Japan

• NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn’t. Good. Not great. 
• But NTT announced a ¥200bn buyback. Again good. Not great. 
• And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.

• Today, the personal holding company of Kyoden Co Ltd (6881 JP) founder Hashimoto-san announced a Tender Offer to take the company private. 
• Together with his company, he owns 64.75%. He only needs 1.93% to tender. The combination of Shokochukin, SMBC, and Yokohama Bank get him over the line. 
• This is small, illiquid, and will trade tight, but it’s a done deal. 

• Softbank and the Vision Fund’s exposure to WeWork – estimated at USD1.8bn – look increasingly to be at risk of being written off
• Masa’s debts to SoftBank stand at USD5.1bn at 1QFY23 end and we believe that private company valuations are vulnerable, especially in the light of the recent Union Square Ventures write-downs
• Softbank shares trade at a 36% discount to the stated NAV; with Alibaba gone, the potential Arm IPO valuation is critical but SVF1 and 2 private company valuations remain questionable

• Kyoden Co Ltd (6881 JP) has recommended the founder’s tender offer of JPY600 per share, a 32.5% premium to the undisturbed price (9 August).
• The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 1.91% ownership ratio.
• The minimum acceptance condition (lower limit) requires an undemanding 5.4% minority acceptance rate. The tender offer is reasonable. 

• A year ago I wrote that same headline as Inpex Corp (1605 JP) reported H1 results, a change in forecasts, and a bigly buyback.
• Yesterday, Inpex reported FY2023 H1 results, a change in forecasts, and a bigly buyback. 
• The mechanics are the same. The impact is a bit different, but it is worth looking at. Then there is the event on 28 February 2024.

• FUJIFILM Holdings (4901 JP) reported 1QFY03/24 results today. Both revenue and OP increased 5.6% and 5.2% YoY to ¥660.8bn (vs consensus ¥649bn) and ¥52.2bn (vs consensus ¥52.1bn) respectively.
• Materials segment’s earnings were negatively impacted during the quarter due to a stagnant semiconductor market, however, we expect segment’s earnings to improve with the completion of Entegris acquisition.
• Despite the company successfully transitioning into a healthcare player, Fujifilm is still trading in line with imaging/photocopy players and there is significant upside to the company’s current share price.

• We have been covering UE for five years principally because we were bullish about its intentions to bring its Manila casino business public.
• Our focus has shifted. We see the casino IPO as inevitable but we like the stock now because it has performed well in its core Pachinko and media businesses post-covid. 
• If the Okada casino deal gest past current legal issues it would be a catalyst “bonus” to holders who come into the stock now, on a slight dip.

• The Tenth Annual JPX Nikkei 400 Index Review was announced on Monday 7 August. There are 38 Inclusions, 36 Deletions. They are mostly in line with Janaghan Jeyakumar, CFA‘s predictions.
• The BIG SELL is T&D Holdings (8795 JP), which surprised me. The top BUY is ROHM Co Ltd (6963 JP) which was not on the Quiddity Leaderboard.
• Otherwise, the ADDs and DELETEs are 1.8-2.0 days of ADV, there are several NEW CAPs and some RECAPS among LARGE CAPS

• The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
• The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
• The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.

• Yesterday, JIP finally announced its Tender Offer for Toshiba Corp (6502 JP) as discussed in JIP Tender Offer for Toshiba (6502) Finally Here 
• I got a few questions this morning on the earnings call comments from Chairman Watanabe regarding what might happen if a Kioxia Transaction were announced mid-JIP Tender.
• My assumption before, during, and after, is that the Board wants this deal done. And doesn’t really want to take any responsibility for pushing any more.

• Fancl released 1QFY24 results last week. While revenue was broadly in line with consensus at ¥27.2bn (consensus ¥26.9bn), OP beat consensus by around 27% to generate an OP of ¥3.2bn.
• While there were certain performance improvements in the flagship brands “FANCL” and “ATTENIR” during FQ1, there are no definitive signs that they are completely out of trouble.
• Meanwhile, it looks like competition has affected Fancl Corp (4921 JP)’s plan to cut advertising costs. Thus, FY24 OP guidance could be under pressure.

• From a niche player to a global high-flyer – Shofu is a domestic market leader in developing and manufacturing dental materials and equipment.

• With its proprietary technology and expertise, it is aiming to become a global top 10 player with a strategic focus on overseas expansion.

• With an addressable market estimated to become up to 20 times larger than Japan, growth prospects are high and the company is gaining solid traction with FY3/2023 results set to reach record highs.

• To narrow the gender wage gap for all workers, reducing non-regular female workers, who make up the majority, is a possible solution, but changing this structure will not be easy.
• Many companies recognize that the low ratio of female managers (about 10% among listed companies) is behind the gender wage gap among regular workers.
• However, many companies aren’t taking immediate actions because they believe that % of female managers will increase as the age of newly hired female full-time hires in recent years increases.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Ports & Special Economic Zone
• Softbank Group

• The JIP TOB for Toshiba is here. Finally. It is still too low. Since the announcement, when it was too low, peers are up a lot, and memory looks healthier.
• But it is not clear that activists who pushed this for years want to push any more. There appears to be Toshiba Fatigue, as I warned in March.
• That makes this deal look “safe” but there are technical aspects which make it less “comfortable” than normal large and long-awaited deals. 

• There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
• Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
• There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.

• Bank of Kyoto (8369 JP) has been on a relative tear recently. This is a bit surprising.  On a static equity-portfolio discount measure, it has outperformed regional banks.
• On a static regional bank PBR basis, it has outperformed its equity portfolio and the discount to the After Tax Equity Portfolio Value (ATEPV) is the smallest in eight years.
• Is there a sea change? There is a possibility, however remote, that domestic investor disappointment rears its voting head. That’s the dream scenario. But I don’t see it coming soon.

• At long last the end to the Toshiba saga appears at hand with JIP’s belated tender offer being formally announced today at the previously quoted price of ¥4,620. 
• With a minimum target of 66.7% this does not seem guaranteed to pass but we nevertheless believe that odds are good. 
• The question is whether there is any room for a small hike in the price as alluded to by the Chairman.

• Japan Industrial Partners (JIP) will launch the Toshiba Corp (6502 JP) tender offer of JPY4,620 per share from 8 August to 20 September.
• The Board has reaffirmed its recommendation to accept the offer. JIP’s inability to raise its bid is used as an excuse to ignore the material peer rerating and unattractive terms.
• The 1Q results undermine the Board’s view of an overstated DCF and show its unwillingness to entertain a potential Kioxia merger as a superior alternative, increasing deal risks. 

• TRYT’s shares started trading on TSE on 24th July. The IPO was priced at ¥1,200 per share and closed at ¥876 per share at the end of first day trading.
• The company’s shares are currently trading at around ¥900 per share, at a 25% discount to TRYT (9164 JP) ‘s IPO price.
• We recommended staying on the sidelines as the company’s IPO was overvalued and our DCF valuation suggests that shares are fairly valued at the current price.

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• Plus Alpha Consulting (4071 JP) will be included in TOPIX at the end of August 2023 and so far the stock has performed negatively as expected (see link).
• Our long-term TOPIX pre-event name CELSYS (3663 JP) has seen its share price decline sharply in the last few weeks which raises some important questions.

• Yakult Honsha (2267 JP)‘s OP fell short of market expectations by ¥500 million in 1QFY24, leading to a 15% drop in the company’s share price.
• With the post earnings price reaction, Yakult’s FY+2 PE has fallen to its lowest level since before the global financial crisis, currently standing at around 18.7x.
• We think this price reaction is unwarranted as the fundamentals haven’t changed. Thus, creates an opportunity for short-term gains by staying bullish on the stock.

• Star Asia Investment (3468 JP) is looking to raise around US$180m in its extended primary follow-on raising. The proceeds will be used to acquire 12 new hotels.
• The deal would be a large deal to digest at 110 days of three month ADV, with the new shares representing around 19% of dilution.
• The REIT has undertaken capital raisings over the past few years to fund its active portfolio management strategy. Thus, we would argue that the deal here is well flagged. 

• 1Q sales growth was strong, but the operating margin was squeezed by the cost of overseas expansion.
• The company’s finances remains very strong, but balance sheet ratios reflect the loss of earnings momentum and the dividend payout remains low.
• Shares sold off on margin contraction, but valuations still  high. A quick rebound cannot be taken for granted.

• Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
• The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
• Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.

• 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 – 111 Inc (YI US), Chindata Group (CD US), Estia Health (EHE AU), Invocare Ltd (IVC AU), ENM Holdings (128 HK), Eoflow (294090 KS), JSR Corp (4185 JP). 
• Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Penguin International (PBS SP), Itochu Techno Solutions (4739 JP), Oishi Group PCL (OISHI TB), Kenedix Retail REIT (3453 JP). 

• 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 – Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK) and Lianlian DigiTech (2104619D CH) IPOs.
• Event-Driven developments – E Guardian Inc (6050 JP), Itochu Techno Solutions (4739 JP), Toshiba Corp (6502 JP), Symbio Holdings (SYM AU), Metro Pacific Investments Co (MPI PM).     

• Yaizu Suisankagaku Industry (2812 JP)/YSK has recommended J-STAR’s tender offer of JPY1,137 per share, a 35.0% premium to the undisturbed price (4 August).
• The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.67% ownership ratio.
• YSK is cash rich, and the offer is below book value. The tender offer is a reasonable alternative in challenging trading conditions that have slashed operating margin targets. 

• Astellas Pharma (4503 JP) reported Q1FY24 results, with revenue beating and operating and net profit missing consensus. Revenue declined 2%, while operating and net profit increased 17% and 13%, respectively.
• Astellas has reiterated FY24 revenue guidance of ¥1,520B, while reduced operating profit guidance by ¥29B to ¥259B (+95% YoY) and net profit guidance by ¥23B to ¥204B (+106% YoY).
• On August 4, Iveric Bio has received FDA approval for Izervay for the treatment of geographic atrophy secondary to age-related macular degeneration, which impacts approximately 1.5M people in the U.S.  

• ZHD reported F1Q/C2Q23 top-line, non-GAAP operating profit and non-GAAP net profit in-line, in-line and (32%) vs. consensus, respectively. Earnings miss was driven by wider tax expense.  
• ZHD’s B2C e-commerce platform GMV continued to decline, which we suspect is due to the continued impact of STAT, especially Shein.
• We maintain SELL and raise TP to JPY 340 due to improved ads-spending, but we expect the transient ad spend increase to be offset by loss of ecommerce customers. 

• Transport industry officials want to ban ‘free shipping’, forcing customers to pay for all deliveries and even redeliveries.
• The aim is to reduce demand in time for new rules on driver overtime due to come into force next year and should relieve pressure on Yamato and others.
• There is also more collaboration to reduce costs and labour: Yamato has scrapped its small packet business entirely, passing customers on to Japan Post. 

• This may get squeezy after Nippon Yusen Kk (9101 JP) announced a ¥200bn over 9mos. Do not be short. Be long. 
• On an implied stub and simple ratio, Takara Holdings (2531 JP) is trading rich to 60.9%-held Takara Bio Inc (4974 JP). 
• Remain bullish Kawasaki Kisen Kaisha (9107 JP) vs TOPIX, especially near-term. But this is a much less exciting and squeeze-able opportunity than before,

• The review period for a bunch of indices ended early last week and the announcement of the changes will be made in the next few weeks.
• Hydro Lithium (101670 KS) will replace Nice Information Service Co (030190 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the close on Monday.
• There have been big net inflows into China focused ETFs and outflows from Taiwan focused ETFs during the week.

• Eisai Co Ltd (4523 JP) reported 7% YoY revenue growth in Q1FY24, due to the growth of anticancer agent Lenvima mainly in the U.S. and insomnia treatment Dayvigo in Japan.
• The company has reiterated FY24 guidance, which calls for 4% YoY revenue decline, 25% YoY growth in operating profit, and 31% YoY decline in net profit.
• On July 6, 2023, Eisai received full FDA approval for Leqembi (lecanemab) injection for the treatment of Alzheimer’s disease. Leqembi is progressing steadily toward treating 10K U.S. patients in FY24.

• Global equities are under some pressure after Fitch downgraded the United States’ credit rating to AA+ from AAA.
• We expect that this is a normal 3%-6% pullback to the 50-day MA or major $93 support level on the MSCI ACWI iShares MSCI ACWI ETF (ACWI US) .
• $TNX is below 4.1%-4.3% and DXY remains in an 8-month downtrend; as long as this remains true, we’d buy on a pullback to the 50-day MA and/or $93 on ACWI-US

• The percentage of stockholdings by individuals will continue rising. Their tendency to buy-on-decline will continue to serve as a cushion in times of falling stocks as well as voting behavior.
• Now that the BOJ’s ETF purchases have subsided, an increase in trust bank stock holdings is not expected. A limited increase in pension assets is also expected.
• The reduction in cross-shareholdings has reduced the shareholding ratio of corporations to 19.6%. Meanwhile, corporations repurchased total of 5,790.7 billion yen in FY2022, indicating that share repurchases have taken root.

• In March, NYK announced a new Mid-Term Management Plan discussed in Nippon Yusen – New MidTermPlan = New Shareholder Return Policy. They promised a full Shareholder Return Policy in May. 
• There was limited new SRP discussion in the 9 May earnings announcement. The MTMP suggested ¥200bn over 2yrs. The (Japanese) earnings announcement did too. Then May ended. 
• Now the Buyback Plan is out. ¥200bn over 9mos. That is different. This could move. 

• On 28 July, Toshiba Corp (6502 JP) disclosed that JIP delayed the tender start to “sometime in August 2023” vs the target “in the last ten days of July 2023.”
• Toshiba reports 1Q results on 7 August. A solid 1Q will undermine the Board’s recommendation of the offer in part on the premise that the IFA’s DCF valuation is unrealistic.
• The current low spread points to a done deal, partly due to shareholder fatigue. However, risks persist as the rerating of peers continues to chip away at the offer’s attractiveness. 

• On an implied stub and simple ratio, Takara Holdings (2531 JP) is trading rich to 60.9%-held Takara Bio Inc (4974 JP).
• Preceding my comments on Takara are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Strategic shifts continue to reap rewards–IDHoldings’Q1 FY3/2024 performance demonstrated a continuation of the robust results experienced in FY3/2023, with DX remaining the core demand driver.
• Business segment sales in System Management, IT Infrastructure, and Cybersecurity, Consulting, and Training grew strongly YoY, demonstrating that the company’s efforts to remodel its business have been successful to better support and serve its customers.
• We have kept our earnings estimates unchanged for FY3/2024 and beyond, with the expectation that high-margin DX demand will continue, driving continued profitability improvements in the business.

• Itochu Corp (8001 JP) today announced it had agreed with 61%-owned Itochu Techno Solutions (4739 JP) sub to take over CTC and squeeze out minorities. 
• The stock released earnings mid-day, somehow, but not on TDNet until post-close. The stock jumped in the last two hours. The Tender Offer is at a 10% premium to close.
• Growth will be up, and there are lots of financial assets and net receivables so this is 8+x March 2025. Itochu is not overpaying. But there will be no counter.

• Itochu Techno Solutions (4739 JP) has recommended Itochu Corp (8001 JP)’s tender offer of JPY4,325 per share, an 18.7% premium to the undisturbed price (1 August).
• The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 5.43% ownership ratio.
• The minimum acceptance condition requires a 14% minority acceptance rate. This is doable as the tender price is attractive and equals the 20-year share price high.

• Today, Kawasaki Kisen Kaisha (9107 JP) announced Q1 earnings. As expected, net was WAY down on weak container business. But the company revised up H1 and Full-Year.
• KLINE increased its FY2023 payout, upping its expected buyback plan from ¥50bn to ¥60bn. This is still cheap at 8.5x and 0.7x book, and there is non-container growth. 
• The structure of the buyback deserves attention. It may deserve a very short-term trade. The buyback construct has the possibility of “fun and games.”

• E Guardian Inc (6050 JP) has announced a partial tender offer and third-party allotment with Change Inc (3962 JP). CHANGE will subscribe for 1.5 million shares at JPY2,099 per share.
• The tender offer is for a minimum of 3.7 million and a maximum of 4.3 million shares at JPY3,000 per share, a 42.9% premium to the undisturbed price.
• The tender offer is reasonable. The minimum acceptance condition requires a 37% minority acceptance rate. A 100% minority participation rate implies a minimum proration is 42.39%. 

• ANA has just announced that it will purchase carbon removal credits underpinned by Direct Air Capture (DAC)
• The purchase of 30,000 credits over 3 years is virtually nothing compared to the company’s annual CO2 emissions over 12 million tons
• Assuming that DAC is expected to remove just 10% of emissions, we estimate that it could wipe out over 70% of operating profit

• Cash generation through the subsidiaries’ IPOs will only buy time, and investors are likely to focus on when Rakuten will move to solve the problems in its cell phone business.
• In recent years, TSE’s market reorganization has focused attention on parent-subsidiary listings, and there’ve been moves to convert listed subsidiaries into wholly owned subsidiaries or sell subsidiaries to other companies.
• For Rakuten, subsidiary IPOs are an essential means of raising cash, but TSE’s recognition of the governance issues involved in parent-subsidiary listings raises questions about Rakuten’s two parent-subsidiary listings.

• Today, Change Inc (3962 JP) (30%-owned by SBI Holdings (8473 JP)) announced a Tender Offer to buy 32-36.9% of E-Guardian, followed by a third-party placement to get them to 45-49%.
• Small cap E-Guardian does internet services support, ad processing, cyber security (their fastest growing segment) and top line has been growing.
• The partial offer is big enough to matter, and up 50%. It is worth a look for people who like small cap special sits.

• In April, Sekisui Jushi (4212 JP) announced lackluster earnings and unsurprising guidance after a year marked by higher costs. It also announced a small (2.5%) buyback, likely for cross-holdings.
• Yesterday, the company announced Q1 results, and a revision to their buyback programme (to buy 20.2% of shares out). This morning their 22+% (#1) shareholder Sekisui Chemical sold 18%. 
• Forward PER dropped nearly 20%. The stock is still outrageously cash/securities-rich and if “re-levered” to zero net leverage would get a high 20s ROE. Hmmm…

• Mizuho has well positioned for YCCC relief with its balance sheet management in 1Q24
• Less low yielding cash assets, higher loans, securities, shift into NCDs, from deposits
• Mizuho reports credit costs reversals and better credit metrics are clear in NPL detail

• Asics is due to report on 8th August. We expect another strong quarter and guidance revision
• Recent results from Nike bode well for Asics – declining inventories and strong top line performance in China
• We believe that higher operating margins will be the key stock driver and see 10% upside to fair value

• Ono Pharmaceutical (4528 JP) recorded 13% YoY revenue growth to ¥120B in Q1FY24, driven by 12% YoY growth in product revenue. Royalty revenue grew 14% YoY.
• Revenue from Opdivo grew 11% YoY to ¥37.8B, due to expanded use in treatments for gastric cancer, esophageal cancer, urothelial carcinoma, etc. Revenue from Forxiga grew 34% YoY to ¥17.5B.
• For FY24, Ono continues to expect revenue growth of 6% to ¥475B. Operating and net profits are expected to increase 8% and 2% to ¥153B and ¥115B, respectively, for FY24.

• The 2023 Version of JAPAN PASSIVE: Who Owns What? where we break down the major (and minor) passive tracking indices and which category of investor owns how much of each. 
• Even if you do not “play” index changes, understanding impact is important. Advantest is up 100% in 3mos. Existing passive ownership and new passive buying were crucial to that performance.
• Understanding the nature of the ownership and flows is crucial to understanding how to trade certain stocks in Japan. 

• The review period for the Nikkei 225 (NKY) September rebalance ended yesterday. There should be three index changes, potential stepwise inclusion, no Fast Retailing capping and a big funding trade.
• There appears to be decent positioning on the potential adds, while it is the close adds that are spiking along with a big increase in traded volumes.
• If the three changes are on expected lines, estimated one-way turnover at the rebalance is 2.01% resulting in a one-way trade of JPY 461bn (US$3.24bn). 

• Toshiba announced on Friday that JIP’s upcoming tender offer would not make the July end deadline. 
• At this point delays for Toshiba are par for the course and we do not think anything needs to be read into this. 
• With earnings coming up next week we examine the likely trends and the possibility of a revision to guidance.

• The Nikkei 225 (NKY INDEX) rallied +27% in the first 6 months of 2023. 6 months closed up, July closed (barely) down. The index can rise further in Aug/Sep.
• If August is down, a LONG opportunity: look at support prices between 32391 and 30600,  good probability to see the market going higher from there.
• If rallying in August, Nikkei could rise between +1.73% (33745) and +3.29% (34265). Continuation of the rally into September could reach higher prices but will encounter resistance at +8.29% (35922).

• Mitsui Fudosan Logistics Park Inc (3471 JP) is looking to raise US$106m in its primary follow-on offering to acquire three properties and two 50% co-ownership interests in two properties. 
• The deal is a somewhat large one to digest, at 20 days of three month ADV and 5.3% dilution. 
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• Nihon M&A reported 1QFY03/2024 results on Friday. Both revenue and OP decreased 9.1% and 52.5% YoY to ¥8.2bn (vs consensus ¥9.8bn) and ¥1.7bn (vs consensus ¥3.6bn) respectively.
• M&A sales decreased yet again in 1Q as the company is struggling to improve revenue per transaction despite there being an increase in the no. of transactions.
• We think the company may not be able to achieve full-year target given declining per transaction revenues and falling other businesses.

• M3 Inc (2413 JP) reported 1QFY03/2024 results on Friday. Revenue increased 0.7% YoY to ¥57.4bn (vs consensus ¥58.1bn) while OP decreased 3.7% YoY to ¥18.0bn (vs consensus ¥18.1bn).
• Overseas revenue growth further slowed down to 5.3% despite the company expecting overseas business growth to help offset slowdown in pharma marketing business going forward.
• This proves that m3’s long list of M&A’s have not been really successful as we have not observed any meaningful growth from these new acquisitions.

• Domestic investment managers are expected to show a higher percentage in favor of shareholder proposals, but life insurances still face a high hurdle in voting in favor of shareholder proposals.
• It is relatively easy to decide for or against a proposal based on quantitative criteria such as the level of ROE or whether there are zero female directors.
• Few institutional investors adequately disclose the reasons for approval or disapproval of individual proposals. Disclosure of reasons for approval or disapproval is required for company proposals that are controversial.

• High earnings visibility – Q1 FY3/2024 results indicate a robust start to the year with record-high quarterly sales, orders, and backlog.
• We believe the company exhibits robust earnings visibility, which can be attributed to its adeptness in delivering high-value-added services within a highly competitive market, with its high-quality workforce and sufficient capacity.

• Aiming for long-term sustainable growth –whilst strong results are appealing, we are encouraged by the following which we believe will allow the business the sustain long-term growth