Japan

In today’s briefing:

CVC Bumps the Macromill (3978) Price, Declares Final, and That’s That… Or Is It?
ECM Weekly (20th Jan 2025) – Guming, LG India, Schloss (Leela), Freetech, Chongqing Terminus, Murata
Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

CVC Bumps the Macromill (3978) Price, Declares Final, and That’s That… Or Is It?

On Friday 17 January, the closing date of the CVC Tender Offer for Macromill, Inc (3978 JP) at ¥1,150/share, the bidder announced an extension of the Tender Offer.
They also announced a bump to ¥1,250/share, and that included a comment saying they resolved not to raise the price further.
This happened during market hours, and the price jumped to just below ¥1,250/share. But one should not consider this a done deal. For reasons…

ECM Weekly (20th Jan 2025) – Guming, LG India, Schloss (Leela), Freetech, Chongqing Terminus, Murata

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 IPO front, Guming Holdings appears to be gearing up for a launch soon.
On the placements front, while Wuxi XDC failed to perform, Murata Manufacturing (6981 JP) has been holding up so far.

Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

The previous share price of FUJISOFT did not reach the value it should have, and therefore, the company did not achieve its management goal of maximizing shareholder profit.
The decision for shareholder return or investment in growth rests with management. Cash returned to shareholders is simply invested by investors to find investments where they can earn better investment.
Rather than “shareholder pressure,” we should think this is the beginning of an effort to return to the basics of shareholder-oriented management, which is to expand shareholder interests.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 19

Daily Brief Japan: Makino Milling Machine Co, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Makino Milling (6135) – Trading Through Terms, May Need Investor Pushing
If Profits Cannot Grow, Tokyo Market Will Be Full of PE and Activist Investors

Makino Milling (6135) – Trading Through Terms, May Need Investor Pushing

Nidec Corp (6594 JP) in late December proposed an unsolicited takeover of Makino Milling Machine Co (6135 JP), with a 3-month delay before launching a Tender Offer.
Makino has asked for an extension to the start. Nidec has said no. Makino is going about this the wrong way. Makino needs to assume Nidec thought this through.
Makino needs to open up the process to other bidders, and investors can help.

If Profits Cannot Grow, Tokyo Market Will Be Full of PE and Activist Investors

There do not seem to be many companies that have executed large one-time dividends that have subsequently grown in corporate value.
Now that the exit from deflationary economy is seen and profit margins have room to grow, the environment is conducive to investing in growth, and companies have opportunities to change.
Limited profit growth is making it easier for market risk-taking investors to leave. Unless companies can grow profitably, Tokyo market will be full of private equity funds and activist investors.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 18

Daily Brief Japan: Macromill, Inc, D.Western Therapeutics Institute Inc., Takachiho Koheki and more

In today’s briefing:

Macromill (3978 JP): CVC Bumps to JPY1,250, but the Offer Remains Light
4576 JP – Announced Revisions to FY24/12 Earnings Forecasts
2676 JP – Aiming to Transform from “selling Goods” to “selling Services”…

Macromill (3978 JP): CVC Bumps to JPY1,250, but the Offer Remains Light

Macromill, Inc (3978 JP) disclosed a revised tender offer from CVC at JPY1,250, an 8.7% premium to the previous JPY1,150 offer. The offer has been declared final.
The revised offer is reasonable compared to historical trading ranges. Since the announcement of the offer, the share price has never exceeded it.
CVC seeks an irrevocable from Oasis, but Oasis has several reasons to ignore the overtures. Due to the high required acceptance rate, a gross spread of 0.2% is unattractive.

4576 JP – Announced Revisions to FY24/12 Earnings Forecasts

By Sessa Investment Research

In light of recent performance trends, DWTI has revised its initial earnings forecasts announced on February 9, 2024.
In addition, the Company is recording an extraordinary loss in its non-consolidated financial results for the fiscal year ending December 2024.
Net sales are expected to increase due to strong royalty income from ophthalmic surgical aid “DW-1002” in Europe, the United States, etc.

2676 JP – Aiming to Transform from “selling Goods” to “selling Services”…

By Sessa Investment Research

Takachiho Koheki (hereafter, the Company) is a trading company highly specialized in electronics technology that has identified the underlying needs of its customers to introduce the world’s cutting-edge electronics products to Japan ahead of competitors.
With engineering employees accounting for over 40% of its workforce, the Company is a highly specialized technical organization with a total of about 25,000 customer accounts, and its solid customer base is one of its assets.
In H1 FY2025/3, the Company surpassed initial estimates, reporting consolidated net sales of JPY13,314 mn (+4.6% YoY), operating profit of JPY936 mn (+31.2% YoY), ordinary profit of JPY811 mn (-23.2% YoY), and profit attributable to owners of parent (hereinafter, net profit) of JPY594 mn (-17.2% YoY).

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 17

Daily Brief Japan: Toyota Motor Corp Spon Adr, TSE Tokyo Price Index TOPIX, Stella Chemifa and more

In today’s briefing:

Toyota’s EV Woes: Struggling To Find The Fast Lane In Electric Mobility
Raising Requirements for Shareholder Proposals Could Hinder the Shift to Value-Creating Management
Stella Chemifa (4109 JP) – Strong Earnings, Attractive Share Price

Toyota’s EV Woes: Struggling To Find The Fast Lane In Electric Mobility

By Baptista Research

Toyota Motor Corporation, the world’s largest automaker by production volume, finds itself at a critical juncture in the global automotive industry.
Despite a commendable first-half operating income of ¥2.464 trillion for fiscal 2025 and a full-year forecast of ¥4.3 trillion, the company’s electrification strategy—or lack thereof—remains a contentious issue.
While Toyota has mastered the art of hybrid and internal combustion engine (ICE) vehicles, it continues to lag significantly behind competitors like Tesla and BYD in the electric vehicle (EV) space.

Raising Requirements for Shareholder Proposals Could Hinder the Shift to Value-Creating Management

Because the majority of companies are still unable to change themselves, both the government and the TSE have taken measures to expect engagement from institutional investors, including activist investors.
Japan has high barriers in areas that aren’t regulated by law. The existence of cross-shareholdings has allowed managers to continue to operate without respect for the interests of minority shareholders.
It is premature to raise the requirements for shareholder proposals and requests to call special meetings to the level of other countries when many companies are still protected by cross-shareholdings.

Stella Chemifa (4109 JP) – Strong Earnings, Attractive Share Price

By Sessa Investment Research

H1 FY2025/3 results review: In H1 FY2025/3, Stella Chemifa (hereafter, the Company) reported strong results, with net sales up 25.3% YoY to JPY 18,160 mn and operating profit up 94.3% YoY to JPY 2,180 mn.
The boost in sales was driven by an increase in shipments in the semiconductor category, mainly for memory devices thanks to a recovery in market conditions, and an increase in shipments of enriched boron (energy category) for new nuclear facilities overseas.
Operating profit rose substantially, as growth in shipments in the high purity chemicals business and an increase in volume in the transportation business offset the JPY 210 mn drag on profits stemming from the Company’s inability to fully reflect cost increases from higher anhydrous hydrofluoric acid prices, a key raw material, and the yen’s depreciation, onto its prices.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 16

Daily Brief Japan: Murata Manufacturing, Mitsui Matsushima, Shift Inc, Vector Inc, FP Partner, Kurotani Corp, J Frontier Co Ltd, IDOM Inc and more

In today’s briefing:

Murata Manufacturing (6981 JP) – No Immediate Passive Buying Could Lead to More Weakness
Murata Mfg (6981) Accelerated Overseas Offer – Minimal Index But Low Vol Vs Peers
Murata Manufacturing Placement – Recent Momentum Isn’t Particularly Strong
[JAPAN Activism] Murakami Buying Mitsui Matshima (1518 JP) BIGLY – Now At 38% Aiming at Control?
Shift 1Q: Earnings Beat with Further Upside
Vector Inc (6058 JP): Q3 FY02/25 flash update
FP Partner (7388 JP): Full-year FY11/24 flash update
Kurotani Corp (3168 JP): Q1 FY08/25 flash update
J Frontier Co Ltd (2934 JP): Q1 and Q2 FY05/25 flash update
IDOM Inc (7599 JP): Q3 FY02/25 flash update

Murata Manufacturing (6981 JP) – No Immediate Passive Buying Could Lead to More Weakness

By Brian Freitas

A group of 7 shareholders are looking to sell 61.3m shares in Murata Manufacturing (6981 JP) to raise JPY 143.8bn (US$916m). That is 3.3% of shares outstanding.
The shares are being offered at a price range of JPY 2296-2345.5/share, a discount of 5-7% to the last close of the stock.
With the offering less than 5% of shares outstanding and less than US$1bn in size, there is no immediate passive buying and there could be further weakness in the stock.

Murata Mfg (6981) Accelerated Overseas Offer – Minimal Index But Low Vol Vs Peers

Today after the close, Murata Manufacturing (6981 JP) announced an equity offering worth roughly US$870mm if the stock prices 10% below last.
Unlike “regular” secondary offerings, this is available only to overseas investors, and bookbuilding is very quick. This “increases the size” relative to its headline (no retail uptake).
At 11 days of ADV and 3.3% of shares out, it has a certain size, but the stock is well-owned by foreigners, and not terribly volatile vs Peers.

Murata Manufacturing Placement – Recent Momentum Isn’t Particularly Strong

By Sumeet Singh

A group of shareholders aim to raise around US$900m via selling around 3% of Murata Manufacturing (6981 JP), in another cross-shareholding selldown.
The company’s shares haven’t done much over the past few years and recent share price performance as well hasn’t been the best
In this note, we will talk about the placement and run the deal through our ECM framework.

[JAPAN Activism] Murakami Buying Mitsui Matshima (1518 JP) BIGLY – Now At 38% Aiming at Control?

By Shifara Samsudeen, ACMA, CGMA

I wrote about this stock in May 2024. At the time, Japan activist Murakami-san had gone from 5% to 20% in a hurry. Shortly after, he was at 29%.
Then he fiddled/sold/bought/waited/sold. The stock fell in late 2024 as a quant fund sold. Murakami-san started buying again. In 3 weeks to 7 January bought from 27.02% to 34.51%.
By my calculation, as of last week he has 38.4% of votes. This is worth a closer look again. It’s a discount to BVPS but ask yourself why this big.

Shift 1Q: Earnings Beat with Further Upside

Shift Inc (3697 JP) ’s share price went up by about 13% today following the release of its 1QFY08/2025 results yesterday. Share price is up 19% YTD.
• Shift’s aggressive investment on HR and system reinforcement had resulted in a decline in the company’s margins since 1QFY08/2024, this drove share prices down.
Shift has once again proved that its business model is resilient and we expect the company’s earnings to continue to see strong growth going forward.

Vector Inc (6058 JP): Q3 FY02/25 flash update

Revenue decreased by 2.2% YoY to JPY42.5bn, while operating profit increased by 14.6% YoY to JPY4.0bn.
PR and Advertising segment saw a 55.2% YoY increase in operating profit due to high-margin projects and cost reversals.
Direct Marketing revenue fell 0.5% YoY, with Vitabrid’s Terminaria First sales growing 21.2% YoY in Q3.

FP Partner (7388 JP): Full-year FY11/24 flash update

FY11/24 revenue was JPY35.6bn (+16.6% YoY), operating profit JPY5.3bn (-4.0% YoY), with EPS at JPY169.85.
FY11/25 forecasts JPY40.2bn revenue (+13.0% YoY), JPY6.1bn operating profit (+15.0% YoY), and JPY175.89 EPS.
Company plans growth investments, 700 new hires, and aims for 100,000 policy transfers in FY11/25.

Kurotani Corp (3168 JP): Q1 FY08/25 flash update

In Q1 FY08/25, the company reported revenue of JPY21.4bn, with a significant YoY increase of 20.3%.
Operating profit decreased by 93.9% YoY to JPY14mn, impacted by rising costs and increased SG&A expenses.
The Non-Ferrous Metals segment experienced an operating loss of JPY7mn, despite a 20.4% YoY revenue increase to JPY21.2bn.

J Frontier Co Ltd (2934 JP): Q1 and Q2 FY05/25 flash update

Revenue increased by 28.5% YoY to JPY5.4bn, while operating profit decreased by 50.0% YoY to JPY18mn.
The company transferred AIGATE career Co., Ltd., resulting in an extraordinary gain of JPY5.7mn from the sale.
Healthcare Marketing business revenue declined YoY due to a large advertising order impact in Q1 FY05/23.

IDOM Inc (7599 JP): Q3 FY02/25 flash update

In cumulative Q3 FY02/25, sales increased by JPY72.8bn (23.7% YoY), driven by large store operations and retail sales.
Operating profit rose by JPY4.2bn (+39.1% YoY), with gross profit per retail unit increasing to JPY440,000 (+40,000 YoY).
SG&A expenses rose due to personnel costs and rent from large store openings, impacting operating profit downward by JPY4.7bn.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 15

Daily Brief Japan: Jamco Corp, Tokyo Metro, Shift Inc, Money Forward , Mani Inc, Sapporo Holdings, WingArc1st Inc, J Com Holdings, Nakamoto Packs and more

In today’s briefing:

Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap
Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel
JAMCO (7408 JP): Bain’s Tender Offer Is Light but Likely a Done Deal
Shift Beats Q1 Consensus by 30%
Money Forward (3994) | SaaS Growth Engine Shows Resilience
Mani Inc (7730 JP): Dental Loosing Shine In China; Margins Eroding; FY25 Guidance Reiterated
The Good News Is that Companies May Change in Less than 17 Years!
WingArc1st Inc (4432 JP): Q3 FY02/25 flash update
J Com Holdings (2462 JP): 1H FY05/25 flash update
Nakamoto Packs (7811 JP): Q3 FY02/25 flash update

Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap

Bain is buying out JAMCO (a long time ago called Itochu Aircraft Maintenance) from Itochu, ANA, Bain’s own portfolio company, and the public. It’s an expected deal. A done deal.
It is being done too cheaply. The price is 6x next year’s expected EBIT. This year expected ROE is 22%. Next year could be double that.
And the company has more in non-operating financial assets than its net equity. And a lot of really old land assets are not marked up. Just a shame.

Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel

By Brian Freitas

Tokyo Metro (9023 JP) listed on 23 October and was added to the TSE Tokyo Price Index TOPIX (TPX INDEX) at the close on 28 November.
Tokyo Metro (9023 JP) was not expected to be added to one global index (it was not added), while it was expected to be added to the other (and missed).
The stock could be added to one global index in February (its close!) and to the other in June (pretty much a sure thing).

JAMCO (7408 JP): Bain’s Tender Offer Is Light but Likely a Done Deal

Jamco Corp (7408 JP) announced a preconditional tender offer from Bain Capital at JPY1,800 per share, a 27.8% premium to the last close.
The offer, which is preconditional on regulatory approvals and will open in mid-February, is attractive compared to historical trading ranges.
On the other hand, the offer is light as it is below the midpoint of the IFA DCF valuation range. However, the modest required acceptance rate suggests a done deal.

Shift Beats Q1 Consensus by 30%

By Michael Allen

Shift reported a 95% increase in OP, to ¥3.2bn, compared to consensus estimate of ¥2.6bn on January 14 after the close.
Just under 5 months ago, we suggested the stock was about 45% undervalued. It is up 40%.
We still expect 20% annual growth through 2030. This is no longer a turnaround stock, but now one of the most solid growth stocks in the market.

Money Forward (3994) | SaaS Growth Engine Shows Resilience

By Mark Chadwick

Money Forward, Japan’s leading SaaS provider, reported strong results for its fiscal year ending November 2024: Sales +33% YoY to ¥40.4 billion
FY11/25 EBITDA guidance of ¥3.5 billion significantly lags consensus expectations of ¥6 billion.
The disappointing EBITDA guidance may trigger further selling, but there is no material change to the company’s long-term fundamentals. Time to be bullish

Mani Inc (7730 JP): Dental Loosing Shine In China; Margins Eroding; FY25 Guidance Reiterated

By Tina Banerjee

Mani Inc (7730 JP) Q1FY25 revenue rose 8% YoY, mainly driven by surgical and eyeless needles segments, and favorable foreign exchange. However, profitability declined year-over-year.
Despite the underperformance of dental segment, management reiterated FY25 guidance. Dental segment contributes more than 30% of total revenue.
Mani shares plunged 20% since it published its Q1 results. Investors should avoid Mani due to its uncertain revenue outlook and deteriorating profitability in short-term.

The Good News Is that Companies May Change in Less than 17 Years!

After 17 years of failure to change, Sapporo’s policy change was triggered by the fact that sales in beer business were beginning to recover after the long tunnel of deflation.
Regulators, weighed down by the growing number of companies with low profitability and declining competitiveness, want to change the situation, even if it means leveraging the power of activist investors.
Many companies bottomed out due to exiting the deflationary economy, and TSE requests prohibit companies from ignoring investors’ proposals, which makes it easier for companies to change.

WingArc1st Inc (4432 JP): Q3 FY02/25 flash update

Revenue for cumulative Q3 FY02/25 was JPY21.6bn, operating profit JPY6.5bn, net income JPY4.7bn, EBITDA JPY7.6bn.
BDS sales revenue rose 12.7% YoY to JPY14.2bn, with cloud services growing 17.3% YoY, invoiceAgent JPY1.7bn.
Full-year FY02/25 forecast revised to revenue JPY28.5bn, operating profit JPY8.1bn, EBITDA JPY9.6bn, profit JPY5.9bn.

J Com Holdings (2462 JP): 1H FY05/25 flash update

Operating profit is highest in Q4 due to subsidies in Child-Rearing Support Service and lowest in Q2.
Revenue increased in Child-Rearing Support and Nursing Care-Related Services, but declined in Comprehensive Human Resources Service.
LIKE opened two new facilities in FY05/25, with total childcare facilities reaching 415 as of October 2024.

Nakamoto Packs (7811 JP): Q3 FY02/25 flash update

Cumulative Q3 FY02/25 results: Revenue JPY36.8bn (+9.1% YoY), Gross profit JPY6.6bn (+28.1% YoY), Operating profit JPY2.4bn (+47.9% YoY).
Full-year FY02/25 forecast revised: Revenue JPY48.0bn (+8.2% YoY), Operating profit JPY2.8bn (+53.2% YoY), Net income JPY1.9bn (+79.7% YoY).
Dividend forecast increased: Annual dividend JPY66.0 per share, payout ratio 31.0%, maintaining dividend for eight consecutive fiscal years.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 14

Daily Brief Japan: Kokusai Electric , Shift Inc, BayCurrent Consulting , Ryohin Keikaku, Kioxia Holdings , BASE Inc, Mirai Corp and more

In today’s briefing:

Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand
SHIFT (3697) The Next – Potential Big Index Add
Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding
BayCurrent Consulting (6532) – High Growth, OK Multiple, Big Index Inclusion Coming Up?
Muji Growing Fast but Not to ¥3 Trillion by 2030
Aequitas 2025 Asia IPO Pipeline – Japan and South Korea
BASE Inc (4477 JP): “Shopify of Japan” at 0.8x EV/Sales
MIRAI Corporation (3476) – Stringent Cost Control and Expansion of Variable Rents for Hotels

Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand

Kokusai Electric (6525 JP) was IPOed in September 2023. The stock was cheap. It rose sharply, tripling in 9 months. At the ATH, the pre-IPO owners launched a HUGE secondary.
It was like a second IPO. The stock dipped, rallied, plummeted into pricing. Stayed there for two days, and in 6 months, the shares have halved.
Lockup expiry is next week, and there is a likely large index event in ~10 weeks.

SHIFT (3697) The Next – Potential Big Index Add

Shift Inc (3697 JP) is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them.
Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.
There is an event coming up shortly which could trigger an imminent index inclusion. It’s worth a look.

Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

By Brian Freitas

The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.
Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
The recent drop in Fast Retailing (9983 JP)‘s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.

BayCurrent Consulting (6532) – High Growth, OK Multiple, Big Index Inclusion Coming Up?

BayCurrent Consulting (6532 JP) is a high-growth consulting company. This year sees 22% annual revenue growth and 25% OP growth to Feb 2025. Q3 results come out tomorrow.
The stock has a fairly large and concentrated active institutional holder base, though interestingly, the foreign active insto base is very long-tailed. LOTS of investors hold this.
The company is likely to see an index inclusion imminently which will over time mean a buy of more than a third of Maximum Real World Float.

Muji Growing Fast but Not to ¥3 Trillion by 2030

By Michael Causton

Ryohin Keikaku made a big splash in 2021 when it announced a sales target of ¥3 trillion by 2030, more than a six-fold increase.
Following a reshuffling of management, targets have been slashed but growth rates still remain impressive with a near doubling of sales by 2030.
At home, the push into food is working and at last, overseas markets are getting the attention they deserve. The next Uniqlo?

Aequitas 2025 Asia IPO Pipeline – Japan and South Korea

By Sumeet Singh

In this note, we will take a look at the Asia Pacific IPO pipeline for 2025, with a look at Japan & Korea after having looked at HK & India.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

BASE Inc (4477 JP): “Shopify of Japan” at 0.8x EV/Sales

By Michael Fritzell

BASE Inc (4477 JP — US$234 million) is an e-commerce technology company based in Tokyo, Japan.
The software helps small merchants open stores online and manage their operations. BASE is often likened to “Shopify of Japan” due to similarities in their product offerings.
However, investors have become skeptical about BASE, with the stock now trading at just 0.8x EV/Sales — a massive discount to Shopify’s 13.3x.

MIRAI Corporation (3476) – Stringent Cost Control and Expansion of Variable Rents for Hotels

By Astris Advisory Japan

FP10/24 results exceeded company guidance for net operating income (NOI) and dividend per unit (DPU).
The notable improvement of NOI (+11.6% vs. FP10/23, +4.8% vs FP4/24) is attributable to a lower expense ratio than initial expectations (actual 32.5%, guidance 34.0%) due to lower rental business expenses and repair costs, higher variable rent on the back of a strong tailwind in the hotel sector (actual ¥173 million vs. guidance ¥149 million), and other one-off rental income.
Other expenses such as outsourcing costs and utility bills were well controlled, reflecting MIRAI’s asset management ability.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 13

Daily Brief Japan: Seven & I Holdings, TSE Tokyo Price Index TOPIX, Nikkei 225 and more

In today’s briefing:

Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking
“Danger Past, God Forgotten” How Long Will the Effect of TSE’s Request Last?
EQD | Nikkei Index Options Weekly – January 06 – 10

Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking

On 10 January, Bloomberg reported that Apollo is considering an equity commitment of JPY1.5 trillion in the Seven & I Holdings (3382 JP) MBO.
Securing financing is a key challenge for the MBO. Apollo’s involvement suggests a shift to a higher mix of equity vs debt, which should ease concerns about securing debt financing.
The article suggests that the MBO valuation could be lower than previously reported. However, 7&i’s underlying value supports a JPY8 trillion MBO valuation (market cap).

“Danger Past, God Forgotten” How Long Will the Effect of TSE’s Request Last?

The improvement in ROA was not as large as that of ROE, which raises concerns that the improvement in profitability may be running out of steam.
Improvements in corporate governance in 2024 were even lower than in 2023. The repetitive loss of enthusiasm after danger past is seen in % Independent Directors, Nomination/Compensation Committee, etc.
The reason why stock valuations little increased despite Foreign Ownership’s 2024 increase might have to do with the fact that improvements in corporate governance have not spread to all companies.

EQD | Nikkei Index Options Weekly – January 06 – 10

By John Ley

Weak price action to start the year for the Nikkei with little direction from USD/JPY which was grinding higher throughout the week.
Volatility at the start of the week helped push short term historic vol higher with at-the-money implied vol up about 1 point.
Volumes picked up substantially over year-end levels with Puts making up 53.5% of all contracts traded.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 12

Daily Brief Japan: Seven & I Holdings, Mitsubishi UFJ Financial (MUFG), Pressance Corp, Shinko Electric Industries, Allegro MicroSystems and more

In today’s briefing:

Last Week in Event SPACE: Seven & I, PA Gooddoctor, Fuji Soft, WH Group
Opportunity Within Europe and Japan; EURO STOXX 50 and TOPIX/Nikkei 225 Near Major Breakouts
Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap
Pressance (3254 JP): Open House (3288 JP) JPY2,390 Tender Offer a Done Deal
(Mostly) Asia-Pac M&A: Insignia Financial, Arcadium, CPMC, GAPack, Haitong Sec., Shinko Electric
Allegro MicroSystems: Can Its Localization In China Enhance Their Competitive Edge In The Region? – Major Drivers

Last Week in Event SPACE: Seven & I, PA Gooddoctor, Fuji Soft, WH Group

By David Blennerhassett

Seven & I Holdings (3382 JP)‘s analysts’ call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.
Those who bought into Ping An Healthcare and Technology (1833 HK)‘s punchy dividend, whether in cash or scrip, the trade has panned out well.
KKR extends its Offer for Fuji Soft Inc (9749 JP). Separately, Bain said it had destroyed confidential data, as requested, but it’s unclear how and when that data was destroyed.

Opportunity Within Europe and Japan; EURO STOXX 50 and TOPIX/Nikkei 225 Near Major Breakouts

By Joe Jasper

Our bullish outlook on global equities (MSCI ACWI) remains intact. Actionable Themes today include Financials, Energy, and Consumer Discretionary (European Luxury Retailers)
We view this pullback as a buying opportunity and we are watching for $116-$117 support to hold on ACWI-US; this is an important resistance-turned-support level dating back to July 2024.
Europe and Japan are on the cusp of major breakouts above critical resistance levels of 5000-5120 on the EURO STOXX 50 and 2740-2820 on the TOPIX

Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap

Four-Plus years ago, Open House (3288 JP) bought the stake in Pressance Corp (3254 JP) owned by its embattled CEO (who had been arrested for a scandal).
Four years ago, Open House launched a partial tender and capital injection to go to ~65%. A takeout was a matter of time.
That time has come. Today Open House announced a Tender Offer to take Pressance fully-private. This is an easy deal. A done deal. Done too cheap.

Pressance (3254 JP): Open House (3288 JP) JPY2,390 Tender Offer a Done Deal

Pressance Corp (3254 JP) announced a tender offer from Open House (3288 JP) at JPY2,390 per share, a 22.1% premium to the last close.
While the offer is below book value, it represents an all-time high and broadly aligns with the mid-point of the target IFA’s DCF valuation range.
The low minimum acceptance condition (2.3 million or 3.25% ownership ratio) suggests a done deal. The offer runs from 14 January to 26 February (30 business days).

(Mostly) Asia-Pac M&A: Insignia Financial, Arcadium, CPMC, GAPack, Haitong Sec., Shinko Electric

By David Blennerhassett

I tally 51 – 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 deal was discussed this week: CC Capital’s NBIO for Insignia Financial (IFL AU).
Key updates/news took place on: Arcadium Lithium (LTM AU), CPMC Holdings (906 HK), Greatview Aseptic Packaging (468 HK), Haitong Securities (H) (6837 HK), and Shinko Electric Industries (6967 JP).

Allegro MicroSystems: Can Its Localization In China Enhance Their Competitive Edge In The Region? – Major Drivers

By Baptista Research

Allegro MicroSystems reported its second-quarter fiscal 2025 earnings, showcasing a blend of resilience and challenges within a fluctuating market environment.
The company’s revenue for the quarter was $187 million, reflecting sequential growth in both automotive and industrial sectors.
However, year-over-year comparisons showed a 32% decline in sales, highlighting significant market challenges.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 11

Daily Brief Japan: Shift Inc, Hisamitsu Pharmaceutical Co, TSE Tokyo Price Index TOPIX, Creek & River, Onward Holdings and more

In today’s briefing:

[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way
Hisamitsu Pharmaceutical (4530 JP): Growth Momentum Intact; FY25 Guidance Raised
Growth Policy Score Improved with the Request to Raise P/B, but Other Criteria Are in the Process
Creek & River (4763 JP): Q3 FY02/25 flash update
Onward Holdings (8016 JP): Q3 FY02/24 flash update

[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way

In December, I thought the March 2025 Nikkei 225 Rebalance was going to be 2 ADDs 2 DELETEs and a double-capping for Fast Retailing.
Fast Retailing has fallen sharply vs Nikkei 225, and another stock has announced a large-multiple share split, making it a strong candidate for Nikkei 225 ADDITION in March 2025.
There is short-term path risk on all three ADDs, but they are definitely worth watching. Keep an eye out for separate insights on two of these names.

Hisamitsu Pharmaceutical (4530 JP): Growth Momentum Intact; FY25 Guidance Raised

By Tina Banerjee

Hisamitsu Pharmaceutical Co (4530 JP) reported single-digit revenue growth and net profit growth in low-teens during 9MFY25, on the back of 13% YoY growth in Salonpas focused OTC segment.
Rx business revenue grew 4% YoY as new products such as Zicthoru, Apohide, Combipatch, Vivelle-Dot etc clocked healthy numbers.
Hisamitsu raised its FY25 guidance for revenue by 1% to ¥154B, operating profit by 24% to ¥18B, and net profit by 24% to ¥20.5B.

Growth Policy Score Improved with the Request to Raise P/B, but Other Criteria Are in the Process

It is commendable that more listed companies as a whole are setting ROE and ROIC as their targets. The real value of actually achieving these goals will now be tested.
Dividend Policy score, Treasury Shares Retirement score, AGM Disclosure score, and IR Disclosure score improved slightly, but the listed companies as a whole have yet to show improvement.
Even though higher stock prices negatively impacted Policy Stock Holding score, overall improvement has not been achieved for the listed companies. Cash allocation also remains an issue for many companies.

Creek & River (4763 JP): Q3 FY02/25 flash update

Sales increased by JPY274mn (+0.7% YoY), driven by Creative (Japan) and Other sectors, while operating profit decreased by JPY496mn (-14.2% YoY).
Revised full-year FY02/25 forecast projects revenue of JPY50.5bn (+1.4% YoY) and operating profit of JPY3.9bn (-6.2% YoY).
Reduction in projects from major game publishers and structural reforms in Medical Staffing segment decreased operating profit by JPY950mn.

Onward Holdings (8016 JP): Q3 FY02/24 flash update