SoftBank shares surge, adds US$14b to market value

TOKYO: SoftBank Group Corp shares jumped 17 per cent yesterday, adding US$14 billion (RM57.03 billion) to the Japanese tech investment giant’s market value, after it unveiled a record share buyback and a surge in quarterly operating profit.

Chief executive officer Masayoshi Son has often complained about SoftBank’s lingering conglomerate discount and is using part of the windfall from the blockbuster listing of its domestic telco to try and reduce the valuation gap.

The buyback “puts a floor under SoftBank stock”, said Jefferies analyst Atul Goyal.

SoftBank shares soared to as much as 9,955 yen (RM368.68), notching up their biggest intraday gain in a decade.

They are up 36 per cent so far this year but still about 14 per cent below the 11,500 yen high hit in September before tumbling on concerns about SoftBank’s financial ties to Saudi Arabia following the murder of Saudi journalist Jamal Khashoggi.

SoftBank said after the market closed on Wednesday it would repurchase up to 600 billion yen (RM22.24 billion) of its stock, funded by the proceeds of the public listing of SoftBank Corp in December last year.

SoftBank Group also announced a 60 per cent jump in third-quarter operating profit, lifted by rising valuations of its growing technology investments.

The company said it offloaded in January its stake in chipmaker Nvidia offsetting most of the recent fall in that tech investment company’s stock price through derivatives contracts.

At an earnings briefing on Wednesday, Son made a 90minute presentation outlining SoftBank’s investment strategy and what he sees as the chronic undervaluation of its shares.

Markets tend to discount conglomerates and reward moves that shift a company towards a more narrow focus, with investors generally viewing smaller companies as more transparent and easier to value.

SoftBank’s market value is currently around 11 trillion yen.

But when its stakes in SoftBank Corp, the Saudi Arabia-backed Vision Fund, chip designer Arm Holdings and others are taken into account, the company’s holdings, net of debt, are worth 21 trillion yen, said Son.