From $5.5 Billion to $17 Billion, Softbank Soars as Masayoshi Son Makes Biggest Ever Buyback

Tokyo: SoftBank Group Corp shares jumped 17 percent on Thursday, adding $14 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 Masayoshi Son has often complained about SoftBank's lingering conglomerate discount and is using part of the windfall from the blockbuster IPO of its domestic telco to try and reduce the valuation gap.

The buyback "puts a floor under SoftBank stock", Jefferies analyst Atul Goyal wrote in a note.

SoftBank shares soared to as much as 9,955 yen, notching up their biggest intra-day gain in a decade.

They are up 36 percent so far this year but still about 14 percent 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 ($5.46 billion) of its stock, funded by the proceeds of the December IPO of SoftBank Corp.

"There was no consensus over how to value SoftBank," said Ace Securities analyst Hideki Yasuda.

Following the IPO, the group "is more like an investment trust and is becoming easier to understand," Yasuda said.

SoftBank Group Corp also announced a 60 percent 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, which has been hit by weak demand for gaming chips in China, offsetting most of the recent fall in that company's stock price through derivatives contracts.

At an earnings briefing on Wednesday Son made a 90-minute 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 ($100.10 billion). But when its stakes in SoftBank Corp, the Saudi-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, Son said.

Analysts say SoftBank would likely struggle to offload its large stake in companies like Yahoo Japan without pushing down the stock price and a sale of its stake in Alibaba is likely to entail a hefty tax bill.

And with many of its investments in unlisted, loss-making startups, investors remain dependent on SoftBank for disclosure of valuations.

The benchmark Nikkei 225 index was down 0.7 percent in early afternoon trading.