D&M Holdings Gets a Boost from Daiwa, But Shares Muted


Haven’t heard of D&M Holdings? Well, then maybe you’ve heard of D&M’s premium audio brands: McIntosh, Marantz, Denon, Boston Acoustics and more!

D&M trades on the Tokyo Exchange, TOPIX-1: 6735.

Shares of D&M surged 14% to Y407 intra-day Monday on a Daiwa Institute of Research upgrade to a “1” from a “2” with a target share price of Y600. Continue reading

Volkswagen To Delist from Tokyo Stock Exchange; And Then There Were 25


Volkswagen has applied to delist from the Tokyo Stock Exchange, citing low trading volume and its plans to also delist from some European exchanges. This continues the TSE’s trend of losing (and not being able to replace, at least for the time being) overseas listings. There will now be only 25 foreign companies listed on the TSE. 1991 was the peak year for overseas listings when there were over 100. Among the remaining American firms with listings the last time I checked are AFLAC, AIG, Bank of America, Boeing, Dow Chemical, JP Morgan Chase and Merrill Lynch.

Next January, the Tokyo Stock Exchange will actually gain a new listing, as Citigroup plans to list shares as part of its broader Japan expansion strategy in conjunction with its acquisition of Nikko Cordial. In fact, Citi is planning a share exchange for the remaining 32% stake of Nikko Cordial that it doesn’t already own, in effect making it the first company to take part in a triangular merger, an acquisition method which has only been allowed since May of this year. Now that Citi has broken the ice, there’s speculation more triangular mergers are on the horizon.

‘Gaijin at the Gates’ Revisited for Weekend Reading


Breaking Open Japan, by George Feifer was recommended for weekend and October reading in a post on Friday. Figured it’s worth posting some modern data as food for thought from an Economist article published over the summer.

A few stats for you from the Aug. 18 edition of The Economist’s article entitled “Gaijin at the gates”:

  • Japan’s inward FDI doubled between 2000 – 2005, but amounts to only 2.4% of national output vs. 15% in the US and 30% – 40% for Germany, France and Britain.
  • The % of sales from affiliates of foreign firms in Japan is significantly lower (manuf. and services <5%) than comparisons to the above countries (manuf. >10%, services upper-single-digits and higher), as well as The Netherlands (double-digit readings above 30% and 20%), which has the highest amounts for all in an Economist chart sourcing the OECD.

So why is it important that Japan, which already has excess capital, seek more FDI? Nobuyuki Nagashima of JETRO, says, “It is important that we have more players in the Japanese economy, with new ideas and new business models.” One example cited by The Economist is Wal-Mart’s continued investment in Seiyu, despite the latter’s poor operating performance.

Also see, “U.K. Journalists Explain Globalization to Japan“.

Two Books for the Weekend and Rest of October


Just picked up the following books:

The China Fantasy: How Our Leaders Explain Away Chinese Repression, by James Mann

Breaking Open Japan, by George Feifer

The book on China is short, about 110 pages, but is worth the read for the perspective, especially if you consume a lot of U.S.-based news.

Haven’t started the book on Commodore Perry and American imperialism, but what better time than now to read a new book on one of the most important periods in Japan’s history.

Check out other books on Japan and also about investing.

Fukuda To Replace Abe


Markets were closed in Japan Monday for a national holiday. The big news for the moment is the election of Yasuo Fukuda to replace Shinzo Abe as prime minister. Below is an abstract from FT Alphaville’s 6am Cut. There were only two choices, so no chance of a real surprise, thus the market reaction is likely neutral to slightly bullish, just because Abe is out of the picture. However, the underlying economic and political problems don’t go away so easily and instead continue to loom over equities. Not to mention the external worries, such as the impact of the U.S. economy (subprime, real estate, consumer credit and spending) on exporters.

Yasuo Fukuda will succeed Shinzo Abe as Japan’s prime minister following his election Sunday as president of the ruling LDP. The party is hoping that the moderate conservative, the first prime minister whose father was also premier, can distance the party from a disastrous year under Mr Abe and rescue its electoral credibility. Mr Fukuda, 71, is due to be installed as prime minister following a vote in Japan’s parliament Tuesday.

Starbucks Japan vs. McDonald’s Japan Hldg Year-to-date, 1-year; McCafe Reportedly Boosts Mac’s August Sales


Below are two stock charts, of Starbucks Japan [?????????????????] (JP: 2717) versus McDonald’s Japan Hldg [????????????????] (JP: 2702) over the calendar year and one-year period. Starbucks had a nice run up over the past 52-weeks, but is in negative territory when looking at a year-to-date chart. McDonald’s has been mostly range bound, seemingly not moving more than 10% total in either direction. As of Friday’s close (9/7), Starbucks Japan was trading at 29.7 times trailing earnings vs. nearly 171x for McDonald’s Japan. On a forward basis, Starbucks is trading at around 23x earnings (yr-end 3/2008) vs. McDonald’s at about 59x (yr-end 12/2007). As for price-to-book, 3.0x for Starbucks and 2.1x for McDonald’s. They both have a pretty high level of shareholders’ equity ratio at 62% for Starbucks and 67% for McDonald’s. However, return on equity [ROE] is much higher at Starbucks, 10.75% vs. 1.2% at Starbucks. McDonald’s has a US$ equivalent market cap of about $2.3 billion vs. $655 million for Starbucks. Note McDonald’s Japan reported its best monthly sales ever in August, Y46.4 billion ($410M), +11.3% year-over-year, helped reportedly by sales of “limited time only” products like ?????, offering more 24-hours stores, and the August 29th opening of 15 McCafe (??????) stores. Click below for charts.

Continue reading

Farewell Edward Seidensticker


Edward George Seidensticker passed away at the age of 86 on August 26 in Tokyo. It is important for all of us with a connection to Japan to not forget the meaningful work of Seidensticker. The New York Times has a pretty detailed obituary of Seidensticker. He is best known for his translation of Murasaki Shikibu’s Genji Monogatari (????). In addition, Seidensticker has translated works of some of the most important 20th century Japanese writers, including, Yasunari Kawabata, Yukio Mishima and Junichiro Tanizaki. For a list of the works, see the NY Times or his Wikipedia entry. It is very fitting that Seidensticker’s last Japanese-to-English translation-related work is associated with a Buddhism-inspired piece entitled, “You Were Born for a Reason: The Real Purpose of Life“?(Japanese title: ?????).