CEO of Japanese telecom giant SoftBank Corp Ken Miyauchi on Friday came welcoming the investment of hedge fund Elliot Investment in its parent organization SoftBank Group Corp. He also appreciated the hedge fund’s assessment of the group’s stock as undervalued.
The activist investor remained building its stake in the tech conglomerate and it has now reached to a control over about 3% of the group’s stock. The management fund is also emphasizing on group to accelerate efforts to make changes in several areas to increase the stock’s value, especially the efforts like share buybacks and to make its corporate governance more strong.
Elliott’s consideration that the SoftBank Group’s valuation is on the lower side, is currently a positive indicator for the company, said Miyauchi. However, about the corporate governance in the telecom unit of the group he has been heading, Miyauchi thinks that it is already strong.
After report of the Elliott investment counting the company’s stock as undervalued, SoftBank’s stock saw an uptrend on Friday and closed the day at 7% higher.
The “positive” comments by Elliott came after reporting of beating third quarter results by SoftBank Corp with an increase of 15% in operating profit that came on the heels of its mobile business.
The beating results also encouraged the company to raise its operating profit forecast for full year 2020. SoftBank increased the forecasted amount from 890 billion yen to 900 billion yen ($8.2 billion).
In the quarter ended December 2019, SoftBank Corp posted operating profit of 243 billion yen which came higher than year earlier operating profit of 211 billion yen, and that also beat analysts’ average forecast of 240 billion yen.
SoftBank Corp is the number three telecom company in Japan and SoftBank Group Corp hold 67% of the stake. The telecom giant has committed to pay the investors out 85% of its net income in shape of dividends, which made it a favorite stock of retails investors in the country who are already yield-hungry.