3 Things About SoftBank Corporation

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3 Things About SoftBank Corporation

SoftBank Corporation owns and operates a collection of Internet and Wireless Telecommunication businesses. Furthermore, the Chairman & CEO Masayoshi Son has proven his skills as an capital allocator and innovator. Going forward, SoftBank has announced to reorganise its corporate structure into two distinct wholly owned subsidiaries – one for its domestic business, one for its international business. This restructuring would require approval from shareholders, but the board is confident it will be completed by 31 December 2016.

Masayoshi Son’s Investment Track Record

Looking at Chairman & CEO Masayoshi Son’s investment track record, it is definitely one that deserves recognition. Prior to the company entering the wireless business, Masayoshi Son was able to convince the late Steve Jobs to provide SoftBank iPhone exclusivity. Furthermore, some other notable investment successes accomplished by Masayoshi Son were Yahoo Japan, Alibaba Group and Vodafone Japan otherwise now known as SoftBank Mobile.

In the following charts, we are able to see how Masayoshi Son turned an accumulated investment of JPY 387.7bn into JPY 11tn 669.9bn, translating to an IRR of 45%, which is a return of 30x over an average span of 9.5 years.

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REITChilton Capital's REIT Composite was up 6.1% last month, compared to the MSCI U.S. REIT Index, which gained 4.4%. Year to date, Chilton is up 6.3% net and 6.5% gross, compared to the index's 8.8% return. The firm met virtually with almost 40 real estate investment trusts last month and released the highlights of those Read More


SoftBank Corporation
SoftBank Corporation

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Turnaround of Sprint Corp

Prior to SoftBank’s acquisition of Sprint Corp, the company had been on a path of destruction due to past management mistakes such as poor workforce management, network integration and customer experience. Some examples were like its merger with Nextel Communications in 2005 – the user of the now defunct iDEN technology, decommissioning the iDEN network which resulted in disruptions for its subscribers and making a renegade decision to deploy WiMAX standard instead of focusing on global standard of LTE which set the company back several years.

From the recent Sprint’s turnaround initiatives, we are able to see an increase in cumulative subscriber numbers, post-paid phone ARPU and post-paid churn rates. Furthermore, they have reported that they had been able to achieve targeted cost reductions and liquidity improvements.

However, while things may be looking rosy for Sprint Corp in the short run, we foresee greater problems in the longer run. The company has USD30.4bn in debt and of which a lot of it is coming due in the next few years. USD2.3bn in 2016, USD2.3bn in 2017 and USD3.0bn in 2018. While Sprint is trying to shore up its cash position, it is slightly just above USD2.0bn based on 3Q2016 results. Furthermore, asides from debt obligations, the company is spending a huge amount of money on capital expenditures to improve the company’s infrastructure.

SoftBank Corporation – Alibaba Group: The Crown Jewel

Part of SoftBank Corp’s investments consists of a 32.6% stake in Alibaba Group. They made the investment during the pre-ipo stage, exchanging JPY10.5bn for 32.6% of Alibaba Group. Not much introduction should be required for the company, given that it is the largest e-commerce company in the world today with an unparalleled competitive position of ~80% market share. With the Chinese e-commerce market still in its early days, we see much growth potential for Alibaba group going forward.

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As seen from the chart above, the data from CLSA, iResearch and US Department of Commerce, we see total China online retail GMV overtaking total US online retail GMV in 2013. SoftBank Corporation

Furthermore, comparing the online retail scene between China and USA, we can see that the online scene in China is growing at a much faster pace as compared to that of USA.

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I developed my passion for investment management especially equity research at a relatively young age. My investment journey began when I was 20, at a point in time where markets were still recovering from the Global Financial Crisis. My portfolio started from money I saved over the past years and through working during the holidays. I was fortunate to have a good friend with common investing mentality to began my journey towards value investing. To date, we still research and invest in companies together, discussing valuations and potential risks of a company. To date, I manage a fund with a value investing style. Positions are decided upon via a bottom-up approach or smart speculation (a term I came up with when buying a stock for quick profit due to a mismatch in prices in the market due to takeovers/selling of a subsidiary or associate). Apart from managing my own portfolio, I enjoy sharing my research with family and friends, seeking their opinions and views towards the stock. Reading Economics in London, I constantly keep up with the financial news in Singapore & Hong Kong. Despite my busy schedule, it has not stopped me from enjoying other aspects of life. I enjoy a variety of activities in whatever free time I may have – endurance running, marathons, traveling, fine dining, whiskey appreciation, fashion. Lastly, I enjoy meeting new people, discussing ideas and gaining new perspectives towards issues in the world.

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