Company Reports

As a telecom and technology investment company, SoftBank Group represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank Group had a good first quarter ended June 30, 2024, with its key Arm shareholding gaining value over the quarter and driving a strong runup in SoftBank’s share price. However, market volatility since then has led to a substantial decrease in the share price of both Arm and SoftBank. The company reported a net loss of JPY 174 billion for the first quarter, but we reiterate that the earnings statement is very noisy and doesn’t give the best picture of the performance of the business, nor does it give a good base for valuation.

SoftBank Group had a very good fourth quarter (ended March 31, 2024), with its key Arm holding gaining value, but it was very cautious regarding new investments. The firm reported a net loss of JPY 228 billion in the fiscal year, mainly due to losses on investments of JPY 559 billion, but its net asset value nearly doubled to JPY 27.8 trillion over the year, driven by Arm's share price performance and Japanese yen weakness. Depending on various share prices, Arm makes up roughly half of SoftBank's value. However, we value Arm at USD 57 per share versus the current Arm share price of about USD 109. We raise our SoftBank Group fair value estimate to JPY 7,900 per share from JPY 7,700, due to an increased valuation for Arm from our previous update, but consider SoftBank Group only fairly valued at the current share price.

As a telecom and technology investment company, SoftBank Group represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence, or AI, are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank Group had a very good third quarter with most of its key holdings gaining value. Still, it was very cautious regarding new investments in third-quarter fiscal 2023 (quarter-ended December 2023) with total investments from the parent company, Vision Funds and LatAm funds of only USD 0.3 billion in the quarter—lower even than the USD 0.5 billion per quarter over the last three quarters of fiscal 2022. The company reported a net profit of JPY 950 billion in the third quarter, mainly due to a net profit of JPY 434 billion on investments.

As a telecom and technology investment company, SoftBank Group represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank was quite cautious regarding new investments in second-quarter fiscal 2023 (quarter ended September 2023) with total investments from the parent company, Vision Funds, and LatAm funds of USD 1.2 billion in the quarter down from USD 1.8 billion in the first quarter but up from the USD 0.5 billion per quarter over the last three quarters of fiscal 2022. The company reported a net loss of JPY 931 billion in the second quarter, mainly due to a net loss on investments of JPY 264 billion and a foreign exchange loss of JPY 183 billion. A weaker Japanese yen increased SoftBank’s net asset value, or NAV, by JPY 0.6 trillion in the second quarter, which was the main reason for the increase in NAV to JPY 16.4 trillion at the end of September 2023 from JPY 15.5 trillion at the end of June 2023, along with increased share prices of its investments. We retain our SoftBank fair value estimate at JPY 7,100 and see it as undervalued at the current share price. We had carried WeWork at zero value since its failed listing and our lowered value for ARM was offset by increased SoftBank Corp valuation and currency movements.

As a telecom and technology investment company, SoftBank Group represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank showed signs of cautiously increasing new investments in first-quarter fiscal 2023 (quarter-ended June 2023) with total investments from the parent company, Vision Funds and LatAm funds of USD 1.8 billion in the quarter, a lift from the USD 0.5 billion per quarter over the previous three quarters. The company reported a net loss of JPY 477.6 billion in the first quarter, mainly due to a net loss on investments of JPY 699 billion. A weaker Japanese yen increased SoftBank’s net asset value by JPY 1.3 trillion in the first quarter, which was the main reason for the increase in NAV to JPY 15.5 trillion at the end of June 2023 from JPY 14.1 trillion at the end of March 2023.

As a telecom and technology investment company, SoftBank Group represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank continued to clamp down on new investments in the fourth quarter of fiscal 2022 (quarter ended March 2023), but management indicated a willingness to selectively invest in suitable artificial intelligence opportunities in fiscal 2023. The company produced a loss on investments of JPY 835 billion in fiscal 2022, with a JPY 5.3-trillion loss from the SoftBank Vision Funds partially offset by holding company gains on sale from Alibaba transactions of JPY 4.6 trillion. Indeed, from a financing perspective, SoftBank has now effectively used or sold its entire state in Alibaba, having now monetized JPY 9.7 trillion worth of shares from a JPY 7.4-billion investment. This equates to a staggering 57% internal rate of return, or IRR, on the investment from 2000 to May 2023. A weaker Japanese yen increased SoftBank’s net asset value by JPY 1.3 trillion in fiscal 2022. We increase our SoftBank fair value estimate to JPY 7,000 from JPY 6,900 previously due to increased valuation of the T-Mobile and Deutsche Telecom stakes offsetting the reduction in Vision Fund 2 value, and the reduced net debt. This valuation includes zero value for WeWork and our 35% holding company discount on the SoftBank portfolio. Our no-moat rating is retained, as we rate SoftBank as an investment holding company rather than an operating company.

As a telecom and technology investment company, SoftBank Group represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank continued to clamp down on new investments in third-quarter fiscal 2022 (quarter ended December 2022) with the two Vision Funds only investing a total of USD 0.3 billion. This mimics the investment in the second quarter but compares with investments averaging JPY 14.9 billion per quarter in the first half of fiscal 2021. We decrease our SoftBank fair value estimate to JPY 6,900 from JPY 7,300 previously due to the stronger Japanese yen and reduced valuation of the Vision Funds. This valuation includes zero value for WeWork, our assumption of 30% capital gains tax on the Alibaba stake, and our 35% holding company discount on the SoftBank portfolio. Our no-moat rating is retained as we rate SoftBank as an investment holding company rather than an operating company.

As a telecom and technology investment company, SoftBank represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank’s first-half fiscal-year 2022 (half-year ending September 2022) result was broadly as expected with the company reporting JPY 4.4 trillion investment losses in the Vision Funds but partially offsetting this with JPY 3.5 trillion of gains relating to monetization of assets, including selling some of its Alibaba stake. The company has drastically lowered new investment in the Vision Funds over the past nine months and has also reduced its leverage with some of the Alibaba sale proceeds. We increase our SoftBank fair value estimate to JPY 7,300 from JPY 7,000 previously due to the much weaker yen more than offsetting reduced valuation of the Vision Funds. This valuation includes zero value for WeWork, our assumption of 30% capital gains tax on the Alibaba stake, and our 35% holding company discount on the SoftBank portfolio. Our no-moat rating is retained as we rate SoftBank as an investment holding company rather than an operating company. The stock price is now below our fair value estimate with the main difference likely due to our valuation of Alibaba that is around 155% above the current stock price.

As a telecom and technology investment company, SoftBank represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank’s fiscal 2022 (quarter ending June 2022) result was broadly as expected with the company reporting a net loss of JPY 3.2 trillion, mainly due to JPY 2.9 trillion of valuation losses in the Vision Fund. The company has drastically lowered new investment in the Vision Fund over the past six months and this looks likely to continue for the foreseeable future with management foreshadowing cost and headcount cuts.

As a telecom and technology investment company, SoftBank represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.

SoftBank’s fiscal 2021 (year ending March 2021) result was broadly as expected with the company reporting a net loss of JPY 1.7 trillion, mainly due to valuation losses in the Vision Funds.

As a telecom and technology investment company, SoftBank represents a unique investment opportunity. The current portfolio is a mix of internet and technology investments with a stake in a developed-market mobile services business. Internet and artificial intelligence are the two main themes likely to underpin most investments in the future. The company can invest in public and private markets both directly and through is Vision Funds that invest in mostly pre-IPO technology companies.