Read More - Japan Times
Blowing in the (offshore) Wind
It’s been a long wait for the offshore wind market to finally take off in Japan. But with Japan’s pledge to become carbon neutral by the middle of the Century, offshore wind is a key part of the government’s renewable strategy. Good news then, that the first Dutch windmills (well monopiles to be precise) have just arrived in Japan to be erected at Akita. The 33 turbines will generate 139MW of power….a small but significant step in the right direction.
Read More - OffShore Wind
Next Generation Leadership
Investors have long complained about corporate Japan’s aged and entrenched boards. Boards that have worked together their entire careers, are likely drinking or golf buddies, and less likely to be critical of poor CEO performance. Older, less diverse boards, generally have lower returns, margins and growth. With Recruit promoting a 45-year old to the top job, investors may reap the benefits of this generational shift.
Read More - Nikkei Asia
Self-Checkout
While I quite like waiting in line and having my shopping carefully packed in reams of plastic, it seems that Aeon supermarket’s shoppers will soon be doing all of that for themselves. Japan has until now been slow to embrace digitalization, but a severe lack of manpower is making this an urgent issue for retailers. DX will continue to be a major market driver this year.
Read More - Nikkei Asia
ESG Investing…Divine intervention
ESG investing is all of the rage these days. ETF behemoth, Blackrock has put sustainability at the core of its investment strategy. So too have Japan’s priests and monks. Low interest rates, persistent declines in membership of religious groups, and pandemic lockdowns have all combined to deprive temples and shrines of donations for funding their upkeep. Not surprisingly, higher interest rates on 40-year social bonds are as appealing to Buddhists as they are to Larry Fink.
Read More - Japan Times
Japanese Small Cap Movers
🔺+32% Wantedly (3991), the SaaS professional networking stock rose 32% as it reported 1Q FY8/21 Operating profit of ¥220m, +280% YoY, almost reaching the full year target of ¥250m. Strong earnings growth driven by customer acquisition, low churn, and ARPA improvements, as well lower advertising expenses
🔺 +25% Sansan (4443), the business card digitization platform provider rose 25% this week on two positive events. Firstly, the company reported 2Q operating profit of ¥493m versus a loss of ¥139m last year. This was driven by strong growth in the mainstay Sansan card digitization business and lower losses in the mobile app, Eight. The newly launched online invoice service, Bill One, saw a 10x growth in subscribers. The second event was the announcement of inclusion into the Tokyo Stock Exchange 1st Section.
🔺 +23% Vector Inc (6058), the Public Relations firm reported strong 3Q profit of ¥1.4b, +62% YoY. There was a strong recovery in the PR business, Press Releases, and Direct Marketing.
🔺 +16% Rorze (6323), the leader in ultra clean wafer substrate handling solutions rose 16% after chip giant Taiwan Semiconductor Manufacturing Company targeted capital spending of $25 billion to $28 billion for 2021, up from $17 billion last year.