Research Coverage of Japanese Listed Companies, Shared Research Inc

Shared Research

Research Coverage of Japanese Listed Companies

Shared Research Inc

Pioneering research coverage of Japanese listed companies. Now customizable and interactive for global institutional investors. Corporate access reimagined.

Equity Bottom-Up

Morinaga Milk Industry Co / Equity Bottom-Up

<ul><li>Q1 FY03/25 sales were JPY140.6bn (+0.6% YoY), operating profit JPY847mn (-11.7% YoY), and net income JPY5.3bn (-90.0% YoY).</li><li>Sales increased in Nutrition and Functional Foods (+2.3% YoY), Core Foods (+3.9% YoY), and B-to-B (+4.2% YoY).</li><li>Overseas business sales declined by 7.4% YoY, with operating profit down 68.2% YoY due to MILEI GmbH downturn.</li></ul>

Q1 FY03/25 sales were JPY140.6bn (+0.6% YoY), operating profit JPY847mn (-11.7% YoY), and net income JPY5.3bn (-90.0% YoY).Sales increased in Nutrition and Functional Foods (+2.3% YoY), Core Foods (+3.9% YoY), and B-to-B (+4.2% YoY).Overseas business sales declined by 7.4% YoY, with operating profit down 68.2% YoY due to MILEI GmbH downturn.

Morinaga Milk Industry Co (2264 JP): Q1 FY03/25 flash update

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p><a href="https://www.smartkarma.com/entities/meiji-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15996:1" rel="noopener">Meiji Holdings (2269 JP)</a> generates over 83% of revenues from the Food segment while the rest comes from the Pharmaceuticals segment. Irrespective of the economic situation, the company’s revenue has grown at low single digits YoY throughout its trading history, apart from two instances where it declined marginally compared to the prior year. Furthermore, the OCF grew at a CAGR of 12% over the last five years while OP and DPS grew at 22% and 28% CAGRs respectively. Therefore, on the surface, Meiji looks like a perfect defensive stock.</p>

Meiji Holdings (2269 JP) generates over 83% of revenues from the Food segment while the rest comes from the Pharmaceuticals segment. Irrespective of the economic situation, the company’s revenue has grown at low single digits YoY throughout its trading history, apart from two instances where it declined marginally compared to the prior year. Furthermore, the OCF grew at a CAGR of 12% over the last five years while OP and DPS grew at 22% and 28% CAGRs respectively. Therefore, on the surface, Meiji looks like a perfect defensive stock.

Quantamental Analysis Shows Meiji’s Perception as a Defensive Stock Could Be a Delusion

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Last week, Japanese dairy play <strong><a href="https://www.smartkarma.com/entities/morinaga-milk-industry-co" target="_blank" data-smartkarma-citation="entities:20907:1" rel="noopener">Morinaga Milk Industry Co (2264 JP)</a></strong> acquired a soy-based food company in the US and a baby formula distribution company in Vietnam</li>
<li>These acquisitions are in keeping with Moringa's medium-term business plan (to Mar-2025) to achieve an overseas sale ratio of 13%, compared to 8.7% last year.</li>
<li>3Q23 results were also announced with 9M23 sales and operating profit of ¥405.2bn and ¥20.5bn, a change of +16.8% and -7.2% yoy.</li>
</ul>


Last week, Japanese dairy play Morinaga Milk Industry Co (2264 JP) acquired a soy-based food company in the US and a baby formula distribution company in Vietnam
These acquisitions are in keeping with Moringa's medium-term business plan (to Mar-2025) to achieve an overseas sale ratio of 13%, compared to 8.7% last year.
3Q23 results were also announced with 9M23 sales and operating profit of ¥405.2bn and ¥20.5bn, a change of +16.8% and -7.2% yoy.


Morinaga Milk (2264 JP)'s Overseas Expansion

Travis Lundy

<ul>
<li>Morinaga &amp; Co is selling down a near-10% stake in Morinaga Milk in a ToSTNeT-3 buyback on 1 March. </li>
<li>Morinaga Milk will see an EPS and ROE uplift. Eventually, there are a lot more cross-holdings to buy back.</li>
<li>Near-, medium-, and longer-term there are different flow patterns worth understanding if you have a position or are looking for one. If you want to sell lots, you can tomorrow.</li>
</ul>


Morinaga &amp; Co is selling down a near-10% stake in Morinaga Milk in a ToSTNeT-3 buyback on 1 March. 
Morinaga Milk will see an EPS and ROE uplift. Eventually, there are a lot more cross-holdings to buy back.
Near-, medium-, and longer-term there are different flow patterns worth understanding if you have a position or are looking for one. If you want to sell lots, you can tomorrow.


Morinaga (2201) Mostly Exits Morinaga Milk (2264) - Big Buyback

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

China Youran Dairy Group Ltd / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/china-youran-dairy-group-ltd" target="_blank" data-smartkarma-citation="entities:31075:1" rel="noopener">China Youran Dairy Group Ltd (9858 HK)</a> is the world’s largest raw milk provider as measured by herd size of dairy cows as of 30 June 2020 and raw milk production volume in 1H20, according to Frost &amp; Sullivan. Youran was once a wholly-owned subsidiary of <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a> until PAG Capital’s investment in 2015.</p>
<p>At the proposed IPO price range of HK$6.98-8.66 per share, Youran will have a market cap of HK$26,492-32,868 million ($3.4-4.2 billion). At the mid-point of the IPO price range, the gross proceeds are HK$5,595 million ($722 million). The primary/secondary split is 69%/31%. The selling shareholder is PAG Capital.</p>
<p>The cornerstone support is unusually low. Two cornerstone investors will purchase $50 million worth of the offer shares (6.94% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are CITIC-Prudential Life Insurance and Harvest Fund Management.</p>
</div><div>
<p>In <a href="https://www.smartkarma.com/insights/china-youran-dairy-group-ipo-initiation-ecownomics" target="_blank" data-smartkarma-citation="insights:51709" rel="noopener">China Youran Dairy Group IPO Initiation: Ecownomics</a>, we stated that notwithstanding its high revenue dependence on Yili, Youran is capitalising on the favourable demand-supply imbalance for raw milk in China by delivering strong organic growth (on a pro-forma basis), rising margins and accretive acquisitions. We concluded that Youran is worth a look.</p>
<div class="content-highlight"><p>Based on our forecasts, Youran is attractively valued to its H-share peer group, which are largely downstream players, at the low-end of the IPO price range. Compared to <a href="https://www.smartkarma.com/entities/china-modern-dairy-holdings" target="_blank" data-smartkarma-citation="entities:6785:1" rel="noopener">China Modern Dairy (1117 HK)</a>, an upstream dairy peer (arguably the key listed comp), Youran trades at a substantial premium on a CY2021 P/E basis but trades at a substantial discount on a CY2021 PEG basis. Overall, we are inclined to participate at most at the low end of the IPO price range due to the decent upside potential. </p></div>
</div>


China Youran Dairy Group Ltd (9858 HK) is the world’s largest raw milk provider as measured by herd size of dairy cows as of 30 June 2020 and raw milk production volume in 1H20, according to Frost &amp; Sullivan. Youran was once a wholly-owned subsidiary of Inner Mongolia Yili Industrial Group (A) (600887 CH) until PAG Capital’s investment in 2015.
At the proposed IPO price range of HK$6.98-8.66 per share, Youran will have a market cap of HK$26,492-32,868 million ($3.4-4.2 billion). At the mid-point of the IPO price range, the gross proceeds are HK$5,595 million ($722 million). The primary/secondary split is 69%/31%. The selling shareholder is PAG Capital.
The cornerstone support is unusually low. Two cornerstone investors will purchase $50 million worth of the offer shares (6.94% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are CITIC-Prudential Life Insurance and Harvest Fund Management.

In China Youran Dairy Group IPO Initiation: Ecownomics, we stated that notwithstanding its high revenue dependence on Yili, Youran is capitalising on the favourable demand-supply imbalance for raw milk in China by delivering strong organic growth (on a pro-forma basis), rising margins and accretive acquisitions. We concluded that Youran is worth a look.
Based on our forecasts, Youran is attractively valued to its H-share peer group, which are largely downstream players, at the low-end of the IPO price range. Compared to China Modern Dairy (1117 HK), an upstream dairy peer (arguably the key listed comp), Youran trades at a substantial premium on a CY2021 P/E basis but trades at a substantial discount on a CY2021 PEG basis. Overall, we are inclined to participate at most at the low end of the IPO price range due to the decent upside potential. 


China Youran Dairy Group IPO: Valuation Insights

Japan

Morinaga Milk Industry Co., Ltd. produces and sells milk and related dairy products such as ice cream and yogurt.  The Company also develops biochemical product and pharmaceutical.

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Morinaga Milk Industry Co (2264 JP)