SoftBank Group Earnings: Valuation Leveraged to Overvalued ARM; Fair Value Up 3% to JPY 7,900

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.