Hitachi to wholly own 5 listed subsidiaries

Hitachi plans to increase its holdings in five listed companies, up to 100%, by spending Y300bn on TOB. Five subsidiaries are Hitachi Maxell (6810), Hitachi Plant Tech (1970), Hitachi Info Sys (9741), Hitachi Software Eng (9694) and Hitachi System and Service (3735).
Hitachi reported $8bn net loss in FY3/09, a record for Japanese manufacturer, and is accelerating the group restructuring; but still holds 16 listed subsidiaries (incl. above) of its 943 consolidated companies.

Parent-child listing is a notorious Japanese system, and given the inefficiency under the economic slowdown and some changes they are going to face in the new accounting standards, there might be some other groups to follow Hitachi’s strategy. –A change, not from a corporate governance point of view though..

Biggest challenge, convergence to IFRS

Attending the EFFAS conference, the most impressive subject was the global convergence to the IFRS, or International Financial Reporting Standard.
It was shocking to see the world map with the countries started/starting to report in this criteria colored, leaving out Japan, US and few other countries.

One of the major changes will be the "comprehensive income" instead of net income, adding minority interest, forex adjustment, pension liability, shareholding profits/losses and derivatives profits/losses to the net income. The new approach will be based on B/S items.
According to some reports, if the forex and stock market stays at the current level, some of the large caps such as Toyota, Panasonic and Mitsui could lose it's "income" by Y400-900bn, mainly due to forex matter, while Toyoda Industry could also suffer from shareholding, as an owner of Toyota Motors.

The convergence will take place by June 2011, arbitrary from 2010, and could be mandatory from 2015-2016 for the Japanese companies.
I would like to follow this topic from now on.

Buying back White Elephants to boost economy

A few of leading Japanese retailers started offering "Trade-In" guarantees to encourage new consumption. These are relatively high end consumer goods, such as household appliances, digital cameras, dresses.

By guaranteeing the trade-in, even for broken used goods, the merchants hope to give consumers confidence to purchase new high-end goods.

One study says these trade-ins created an additional two trillion yen consumer market.

For example, a home electronics retailer Big Camera guarantees to buy back 20 items even if they no longer work.

http://www.biccamera.co.jp/shopguide/campaign/teigakushitadori/index.html

Odakyu Dept Store gives a 1000 yen ticket for worn out shoes purchased from the retailer, which then can be applied toward a purchase of a new pair of shoes priced over 5,000 yen.

For more information (in Japanese), see below:
http://www.j-cast.com/2009/04/09039201.html

EFFAS Summer School

Aska will participate in this program from tomorrow, held at Santandar near Madrid.
http://www.saa.or.jp/curriculum/ciia/pdf/EFFAS_SummerSchool09.pdf
If any of you happen to be there, please let me know!
I will be back on 13th Monday.
If you need urgent help from Alba Partners, please contact toko.sakuta@alba-partners.com or chako@alba-partners.com.

Renovations boom, negative impact to general contractors?

New condo sales was 12,180 last month while second hand condos sold 13,340. Japanese people used to prefer living in new houses and condos, but the trend seems to be changing. These old condos are renovated by the real estate developers or sometimes by the buyers. When the developers renovate, some started to issue an “evidence” to proof the safety and cleanliness of the used-houses, which is probably stimulating the demand.
Quite contrary, general contractors, or the Japanese construction companies are suffering a sharp decline in orders for 7 consecutive months. May orders of top 50 general contractors were -41.9% yoy.
If people do not buy new houses/condos and are shifting to the used market, the competitive landscape of the construction industry will change.