Japan

In today’s briefing:

Fuji Soft (9749 JP) – The Fine Print Is Worth Reading
Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy
Tokyo Metro (9023 JP) IPO: Trading Debut
Human Capital Initiatives Can Also Be Viewed as Part of Such Autonomous “kaizen” Activities
Tokyo Metro IPO Trading – Robust Demand for Quality Asset

Fuji Soft (9749 JP) – The Fine Print Is Worth Reading

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.

Shinko Electric (6967 JP) Takeover – THIS Is a Dip to Buy

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) IPO: Trading Debut

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.

Human Capital Initiatives Can Also Be Viewed as Part of Such Autonomous “kaizen” Activities

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 IPO Trading – Robust Demand for Quality Asset

By Sumeet Singh

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.

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Oct 21

Daily Brief Japan: Fuji Soft Inc, Fujikura Ltd, Seven & I Holdings, Exedy Corp, Tokyo Metro, Nikkei 225, Sanwa Holdings, Mazda Motor and more

In today’s briefing:

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside
Fujikura (5803 JP): Positioning & Potential Passive Buying
Merger Arb Mondays (21 Oct) – Seven & I, Fuji Soft, Henlius, Canvest, GA Pack, Dyna-Mac
[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run
ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree
EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst
Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel
Unloved Japan Roundup: Bracing for Q3

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside

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 (5803 JP): Positioning & Potential Passive Buying

By Brian Freitas

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.

Merger Arb Mondays (21 Oct) – Seven & I, Fuji Soft, Henlius, Canvest, GA Pack, Dyna-Mac

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).

[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run

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.

ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree

By Sumeet Singh

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.

EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst

By Gaudenz Schneider

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.

Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel

By Mark Chadwick

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.

Unloved Japan Roundup: Bracing for Q3

By Michael Allen

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.

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Oct 20

Daily Brief Japan: Fuji Soft Inc, Allegro MicroSystems , Seven & I Holdings, Nextage Co Ltd, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter
(Mostly) Asia-Pac M&A: GJS/Haitong, Fuji Soft, Bossini, Dyna-Mac, Beijing Capital Grand, TCM
Allegro MicroSystems Inc.: Enhanced Product Portfolio With Focus on Automotive & E-mobility Applications Driving Our Bullishness! – Major Drivers
Last Week in Event SPACE: Seven & I/Couche-Tard, Intouch, SAMTY, Korea Zinc/Young Poong
NextAge (3186): What Went Wrong?
A Compensation Model Should Be Created to Maximize Outside Directors’ Abilities as Necessary Talents

Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter

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.

(Mostly) Asia-Pac M&A: GJS/Haitong, Fuji Soft, Bossini, Dyna-Mac, Beijing Capital Grand, TCM

By David Blennerhassett

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 Inc.: Enhanced Product Portfolio With Focus on Automotive & E-mobility Applications Driving Our Bullishness! – Major Drivers

By Baptista Research

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.

Last Week in Event SPACE: Seven & I/Couche-Tard, Intouch, SAMTY, Korea Zinc/Young Poong

By David Blennerhassett

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.

NextAge (3186): What Went Wrong?

By Michael Allen

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.”

A Compensation Model Should Be Created to Maximize Outside Directors’ Abilities as Necessary Talents

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.

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Oct 19

Daily Brief Japan: Alinco Inc and more

In today’s briefing:

Alinco Inc (5933 JP): 1H FY03/25 flash update

Alinco Inc (5933 JP): 1H FY03/25 flash update

In 1H FY03/25, revenue increased 5.4% YoY to JPY30.8bn, while operating profit declined 3.9% YoY to JPY1.3bn.
Segment profit for scaffolding equipment rentals grew 0.4% YoY to JPY1.3bn, with revenue up 15.1% YoY to JPY12.5bn.
Electronic Equipment segment revenue fell 10.0% YoY to JPY2.4bn, resulting in a segment loss of JPY326mn.

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Oct 18

Daily Brief Japan: Seven & I Holdings, SAMTY HOLDINGS Co Ltd, Intermestic, Hiday Hidaka, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Couche-Tard Execs in Tokyo, “Hoping” For Meetings But Really There To Hold a Press Conference
Samty (187A) Deal Looks Somewhat Vulnerable to Potential Interlopers
Intermestic IPO Trading – Drew a Strong Institutional Demand
Hiday Hidaka (7611 JP): Initial Report
No Disruption in Quarterly Disclosure Review, but a Few Companies Disclosed CF Statements in 1Q & 3Q

Couche-Tard Execs in Tokyo, “Hoping” For Meetings But Really There To Hold a Press Conference

Alimentation Couche-Tard (ATD CN)‘s CEO, former CEO, CFO, and founder were in Tokyo today giving a press conference about their trip and designs on Seven & I Holdings (3382 JP).
There was some passive-aggressive behaviour. Their bid was better than 7&i’s plan. They said it was a high price. They said they wanted to meet management, the ITOs, the government.
None of that will win the hearts and minds of the Special Committee.

Samty (187A) Deal Looks Somewhat Vulnerable to Potential Interlopers

The Hillhouse (Asia-based global PE firm) deal for SAMTY HOLDINGS Co Ltd (187A JP) has seen Samty shares trade tight to terms in the first three days of trading.
Some 7.5mm shares have traded. This is only 16% of shares out, but it is a much larger portion of Maximum Real World Float.
This begs the question of whether the deal could be put in jeopardy by the actions of one or two shareholders.

Intermestic IPO Trading – Drew a Strong Institutional Demand

By Clarence Chu

Intermestic (262A JP) raised around US$120m in its Japan IPO.
Intermestic is an eyewear manufacturer of eyeglasses and eyeglass accessories in Japan.
We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.

Hiday Hidaka (7611 JP): Initial Report

In FY02/24, revenue was JPY48.8bn (+27.8% YoY), operating profit was JPY4.6bn (+653.2% YoY), recurring profit was JPY4.8bn (+92.5% YoY), and net income was JPY3.2bn (+112.8% YoY).
The company attributed YoY revenue growth to the following factors.
First, customer count continued to grow after the March 2023 price hike.

No Disruption in Quarterly Disclosure Review, but a Few Companies Disclosed CF Statements in 1Q & 3Q

The number of days to disclose first- and third-quarter financial results was 37.0 days, roughly the same timing as the previous year, regardless of whether reviews were conducted or not.
The larger market capitalization companies are more likely to conduct voluntary reviews, and the larger market capitalization companies are more positive about ensuring the reliability of their disclosure information.
Despite a slight increase from the previous year, only a little more than 10% of all companies disclosed cash flow statements in the first and third quarters.

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Oct 17

Daily Brief Japan: Mazda Motor, Seven & I Holdings, WA Inc, TSE Tokyo Price Index TOPIX, Daiichi Sankyo, GENOVA , Onward Holdings, IDOM Inc, Takashimaya, Vector Inc and more

In today’s briefing:

Japan: Potential Passive Selling in November
7&I Holdings (3382 JP) – Artisan Writes Another Letter – Based on Content, They Should Sell Any Pop
Wa Inc (7683 JP) – Equity Offering, and TOPIX Inclusion But Very Lopsided Register
Fair for Managers Who Are Protected by Cross-Shareholding and Get Inflated Payout Due to Weak Yen?
Daiichi Sankyo (4568 JP) Valuation Update – Are We There Yet?
GENOVA (9341 JP): 70% Rally Over the Last Two Months; Here’s Why Outperformance to Continue
Onward Goes Young with Wego
IDOM Inc (7599 JP): 1H FY02/25 flash update
Takashimaya (8233 JP): 1H FY02/25 flash update
Vector Inc (6058 JP): 1H FY02/25 flash update

Japan: Potential Passive Selling in November

By Brian Freitas

Up to 9 stocks could be deleted from global passive portfolios in November. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.

7&I Holdings (3382 JP) – Artisan Writes Another Letter – Based on Content, They Should Sell Any Pop

Some two weeks after it became apparent Alimentation Couche-Tard (ATD CN) had lobbied a bid in for Seven & I Holdings (3382 JP), Artisan Partners wrote a letter.
It was full of misguided analysis, ungrounded insinuation of a general nature without specifying where they would have a problem. It seemed to be complaint for the sake of complaint.
Today another public letter. This time there are a couple of worthwhile suggestions, some accusations of fiduciary impropriety based on no evidence, and an implicit admission they should have sold?

Wa Inc (7683 JP) – Equity Offering, and TOPIX Inclusion But Very Lopsided Register

Yesterday WA Inc (7683 JP) announced that on the five year anniversary of its listing in 2019, the stock would move to TSE Prime on 1 November 2024
They also announced a secondary offering of 2.86mm shares including greenshoe. That’s 15% of shares out but the offering will double total float. This is almost a re-IPO.
This will lead to a TOPIX inclusion on 27 December which will be smaller than the offering. This will be all retail.

Fair for Managers Who Are Protected by Cross-Shareholding and Get Inflated Payout Due to Weak Yen?

It’s understandable that compensation is paid for managing a global business and achieving significant growth, but it’s also paid for bloated performance in yen terms due to the weak yen.
Employee engagement is very important for value-added products and more money should be spent on human capital. Otherwise, higher profit margins are unlikely to be achieved.
The election of directors at AGMs rarely results in rejection of the company’s proposal. Cross-shareholdings should be reduced so that managers whose “employment” is protected by cross-shareholdings don’t receive commensurate compensation.

Daiichi Sankyo (4568 JP) Valuation Update – Are We There Yet?

By Avien Pillay

At a 51 NPE, Daiichi Sankyo was priced for perfection.
We do like their focus on the high growth oncology segment, however, we felt that the valuation left no room for error.
Post the two disappointing trial announcements, at a 39 NPE, the valuation is become more palatable and getting closer to our mid-thirties target entry point.

GENOVA (9341 JP): 70% Rally Over the Last Two Months; Here’s Why Outperformance to Continue

By Tina Banerjee

GENOVA (9341 JP) recorded better-than-expected sales and operating profit in Q1FY25, driven by continued strong demand. With the progress achieved in Q1FY25, the company is expected to beat H1FY25 guidance.
Medical Platform business has been experiencing steady growth in both the number of articles and page views, leading to creation of multiple contracts and improve the platform’s unit contract price.
The company had 14K customers for the Medical Platform Business and the Smart Clinic Business in Q1FY25, a mere 8% of its estimated potential customer base of 173K clinics.

Onward Goes Young with Wego

By Michael Causton

Most of Onward’s current customers are in their 40s and older but the purchase of casual clothing retailer, Wego, increases its exposure to people in their teens and 20s.
It will accelerate development of new omnichannel brands to match as part of plans to grow sales by 50% in the next six years and more than double operating profits.
Onward itself has been transformed by a switch to omnichannel and after years of slashing stores and sales now looks set to become a growth business again.

IDOM Inc (7599 JP): 1H FY02/25 flash update

In 1H FY02/25, sales rose JPY46.0bn (22.6%) YoY, driven by large store operations and retail unit sales.
Operating profit increased JPY3.0bn (42.1%) YoY, with gross profit per retail unit rising to JPY440,000 (+60,000 YoY).
Revised FY02/25 forecast projects sales of JPY500.0bn (+19.1% YoY), operating profit of JPY20.3bn (+26.0% YoY).

Takashimaya (8233 JP): 1H FY02/25 flash update

The company revised its FY02/25 forecast, projecting operating revenue of JPY495.0bn and operating profit of JPY55.0bn.
Operating revenue and profit grew YoY across segments, with notable growth in Domestic Department Store and Contract and Design.
Takashimaya Financial Partners Co., Ltd. saw increased revenue from card transactions and expanded its Social Lending business.

Vector Inc (6058 JP): 1H FY02/25 flash update

Revenue decreased 4.1% YoY to JPY27.4bn, while operating profit increased 39.5% YoY to JPY2.1bn.
PR and Advertising saw significant profit growth due to provisions reversal, while Direct Marketing faced profit decline.
Revenue forecast downgraded; 1H revenue fell short due to client loss and food safety impact.

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Oct 16

Daily Brief Japan: MS&AD Insurance, Takashimaya, Seven & I Holdings, Rigaku Holdings, Money Forward and more

In today’s briefing:

Japan CorpGovReport Details: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Oct24)
Takashimaya (8233 JP) Decent Earnings, BIG Buyback (Odd Register Dynamics)
How Seven Eleven and Other Conbinis Are Sitting on a Retail Media Goldmine
Rigaku IPO: Forecasts and Valuation
Money Forward (3994) | Q3 Priced In; Look for Pull-Back

Japan CorpGovReport Details: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Oct24)

TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
Our tools show every report, links to every document, and now a new diff file tool. input a name, see the difference between the Old/New Reports. We hope it helps.
This tool is designed to be a shelf reference. We update it once a month, and every CorpGovReport and new “Management Conscious” report updated since a CGR update is here.

Takashimaya (8233 JP) Decent Earnings, BIG Buyback (Odd Register Dynamics)

By Shifara Samsudeen, ACMA, CGMA

Today, Takashimaya (8233 JP) reported Q2 earnings, a dividend hike, upward revisions to the FY26 MTMP, and a decent-sized buyback to raise leverage levels and ROE.
The company is yen-sensitive both in overseas retail and domestic department stores on inbound traffic. One could imagine future issues.
The register looks like it is quite open. It is not. That is worth considering now and in future.

How Seven Eleven and Other Conbinis Are Sitting on a Retail Media Goldmine

By Michael Causton

Just as they did before, Japanese convenience stores are taking a US idea and making it Japanese, in this case retail media, which looks set to be huge in Japan.
Seven & I believes it will be a ¥3 trillion business and Familymart, which is leading in this new profit machine, expects ¥5 billion in media income in 3 years.
The options for highly personalised targeting and behavioural analysis will transform brand advertising and marketing – but even more the bottom line of convenience stores.

Rigaku IPO: Forecasts and Valuation

Rigaku Holdings (268A JP) has opened its books for the IPO, and the IPO will raise $753m purely through the sale of shares by the existing shareholders.
Unlike its competitors, Rigaku has a very specialized product portfolio that is entirely focused on X-ray technology which makes the company unique among its competitors.
Our analysis reveals that Rigaku’s IPO is attractively priced compared to its competitors and there is more than 15-20% upside to the indicative IPO price range.

Money Forward (3994) | Q3 Priced In; Look for Pull-Back

By Mark Chadwick

In Q3, Money Forward demonstrated continued strong performance, with consolidated net sales posting 31% growth year-on-year to ¥9.81 billion
EBITDA for the cumulative nine months stands at ¥1.48 billion, comfortably within the company’s full year guidance range of ¥1-3 billion.
We now see a very modest 2% upside to our target price of ¥6,440, based on an 8x forward revenue multiple.

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Oct 15

Daily Brief Japan: Mazda Motor, Neos Corp and more

In today’s briefing:

Unloved Japan Round-Up
Neos Corp (3627 JP): 1H FY02/25 flash update

Unloved Japan Round-Up

By Michael Allen

Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.
The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.
Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.

Neos Corp (3627 JP): 1H FY02/25 flash update

In 1H FY02/25, TECMIRA reported revenue of JPY5.6bn, a 34.4% YoY increase, with a net loss of JPY67mn.
IoT & Devices segment revenue rose 13.9% YoY, with segment profit increasing 12.7% YoY due to improved production efficiency.
AI & Cloud segment profit surged 594.4% YoY, driven by AI chatbot productization and infrastructure migration to Microsoft Azure.

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Oct 14

Daily Brief Japan: Fuji Soft Inc, Tokyo Metro, TSE Tokyo Price Index TOPIX, Shionogi & Co and more

In today’s briefing:

Bain Bids Bigger, Goes Hard on Fuji Soft (9749); I’ve Got 🍿🍿🍿
Fuji Soft (9749 JP): Bain’s Better Late than Never Competing Offer
ECM Weekly (14th Oct 2024) – Tokyo Metro, Rigaku, Hyundai, China Res, Swiggy, USS, Akeso, Shiyue
After TSE’s Request, the Key Is Whether the Company Can Deliver While Investors Are Still Hopeful
Shionogi & Co (4507 JP): Performance to Improve in H2; Upcoming Drugs to Accelerate Growth

Bain Bids Bigger, Goes Hard on Fuji Soft (9749); I’ve Got 🍿🍿🍿

As they had announced was their intention, Bain has made a binding offer for Fuji Soft Inc (9749 JP), bidding ¥9,450 against KKR’s ¥8,800. They aim to launch late October.
There is no minimum and no maximum. The Founding Nozawa family had thrown their lot in with Bain not KKR and that 18.5% is tied up.
There are conditions, and those are ALL-important. And I expect we see in the next week or so how coercive KKR’s “non-coercive” scheme change was. I’ve got 🍿🍿🍿.

Fuji Soft (9749 JP): Bain’s Better Late than Never Competing Offer

Bain’s pre-conditional tender offer for Fuji Soft Inc (9749 JP) is JPY9,450, a 7.4% premium to KKR’s JPY8,800 offer. There is no minimum or maximum acceptance condition.
The preconditions relate to regulatory approval (Vietnam) and Board recommendation. Bain’s offer is designed to bring KKR to the negotiating table to find a solution to privatisation.
KKR can 1) do nothing, 2) work with Bain on a solution, or 3) engage in a price war to prevent the satisfaction of Bain’s Board recommendation precondition.

ECM Weekly (14th Oct 2024) – Tokyo Metro, Rigaku, Hyundai, China Res, Swiggy, USS, Akeso, Shiyue

By Sumeet Singh

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 two Japanese IPOs, Tokyo Metro (9023 JP) and Rigaku Holdings (268A JP) appeared attractively priced. The same couldn’t be said about Hyundai Motor India.
On the placements front, there were deals in Hong Kong, Japan and India.

After TSE’s Request, the Key Is Whether the Company Can Deliver While Investors Are Still Hopeful