Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Aisin’s first-half FY3/25 results highlight short-term challenges, with operating profit falling 38% to JPY 56.1 billion due to weak sales and worsening product mix. </li>
<li>Management cut its full year operating profit guidance from JPY 220 billion to 200 billion. We believe that street expectations had already factored in weaker Toyota volumes.</li>
<li>Aisin’s long-term outlook remains strong, centred on the transition to EVs. We still see over 100% upside if the transition is successful. </li>
</ul>


Aisin’s first-half FY3/25 results highlight short-term challenges, with operating profit falling 38% to JPY 56.1 billion due to weak sales and worsening product mix. 
Management cut its full year operating profit guidance from JPY 220 billion to 200 billion. We believe that street expectations had already factored in weaker Toyota volumes.
Aisin’s long-term outlook remains strong, centred on the transition to EVs. We still see over 100% upside if the transition is successful. 


Aisin (7259) | Short-Term Challenges Amid Strategic Shift to EVs

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Last September in the release of its new Mid-Term Management Plan, Toyota Group member <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> announced a plan to cut cross-holdings to zero. <a href="https://www.smartkarma.com/entities/jtekt-corp" target="_blank" data-smartkarma-citation="entities:12197:1" rel="noopener">JTEKT Corp (6473 JP)</a> followed suit.</li>
<li>It started with a selldown of <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a>, then <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>, now <a href="https://www.smartkarma.com/insights/big-aisin-7259-offering-sets-stage-for-first-toyota-group-full-unwind" target="_blank" rel="noopener">Aisin</a>. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.</li>
<li>Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.</li>
</ul>


Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.


Toyota Group Cross-Holding Structure Primer - Holdings, Unwind Progress, Buyback Policies, Etc

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>Panasonic blew out consensus forecasts in Q2 and trades at 60% of book value. </li>
<li>Jtekt missed but raised its dividend, which was already very high. </li>
<li>Aisin missed, but by a trivial amount, and the price/book value fell back to a level that marked support on multiple occasions since the Pandemic started.</li>
</ul>


Panasonic blew out consensus forecasts in Q2 and trades at 60% of book value. 
Jtekt missed but raised its dividend, which was already very high. 
Aisin missed, but by a trivial amount, and the price/book value fell back to a level that marked support on multiple occasions since the Pandemic started.


IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>Since the US$1.1 billion secondary placement announcement, <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a>’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).</li>
<li>Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.</li>
<li>The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.</li>
</ul>


Since the US$1.1 billion secondary placement announcement, Aisin (7259 JP)’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.
The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.


APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a>, <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> are looking to raise US$1.1bn from selling some of their stakes in <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a>.</li>
<li>We have covered the background of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/aisin-corp-placement-us-1-1bn-selldown-by-toyota-and-denso" target="_blank" data-smartkarma-citation="insights:150223" rel="noopener">Aisin Corp Placement - US$1.1bn Selldown by Toyota and DENSO</a>.</li>
<li>In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.</li>
</ul>



Denso Corp (6902 JP), Toyota Motor (7203 JP) and Toyota Industries (6201 JP) are looking to raise US$1.1bn from selling some of their stakes in Aisin (7259 JP).
We have covered the background of the deal in our earlier note, Aisin Corp Placement - US$1.1bn Selldown by Toyota and DENSO.
In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.


Aisin Corp Placement - Follow Up - Could Fall into a Similar Fate as past Large JP Secondary Deals

Japan

Aisin Corporation manufactures and distributes motor vehicle parts. The Company produces drive train, transmissions, clutches, disc brakes, anti-skid brake system, suspensions, oil pumps, power windows, power door locks, and more. Aisin operates sales and production subsidiaries worldwide.

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Aisin (7259 JP)

Aisin (7259) | Short-Term Challenges Amid Strategic Shift to EVs

Aisin faces short-term challenges with operating profit falling 38%, but long-term outlook remains strong with potential for over 100% upside in...

Mark Chadwick

Toyota Group Cross-Holding Structure Primer - Holdings, Unwind Progress, Buyback Policies, Etc

8mos past the first large Toyota Group selldown in Denso (i.e. past lockup). Others have followed since. Toyota Inds and Toyota R.E. have ¥600bn to...

Travis Lundy

Panasonic (6752): Blows Past Consensus

Panasonic outperforms in Q2, trading at 60% of book value; Jtekt misses but raises dividend; Aisin misses slightly, price/book value falls to...

Michael Allen

Aisin (7259 JP): The Current Playbook

The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Arun George

Aisin Corp Placement - Follow Up - Could Fall into a Similar Fate as past Large JP Secondary Deals

The Toyota-affiliates are looking to raise US$1.1bn from selling some of their stakes in Aisin (7259 JP). In this note, we talk about the updates...

Clarence Chu

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Aisin (7259) | Short-Term Challenges Amid Strategic Shift to EVs

​Aisin faces short-term challenges with operating profit falling 38%, but long-term outlook remains strong with potential for over 100% upside in...

Mark Chadwick

Toyota Group Cross-Holding Structure Primer - Holdings, Unwind Progress, Buyback Policies, Etc

8mos past the first large Toyota Group selldown in Denso (i.e. past lockup). Others have followed since. Toyota Inds and Toyota R.E. have ¥600bn to...

Travis Lundy

Panasonic (6752): Blows Past Consensus

​Panasonic outperforms in Q2, trading at 60% of book value; Jtekt misses but raises dividend; Aisin misses slightly, price/book value falls to...

Michael Allen

Aisin (7259 JP): The Current Playbook

The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Arun George

Aisin Corp Placement - Follow Up - Could Fall into a Similar Fate as past Large JP Secondary Deals

The Toyota-affiliates are looking to raise US$1.1bn from selling some of their stakes in Aisin (7259 JP). In this note, we talk about the updates...

Clarence Chu

Aisin faces short-term challenges with operating profit falling 38%, but long-term outlook remains strong with potential for over 100% upside in...

Panasonic outperforms in Q2, trading at 60% of book value; Jtekt misses but raises dividend; Aisin misses slightly, price/book value falls to...