Japan

• On Friday 15 November, KKR announced it would launch KKR Tender2 to buy the rest of FujiSoft not purchased in KKR Tender1. Their new price is ¥1 higher than Bain’s.
• Fuji Soft Inc (9749 JP) announced (J) it supported the KKR2 Tender and rejected the Bain TOB Proposal. KKR1 shareholders are “made whole” at ¥9,451/share. Minimum is 53.22%.
• The document, however, is a Governance Disaster – an absolute shambles, effectively gaslighting investors at every turn. And now investors can see it was problematic from the start.

• A lot of the talk around the news that Ito family scion Ito Junro had proposed to Seven & I Holdings (3382 JP) an MBO was about thwarting Alimentation Couche-Tard.
• Several mentioned that this bid – seemingly uncompetitive at the moment – would make ACT back down. I discussed the bid and its repercussions here. 
• Here I suggest an alternate solution which might get everyone what they want.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPOs front, the usual year end deal flow appears to be picking up with US elections now out of the way.
• On the placements front, Kansai Electric Power (9503 JP) launched a large primary offering, while Varun Beverages (VBL IN) did the same in India.

• Listing criteria for TSE Growth Market will be raised to over 4 billion yen in market capitalization after 10 years of listing, but the details are left for further discussion.
• It is necessary to provide opportunities for founders to exit and recover their capital without relying on an IPO, for example by creating a market for unlisted shares.
• Switching to a policy of using cash for shareholder returns because of the inability to comply with TSE Growth Market listing maintenance standards is not a fundamental solution.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: S.F. Holding (002352 CH) is premarketing an H Share listing to raise US$1.0-1.5 billion, Kansai Electric Power (9503 JP)‘s US$3.5 billion placement.  
• Event-Driven developments: Seven & I Holdings (3382 JP), Fuji Soft Inc (9749 JP), Nishimoto (9260 JP), Macromill, Inc (3978 JP), Agro Kanesho (4955 JP), Renewable Japan (9522 JP), CPMC.

• KKR & Co (KKR US) has secured the Fuji Soft Inc (9749 JP) Board’s unanimous support by bumping its second tender offer to JPY9,451, a JPY1 premium to Bain’s JPY9,450 offer. 
• The Board is claiming a “fiduciary duty” win as it has secured a higher offer from KKR but paradoxically signalling that it will not negotiate a bump from Bain.  
• Bain will likely walk rather than try to win the Board’s support by revising terms. At the last close, the gross spread to KKR’s offer is 3.7%.

• I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Six new deals this week! TOs for Agro Kanesho (4955 JP), Nishimoto (9260 JP), Chita Kogyo (5993 JP), Macromill (3978 JP). Also Silk Logistics (SLH AU) and Avarga (AVARGA SP).
• Key updates took place on: Pacific Smiles (PSQ AU), ASMPT (522 HK), Nec Networks & System Integr (1973 JP), Seven & I (3382 JP), and Malaysia Airports Holdings (MAHB MK).

• There are people who’ll take profit in Seven & I (3382 JP) because of path dependency til year-end. It will drag out a while: buy the dips, trim on pops.
• Just like in Lufax Holding (6623 HK)‘s special dividend, expect Ping An to boost its holding in Ping An Healthcare and Technology (1833 HK) via the stealthy scrip dividend option. 
• The landscape for Nec Networks & System Integr (1973 JP) has FULLY changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable.  

• Asahi Intecc (7747 JP) recorded 9% YoY revenue growth to ¥31B in Q1FY25. Revenue growth is attributable to the continued strong trajectory of medical division, which reported 10% YoY growth.
• Strong rebound in China is key highlight for medical division performance. Revenue from China increased by a whopping 36% YoY and 44% QoQ to a record high of ¥9.3B.
• Despite a better-than-expected Q1FY25, the company maintains full-year FY25 guidance, due to external factors such as currency movements as well as uncertainties in trends for net sales, productivity, and expenditure.

• Toyota Motor Corporation has announced its fiscal year 2025 second-quarter financial results.
• The company achieved an operating income of JPY 2.4642 trillion for the first half of the fiscal year, which was maintained close to the previous year despite some setbacks in production and increases in expenses.
• While sales revenue touched JPY 23.2824 trillion, the net income of JPY 1.9071 trillion saw a significant decrease from the prior year, primarily due to exchange rate fluctuations which caused valuation losses in foreign currency assets.

• With external female board member resources under pressure, it will be extremely difficult to raise the percentage of female board members steadily at this rate.
• The trump card for this is matching numbers. Increasingly, female board members with no management background or outside talent are being recruited to female managerial positions.
• It is expected that fewer companies will move to Company with US type 3 Statutory Committees in order to avoid increasing the number of statutory executive officers.

• Sales increased by 3.6% YoY to JPY26.1bn, but operating profit decreased by 25.3% YoY to JPY1.2bn.
• Paris Miki Inc. sales rose 4.2% YoY to JPY23.2bn, with 13 store openings and nine closures.
• China subsidiary faced a sales decline of 0.9% YoY to JPY3.0bn, resulting in an operating loss.

• The company restructured its business segments in FY09/24, renaming Inventory Management Solution to Solution and Merchandise Distribution Platform to Platform.
• Overall sales decreased by 5.9% YoY, while net income attributable to owners increased by 997.7% YoY.
• NETSEA’s sales and operating profit increased YoY due to reduced advertising expenses, despite a decline in GMV.

• Revenue increased by 20.1% YoY to JPY6.8bn, with Digital Marketing contributing JPY3.1bn, Data Marketing JPY2.3bn, and Insight JPY1.4bn.
• Operating profit reached JPY356mn, a significant improvement from a loss of JPY17mn in Q1 FY06/24, driven by higher gross profit.
• Overseas operations revenue grew 16% YoY to JPY1.2bn, with forex negatively impacting by JPY30mn, excluding effects, growth was 24% YoY.

• Q1 FY06/25 revenue declined 6.7% YoY due to subsidiary exclusion, with operating profit falling 27.9% from increased costs.
• FY06/25 forecast projects revenue of JPY21.0bn (+0.4% YoY) and operating profit of JPY2.5bn (+1.8% YoY).
• Company focuses on expressway projects, sales in building maintenance, and R&D investment to enhance technical capabilities.

• Consolidated sales declined to JPY32.5bn (-1.7% YoY), while net income attributable to owners reached JPY5.2bn (+570.2% YoY).
• HR-Tech engage segment reported sales of JPY4.4bn (+45.3% YoY) with an operating loss of JPY1.6bn.
• Human Resource Platform segment achieved JPY4.1bn in sales (+17.8% YoY) and an operating profit of JPY601mn.

• The company achieved 112.6% of its sales target, leading to a revision of the full-year forecast.
• Semiconductor Equipment-related business saw increased sales in vacuum products and semiconductor manufacturing materials, boosting segment performance.
• The company raised its sales forecast by JPY30.0bn, anticipating strong demand from Chinese manufacturers in 2H FY03/25.

• Revenue increased by 10.4% YoY to JPY8.6bn, with directly operated clubs contributing JPY5.3bn and franchise revenue JPY3.1bn.
• Operating profit decreased by 28.2% YoY to JPY1.4bn, impacted by higher costs and growth investments, especially overseas.
• Membership count rose to 935,000, with 33 new clubs opened and three closed, totaling 1,163 clubs.

• Group sales were JPY45.8bn (-31.7% YoY), with net income attributable to owners of the parent at JPY2.8bn (-31.5% YoY).
• Content and Digital business sales reached JPY8.0bn (+7.9% YoY), driven by Tsuburaya Productions’ overseas revenue growth of 34.0% YoY.
• PS business reported sales of JPY37.2bn (-37.0% YoY), with 48,636 amusement machines sold, down 77,389 units YoY.

• Revenue decreased YoY across BPO and CRM businesses, but operating profit increased due to cost reduction efforts.
• New partnerships with seven local governments expanded client base to 177, focusing on economic stimulus projects.
• Revenue rose in food processing and manufacturing, driven by strong orders and efficient SG&A expense management.

• On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
• On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
• The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.

• Today, CVC announced a deal to buy out Macromill, Inc (3978 JP). It is agreed and supported by management and the Board. 
• The shareholder register on this stock is wide open. It is not burdened by crossholders. It IS burdened by 7 large active holders who have 55%. 
• Those holders may complain about the process, the transparency, and the low price. This could be a target for an activist or a strategic overbidder.

• Macromill, Inc (3978 JP) has recommended CVC’s tender offer at JPY1,150, a 40.1% premium to the last close.
• While the offer is attractive compared to historical trading ranges, it is 41% below the IPO price and 11% below the midpoint IFA DCF valuation range. 
• The lack of an irrevocable, open shareholder register and large foreign institutions’ shareholding increases the odds of activism to force a bump.  

• Renewable Japan (9522 JP) has recommended a Tokyu Fudosan Holdings (3289 JP)-sponsored MBO at JPY1,250 per share, a 132.3% premium to the last close.
• The high takeover premium reflects the 55% YTD decline in the share price. While the timing is opportunistic, the offer is attractive compared to peer multiples. 
• The irrevocables and low required minority acceptance rate ensure that this is a done deal. The tender runs from 15 November to 8 January 2025 (34 business days).

• In Q3 FY24, Appier achieved record-breaking revenue, reaching JPY 9.1 billion, marking a 28% year-over-year growth.
• Operating income for Q3 surged by 2.5 times YoY to JPY 788 million, with the operating margin improving by 4.3 percentage points to 8.7%.
• At less than 4x EV/Sales and 16x FY25 EBITDA the stock does not appear expensive.

• Observing implied volatility across 16 markets plus gold provides a picture of falling implied volatility, despite dispersion in market performance.
• Several, but not all, markets display moderation from unusual volatility levels to a more balanced implied volatility structure.
• The realignment of implied volatility across markets presents potential relative value opportunities.

• Freee KK (4478 JP) reported 1QFY06/2025 results which saw the company generating its first-ever Adj. operating profit, earlier than we expected.
• The company has begun capitalising its software assets (decline in R&D costs as % of revenue) and this coupled with fall in S&M costs have contributed to profits.
• The corporate paying customers surpassed more than 200k for the first time and we expect freee’s earnings to continue to improve going forward.

• Sankyo, a Japanese company previously seen as a value trap, has made changes to enhance shareholder value
• The company has implemented share buybacks, acquiring 24% of shares in the last year and leading to a higher valuation
• The focus on capital efficiency and returning value to shareholders has revitalized Sankyo, leading to increased investor confidence and potential future growth opportunities

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Revenue reached JPY2.8bn (+26.2% YoY), with operating profit at JPY697mn (+48.7% YoY) and recurring profit at JPY699mn (+40.4% YoY).
• Companywide ARR was JPY3.8bn (+25.3% YoY), with subscription-based recurring revenue accounting for 93.8% of total revenue.
• User count for Shadankun, WafCharm, and SIDfm increased, with low churn rates and varying revenue per user growth.

• Revenue reached JPY5.5bn (+33.7% YoY), driven by growth in Second-hand Online and Mobile & Telecommunications segments.
• Operating profit turned positive at JPY69mn, with a 1.3% margin, despite JPY68mn in relocation expenses.
• The company recorded a JPY32mn derivatives valuation loss due to a stock price decline in a CFD contract.

• In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a non-binding proposal from Junro Ito (founder’s son) and Ito-Kogyo. No terms were disclosed.
• Bloomberg suggests an MBO deal worth up to JPY9 trillion (US$58 billion), which implies an offer of JPY3,467.89, a 39.3% premium to the last close price.
• The “white knight” MBO undermines Alimentation Couche-Tard (ATD CN)’s offer and is a proxy for the restructuring plan’s value. Couche-Tard will likely walk if a binding MBO proposal emerges.

• The past few years, large equity offerings have either been IPOs or secondary offerings (without dilution). Today we get a big dilutive secondary offering from Kansai Electric Power (9503 JP). 
• This is ~223mm shares or roughly ¥530bn against a current market cap of ¥2.1+trln. A 25% increase in share count. It is quite dilutive, but the stock is not rich.
• Because dilutive, not overly-well-flagged, and mostly retail, this could get hammered. The div is not high enough to make it attractive, so one has to appreciate high earnings yield.

• Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
• This will be a large deal for the stock to digest and doesn’t appear to have been particularly well flagged.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
• Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
• There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.

• Kansai Electric Power (9503 JP) has announced primary and secondary offerings of up to 223.1 million shares (including overallotment) and a third-party allotment of 29.1 million shares.
• JPY239.9 billion of proceeds will be used to improve energy efficiency and decarbonisation, while other funds will be used for data centres, renewable energy and overseas investments.
• Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 26 and 29 November (likely 26 November).

• Nexon’s 3Q24 earnings report saw its stock dip -17% as revenue missed guidance and foreign exchange losses weighed on the bottom line.
• Nexon’s operating profit rose +11% y/y to ¥51 billion, with an operating margin of 38%
• The stock is trading at 8.5x EBITDA, which makes it very attractive versus the sector

• In 1H FY03/25, the company reported revenue of JPY1.12tn, operating profit of JPY313.9bn, and net income of JPY243.9bn.
• The revised full-year forecast for FY03/25 includes revenue of JPY2.40tn and operating profit of JPY680.0bn.
• The company announced a JPY70.0bn share buyback plan, acquiring up to 3.5mn shares, representing 0.8% of outstanding shares.

• Yesterday a news article from Bloomberg suggested 7&i was “considering” an MBO. Seven & I Holdings (3382 JP) later confirmed they had received a non-binding proposal from ITO Junro/family.
• The initial number was ¥9trln. If market cap? High. If EV, too low. That would have implied a price just over the first “grossly inadequate” ACT price.
• There is a lot we don’t know. This changes the landscape. It probably shifts the range trade, but it will shift more when we get more clarity on ITO-san’s price.

• Sales increased by 27.4% YoY, with the Idle Asset Utilization segment driving growth, achieving JPY10.0bn in sales.
• The company forecasts FY09/25 sales of JPY12.5bn, operating profit of JPY2.5bn, and net income of JPY1.6bn.
• Visualization segment reported full-year sales of JPY214mn, focusing on technical skill improvement and expanding the sales team.

• Listed subsidiaries decrease but increase if equity method listed companies are included. Many companies haven’t fully exercised treatment of subsidiaries, selling only a little of their shares to below 50%.
• Many parent companies that own listed subsidiaries and equity-method listed companies have placed cash in subsidiaries or equity-method companies without increasing their own stock prices.
• Although companies have changed their mindset somewhat, they haven’t changed their management to effectively use cash to create value, which is the reason for the low valuations of Japanese stocks.

• Tokyo Metro (9023 JP) had a blockbuster listing yesterday, finishing the day 45% higher. That took the estimated div yield down from 3.33% (at the IPO price) to 2.3%.
• One expected index inclusion will not take place due to insufficient information on IPO allocations and that leads to a much lower free float than expected.
• That inclusion will now be deferred to June; BUT there could be two other (bigger) index inclusions on the cards prior to that.

• Rigaku Holdings (268A JP) priced its IPO at JPY1,260 per share to raise gross proceeds of US$856 million. The shares will start trading on 25 October.
• We previously discussed the IPO in Rigaku Holdings (268A JP) IPO: The Bull Case, Rigaku Holdings (268A JP) IPO: The Bear Case, Rigaku Holdings (268A JP) IPO: Valuation Insights.
• The peers have modestly derated since the prospectus was released on 20 September. The IPO price remains attractive.

• Nidec’s Q2 operating income beat my estimates, driven by strong small motors and appliance segments, though automotive profits underperformed
• The automotive division is shifting focus from e-axles to broader auto parts, while improving operational efficiency through partnerships and streamlined logistics
• Despite macro risks, Nidec remains well-positioned for long-term growth in digitalization, decarbonization, and automation, with a price target of ¥4,350

• Goldwin has big plans for both The North Face in the Japanese and Korean markets and for its own brand globally.
• But there are worries about saturation for the former in Japan, slowing brand development, and lack of expertise in overseas markets to build its own brand.
• Goldwin has had an amazing run but can it build a global brand? If it can, it will feed into high levels of demand for Japan-tech sports brands.

• Unlike the transfer of personnel rights, which is resisted by management, equity compensation that can be used to retain talent is attractive to management and is likely to accelerate.
• If equity compensation plans are introduced for employees with a low ratio of female managers, the gap in compensation between men and women is expected to widen.
• The introduction of equity compensation for employees is anticipated to provide an opportunity for management “kaizen” tips to emerge from individual workplaces.

• Revenue reached JPY3.1bn, an 8.3% YoY increase, achieving 48.7% of the full-year forecast, with strong AI demand.
• Operating profit increased by 173.2% YoY to JPY149mn, driven by robust sales in plating chemicals for AI applications.
• Net income forecast revised to JPY1.6bn due to gains from the sale of investment securities announced in August 2024.

• Tokyo Metro (9023 JP) priced its IPO at the top end (JPY 1200/share), raised JPY 348.6bn (US$2.3bn) and the company is valued at JPY 697bn (US$4.62bn).
• The stock starts to trade today, and the grey market is indicating an open 20% higher. Not surprising considering that the IPO was heavily oversubscribed.
• Even at a price of JPY 1440/share, the estimated dividend yield is 2.78% and that should keep the stock supported. Index inclusions will result in more buying next week.

• The Tokyo Metro (9023 JP) IPO is one of the largest IPOs of recent years, well-flagged, and it is hot hot hot!  A super stable, well-known, well-respected, service provider.
• There are numerous attractions but I expect people have not thought too deeply about the demand and supply dynamics of different holder types. It’s worth thinking about. 
• This was priced “cheap” but everyone knows that so there may be flippers. This is probably more Japan Post Bank than Japan Post Insurance.

• At first glance, the Shinko Electric Industries (6967 JP) and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.
• The aftermath of China Traditional Chinese Medicine (570 HK) has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread. 
• Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.

• Konica Minolta, a key player in the Japanese office equipment market, presents an attractive investment opportunity, particularly in light of the recent actions by activist investor Effissimo.
• The investment case for Konica Minolta hinges on several factors, including potential structural reforms, M&A activity, and undervaluation.
• Given Effissimo’s track record with Ricoh and the broader industry dynamics, the thesis for a bullish outlook on Konica Minolta is compelling.

• The Nikkei 225 INDEX continues to move chaotically in highly unpredictable and fragmented fashion. At the moment it’s been falling for 2 weeks (CC=-2 to be confirmed on Friday).
• Since the index is in a phase where it keeps going up and down with no trend, we see an opportunity to accumulate short-term LONG positions on the current pullback.
• A small bounce from current levels, rising towards the 41k target, could generate some good returns in a short span of time. This would be a reversal trade.

• On 11-Oct, Bain submitted a binding proposal for Fuji Soft Inc (9749 JP). On 15-Oct, FSI acknowledged, but questioned the Nozawa family commitment.  Founder Nozawa wrote letters the 17th.
• O 18-Oct, FSI reiterated support for the KKR First Tender in a late night drop. It included fine print, but no media coverage. Today, FSI filed a Target Opinion Amendment.
• That filing included yet more fine print not in the public filing Friday. And KKR extended. The new fine print is nuanced. But worth reading.

• Over the last few days, Shinko Electric Industries (6967 JP) shares have dipped lower than the previous standard trading range. 
• I expect this weakness is related to investors in other deals deciding to sell this deal too. I believe it is not related to Shinko specifically.
• For that, while gap risk remains somewhat high, I still see break risk as low and see this as a great opportunity to buy the dip.

• Tokyo Metro (9023 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$2.3 billion. The shares will start trading on 23 October.
• We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case, Tokyo Metro (9023 JP) IPO: The Bear Case and Tokyo Metro (9023 JP) IPO: Valuation Insights.
• The peers have modestly derated since the prospectus was released on 20 September. The IPO price remains attractive, particularly relating to the implied dividend yield.

• A year after human capital disclosure became mandatory, little progress was made, but few companies, even those in top 100 in market capitalization, have self-assessed their milestones and actual progress.
• While it was favored that companies with higher scores on human capital disclosure outperformed in stock price, it is reasonable to assume that multiple other factors had an impact. 
• Some companies formulated growth strategies by presenting clear cash/capital allocations and have actually achieved improved capital profitability. Human capital initiatives can be viewed as part of such autonomous “kaizen” activities.

• Tokyo Metro (9023 JP)‘s shareholders raised around US$2.4bn in its Japan IPO. 
• Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
• We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

• The Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors. 
• Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible. 
• KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside. 

• Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
• Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
• The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Seven & I Holdings (3382 JP), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP),Canvest Environmental Protection Group (1381 HK), Arcadium Lithium (LTM AU). 
• Lowest spreads: Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP), Silverlake Axis (SILV SP), T Gaia Corp (3738 JP), Descente Ltd (8114 JP), Pasco Corp (9232 JP). 

• This past week, activist Murakami-san’s City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?  ¥2,928/share.
• The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They’ve since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
• If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There’s room to run here, still. 

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the live IPOs front,  the coming week will see a whole lot of listings across the region.
• On the placements front, there were mainly deals in Australia this week.

• Nikkei 225 (NKY INDEX) option implied volatility is stabilizing at an elevated level. This Insight analyses term structure, skew, open interest, and more.
• We identify a tactical option opportunity that profits from the current volatility structure.
• Are Consumer Price Index and Bank of Japan interest rate decision announcements systematically followed by unusually large market moves? We run the numbers. 

• Sanwa Holdings revised its first-half (1H) forecasts, increasing sales estimates from ¥293 billion to ¥313 billion, and operating profit (OP) from ¥25.6 billion to ¥32 billion
• Essilor’s growing investment in Nikon, with the optical giant increasing its stake from 5.1% to 7.38% in just a few weeks, underscores our bullish view on the name.
• Nihon Kohden recently revised its first-half (1H24) guidance, raising sales expectations by ¥700 million to ¥102.7 billion and operating profit by ¥2 billion to ¥5 billion. 

• Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.
• Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.
• But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.

• On Tuesday, Fuji Soft Inc (9749 JP) said they had received the legally-binding Bain proposal on 11 October, but noted they could not confirm founder Nozawa-san’s agreement or intentions.
• Founder Nozawa Hiroshi responded with a pair of impassioned letters Thursday criticising process, asking Fuji Soft to withdraw support for KKR, and switch to or allow the Bain Offer.
• Fuji Soft on Friday reiterated support for the KKR First Tender, but interestingly, saw a majority resolve to suggest common shareholders NOT tender because of the optionality.

• I  tally 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deals discussed this week: Bossini International (592 HK) low-balled scrip Offer from Viva Goods (933 HK). Beijing Capital Grand (1329 HK) also suspended due to the Takeovers code. 
• Key updates took place on: GJS (2611 HK)/Haitong Securities (600837 CH), Fuji Soft Inc (9749 JP), Hotel Property Investments (HPI AU), TCM (570 HK) and Dyna Mac Holdings (DMHL SP) 

• Allegro MicroSystems presented their first fiscal quarter 2025 results, positioning themselves within a competitive and challenging market environment.
• Positive indicators can be discerned from their performance, although there remain areas of concern which reflect broader market conditions and segment-specific issues.
• Starting with the positives, Allegro MicroSystems reported first-quarter sales of $167 million, which was above the midpoint of their guidance.

• Couche-Tard execs do the rounds in Tokyo, complaining about not being able to do the rounds. This sounds like they are trying to make themselves sound nice. For now
• First the low-balled VTOs for AIS (ADVANC TB) and Thaicom (THCOM TB). Then the Intouch (INTUCH TB)/Gulf Energy (GULF TB) amalgamation. Then, arguably, the next unorthodox development will take place.
• Investors buying SAMTY HOLDINGS (187A JP) in size may withhold shares, either they’ll try to become the fulcrum investor to get into the Bidco OR they will try for a bump.

• Sales per outlet and gross margin per vehicle were supposed to rise in Q3. Instead, both went south, causing management to lower FY guidance about 50%. 
• Evidence from the 1st and 2nd quarters that indicated an immanent turnaround simply vanished in the 3rd quarter. 
• We lower our rating form “Massive Growth at Huge Discount” to “Decent Growth at Reasonable Price, No immanent catalyst.”

• Outside director compensation is increasing, but there is a considerable difference in compensation for outside directors between large and small companies and between small and medium-sized publicly traded companies.
• Every time a scandal occurs, there is a lack of shareholder-oriented management and a smattering of outside board members who turn a blind eye to the scandal.
• A compensation model that includes equity compensation should be created to maximize the power of outside directors, with “management from the perspective of shareholders” as a necessary condition.