SoftBank Group Continues Defense Mode; FVE Cut to JPY 6,900 on Currency Strength, Vision Fund Losses

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.