Japan

In today’s briefing:

Fanuc (6954) | Forget FA, Robots Are the Future
Hogy Medical (3593 JP): Strong Nine-Month Result as COVID Had Minimal Impact on Surgery Volume
Isn’t the Best Catalyst to Facilitate MBOs to Increase Market Metabolism?

Fanuc (6954) | Forget FA, Robots Are the Future

Fanuc’s Q3 sales and earnings beat analyst expectations. Sales rose 17% YoY and profit increased by 14%.
The bears will be able to point to the collapse in FA orders in Q3, but this just confirms what the Japan Machine Tool numbers have been signalling.
Robot orders remain strong as Fanuc continues to benefit from de-globalization and the need to modernize global supply chains.

Hogy Medical (3593 JP): Strong Nine-Month Result as COVID Had Minimal Impact on Surgery Volume

Hogy Medical (3593 JP) reported 6.2% growth in revenue to ¥29.5B during 9MFY23, driven by healthy sales of Premium Kit and other non-woven products. Sales of Premium Kit climbed 12%.
Rising cost pressure has negatively impacted margins. Gross profit margin contracted 180bps YoY to 40.6% in 9MFY23. Operating profit margin declined 20bps YoY to 17.1%.
Hogy continued to expect revenue to rise 5.3% YoY to ¥38.7B, operating profit to grow 6.1% YoY to ¥6.5B, and net profit to increase 4.6% YoY to ¥4.57B in FY23.

Isn’t the Best Catalyst to Facilitate MBOs to Increase Market Metabolism?

The problem is that many companies have resources but haven’t taken steps to strengthen their profitability, given that multiples have declined due to lower excess earnings than 50 years ago.
What is required of TSE isn’t to keep failing students in prime market and lower the quality of the market, but to promote metabolism and raise the quality of it.
The best catalyst is an MBO. Serious management’s consideration of what it should do for shareholders is to enhance profitability by leveraging resources, while the other is an MBO.

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Jan 27

Daily Brief Japan: Jafco Co Ltd, Nitto Denko, Takashimaya, Itochu Corp and more

In today’s briefing:

JAFCO Tender Offer Results – Low Pro-Ration Surprise, Murakami Overhang
Nitto Denko Q3 Results and Buyback Announced
Record Sales at JR Tokai Takashimaya
Itochu Signs L.L.Bean License, Gears up Forever 21 and Eddie Bauer Relaunches

JAFCO Tender Offer Results – Low Pro-Ration Surprise, Murakami Overhang

Jafco Co Ltd (8595 JP) announced the results of its Tender Offer Buyback today. They wanted to buy 16.8mm shares including 13.9mm from Murakami-san. He sold 9.63mm. Oops.
Pro-Ration was 69.25% which means that Murakami entities are still long about 4.276mm shares or 5.83% of shares out.
There should be some index selling, and some Murakami Overhang. There may be more overhang at recent prices.

Nitto Denko Q3 Results and Buyback Announced

Nitto Denko (6988 JP) today announced Q3 results, lower full-year guidance with one-quarter left to go, sharply undercutting implied Q4 results vs the Street.
The company also announced a buyback of 4.1-4.7% of shares out over the next 6mos. Assuming the share price falls in reaction, this could be closer to the top end.
The buyback is non-negligible as a portion of Likely Real World Float and as such the situation is worth a look – for those with a position and those without.

Record Sales at JR Tokai Takashimaya

JR Takashimaya is a newbie in the world of department store retailing but has grown to become the fourth highest selling store in the two decades since it opened.
As a result, it is increasingly regarded by brands as the Nagoyan version of Isetan Shinjuku in Tokyo and Hankyu Umeda in Osaka.
The store is an example of Takashimaya’s successful strategy to surround its key stores with more shopping facilities to suit all population segments, so driving traffic to the main store.

Itochu Signs L.L.Bean License, Gears up Forever 21 and Eddie Bauer Relaunches

Three years ago, Itochu Corp made it clear it would be investing heavily in its brand business.
It has been true to its word, adding the likes of Reebok, Under Armour and Forever 21 to its portfolio in the last year alone.
It has now signed a deal with long-term Japan operator, L.L.Bean, while gearing up for a major relaunch of Eddie Bauer.

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Jan 26

Daily Brief Japan: Olympus Corp, Toshiba Corp, CyberAgent Inc, Nidec Corp, Nippon Light Metal, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

The Olympus Peer-Relative Crash – Due to ADR Cancellation Overhang?
Toshiba – Preparing for 2QFY23
CyberAgent (4751) | World Cup Winners
CyberAgent 1QFY09/2023: Earnings Miss, Struggling Gaming and Huge FIFA Cost Add to the Woes
Nidec (6594): A V-Shaped Recovery Cannot Be Taken for Granted
Nippon Light Metal (5703 JP) Is On The Verge Of Confirming Bullish MT Trend Change
Maybe There Are Many Companies in Japan that Have the Resources but Neglect Efforts to Increase ROA

The Olympus Peer-Relative Crash – Due to ADR Cancellation Overhang?

Olympus has been sold down relatively hard in the last couple of months. At the same time, we are at crunch time for the cancellation of the US ADR.
This may create short-term overhang, but the medium-term overhang from substantial foreign net buying in H1 when USDJPY was going up may be larger.
This insight looks at the relative performance vs Peers, vs forward earnings expectations, USDJPY, etc.

Toshiba – Preparing for 2QFY23

By Mio Kato

We have turned slightly more bearish on Toshiba’s near term fundamental prospects as we now have concerns about the industrial side of its semiconductor business.
The re-emergence of a WDC-Kioxia deal and the likelihood of a change in BOJ policy make us wonder whether bankers might want to wait a little on financing.
As such, while recent weakness makes an aggressively negative view difficult we do not feel that upside risks are particularly threatening either.

CyberAgent (4751) | World Cup Winners

CyberAgent Q1 loss on one-off expenses from World Cup streaming. We see Q1 as a bottom this fiscal year
Share price already discounted weak FY9/23 guidance last October and focus is now on recovery
The World Cup was a success for the Japanese National side and for Abema

CyberAgent 1QFY09/2023: Earnings Miss, Struggling Gaming and Huge FIFA Cost Add to the Woes

CyberAgent Inc (4751 JP) reported 1QFY09/2023 results. Revenue declined 2.1% YoY to JPY167.6bn (vs consensus JPY176.1bn) while OP turned negative JPY1.25bn (vs consensus OP of JPY4.1bn.
CA’s largest investment to-date was for FIFA 2022 but top line growth has largely been in line with previous quarter. WAU have dropped to pre-FIFA levels.
Though AbemaTV’s monetisation strategy seems to work, the growth prospects for other two segments are concerning and likely to drag down the consolidated performance.

Nidec (6594): A V-Shaped Recovery Cannot Be Taken for Granted

By Scott Foster

Nidec is headed into the red due to market disruption in China, restructuring charges and stagflation.
The first two of these factors should be temporary, but the third points to longer term pressure on margins. Competition in EV motors is another problem that won’t go away.
In a weak economy characterized by stagflation, it is too early to turn bullish.

Nippon Light Metal (5703 JP) Is On The Verge Of Confirming Bullish MT Trend Change

By David Coloretti, CMT

At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. 1) Response to key levels. 2) Price action. 3) Momentum confirmation.
Every recommendation requires definitive evidence of all 3 pillars to be regarded as a high probability outcome.
5703 JP has a LT double bottom in place and comprehensive MT uptrend confirmation (weekly RSI). Only an appropriate weekly close is required this week to confirm the MT uptrend.

Maybe There Are Many Companies in Japan that Have the Resources but Neglect Efforts to Increase ROA

If we read “improved asset efficiency” as “ROA,” it would fit better. ROA, along with ROE, correlates with valuation, and higher ROA can be expected to trigger higher stock prices.
Companies with high ROA tend to have advanced corporate governance initiatives. In Metrical Universe of 1,779 companies, ROA (historical 3-year average) for many of corporate governance metrics are significantly correlated.
Whether Japanese stocks are undervalued is another question, but if companies have resources but are neglecting company-wide efforts to increase margins and turnover, activist investors are likely to be interested.

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Jan 25

Daily Brief Japan: Kawasaki Kisen Kaisha, Toyo Construction, Nidec Corp, Baycurrent Consulting, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?
YFO To Take the Fight To Toyo Construction’s Board
Nidec (6594) | Down but Not Out
Baycurrent Consulting: High Value-Added Projects and New Consulting Areas Drive New Phase of Growth
The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX

KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?

KLine is the cheapest of the three Japan majors in terms of forward consensus PER. And forward EPS ratios are improving as the company buys back shares.
The CEO mentioned in December the possibility of additional shareholder return this fiscal year based on cashflow.
In this insight, we look at what he knew then, and what he might know now, and the chances for an additional buyback (and how it might work).

YFO To Take the Fight To Toyo Construction’s Board

YFO offered another Press Release yesterday. This one outlines what they see as Corporate Governance failures and offers a NEW POLICY.
The Corporate Governance failures are indeed, failures. Toyo’s Board has failed to be transparent with shareholders, and in not at least addressing the takeover proposal, has failed its duties.
NEW POLICY? Elect new independent directors “capable of improving the long-term corporate value and maximizing the interests of the general shareholders.” Soft war starts now.

Nidec (6594) | Down but Not Out

Nidec slashed its full year operating profit guidance by 48% to 110 billion yen
For Q3, Nidec reported an operating profit of 28 billion yen (-37% YoY), significantly below street expectations (51 billion)
We remain bullish, expecting cost cutting efforts to ignite a profit recovery next year

Baycurrent Consulting: High Value-Added Projects and New Consulting Areas Drive New Phase of Growth

Baycurrent’s share price has moved up 41.3% YTD with the company reporting strong earnings for 3QFY02/2023 which beat consensus estimates by a huge margin.
With pandemic conditions fading off, share price began to fall with top-line growth declining slightly. However, growth rates have bounced back, and margins have seen strong improvement reaching new highs.
Though share priced has rallied significantly over the last few months, we think there is further upside driven by value-added projects and expansion into new consulting areas.

The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX

Since simply increasing shareholder returns won’t increase corporate value/market cap, it’s more natural to present shareholder return policy together with reasonable earnings target, even when such policy is put forth.
In fact, the companies exemplified in the Nikkei article saw share prices rise for companies with positive earnings outlooks and increased conviction that they will meet their medium-term earnings targets.
This is a more serious and urgent issue for transitional companies, as companies with market cap of less than 10 billion yen in October 2023 will be excluded from TOPIX.

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Jan 24

Daily Brief Japan: Seven & I Holdings, Toyo Construction, Universal Entertainment, Takeda Pharmaceutical and more

In today’s briefing:

Seven & I: Activist ValueAct Seeking a Spin-Off of The US Business
Toyo Construction (1890 JP): YFO Fires Another Salvo at the Board
Universal Entertainment of Japan: IPO for Its Manila Casino Draws Closer
Takeda Strengthens Oncology Portfolio with HUTCHMED’s Fruquintinib Acquisition

Seven & I: Activist ValueAct Seeking a Spin-Off of The US Business

By Oshadhi Kumarasiri

New York-based hedge fund ValueAct has told Seven & I Holdings (3382 JP)’s shareholders to support them in their bid to spin off the 7-Eleven US convenience store business.
Spinning off the only growth driver of the business does not seem like an idea that Seven & I or its shareholders are likely to entertain.
We fear that ValueAct could be looking for reasons to call-off its investor-activism-campaign and perhaps is trying to squeeze out every last bit of gains as it exits its positions.

Toyo Construction (1890 JP): YFO Fires Another Salvo at the Board

By Arun George

Due to the inability of getting a fair hearing from Toyo Construction (1890 JP)’s Board, YFO’s strategy now is to replace some of the Board at the June AGM.
YFO’s latest press release also catalogues the Board’s shockingly poor corporate governance in relation to its tender offer at JPY1,000. Crucially, a special committee is yet to be formed.
There is no timeline update on the tender which was set to start in late January. YFO continues to maintain that it will not withdraw its proposal.

Universal Entertainment of Japan: IPO for Its Manila Casino Draws Closer

By Howard J Klein

The long, tortured legal mess between Universal and its ousted founder over control of its lucrative Manila integrated casino resort now has a clear path to its spin off IPO.
The Okada Manila resort is among the sector leaders in the burgeoning Philippines gaming market now ramping rapidly toward full GGR recovery.
At UE’s current price of 2,347jpy, the stock bears a built in premium of a Spac IPO now appearing to be pointed to debut this year.

Takeda Strengthens Oncology Portfolio with HUTCHMED’s Fruquintinib Acquisition

Takeda announced Monday that it has entered into an exclusive licensing agreement with HUTCHMED (China) for further development and commercialisation of Fruquintinib outside of Mainland China, Macau and Hong Kong.
Takeda will pay HUTCHMED $400m upfront and up to $730m in additional potential payments relating to regulatory, development and commercial sales milestones, as well as royalties on net sales.
Fruquintinib was approved in China in 2018, is a highly selective, oral VEGFR1/2/3 Tyrosine Kinase Inhibitor and offers potential new treatment option for patients with refractory metastatic colorectal cancer (CRC).

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Jan 23

Daily Brief Japan: Fujitsu General, Oriental Land, Chugai Pharmaceutical and more

In today’s briefing:

Fujitsu General (6755) – Fujitsu’s Stake On The Block
Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
Chugai Pharmaceutical (4519 JP): Hemlibra Is the Only Saviour; Competition Bites Mainstay Drugs

Fujitsu General (6755) – Fujitsu’s Stake On The Block

10 days ago I wrote Fujitsu (6702) Subsidiary Selldowns To Come after Bloomberg carried an article with the CEO. Not new news, but I was struck by the implications.
Yesterday saw an article which pushed Fujitsu General (6755 JP) nearly 14% higher yesteday. Fujitsu Ltd (6702 JP) had launched an auction for its 42% stake. First round bids due imminently.
This takes the urgency to a new level. People jumped into an already illiquid stock. How far can this go?

Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End

By Brian Freitas

The review period for the Nikkei 225 (NKY INDEX) March rebalance ends next week. We highlight the 3 potential inclusions and exclusions for the index.
Lasertec Corp (6920), Oriental Land (4661) and Renesas Electronics (6723) remain our top inclusions, while Toyobo Co Ltd (3101), Nippon Light Metal (5703) and Toho Zinc (5707) could be deleted.
Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 1x ADV on many index constituents.

Chugai Pharmaceutical (4519 JP): Hemlibra Is the Only Saviour; Competition Bites Mainstay Drugs

Chugai Pharmaceutical (4519 JP) recorded double and triple-digit revenue growth from Hemlibra in domestic and export markets, respectively during 9M2022. Growth momentum is expected to continue.
Both Actembra and Ronapreve have limited revenue potential from COVID-related indications. Ronapreve reported revenue of ¥60.8 billion in 1Q22 in domestic market, with no reported revenue in two subsequent quarters.
Actemra will face biosimilar competition. This month China has approved first Actembra biosimilar, while a couple of others are under review of the FDA.

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Jan 22

Daily Brief Japan: Bank of Kyoto, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Last Week In SPACE: Bank of Kyoto, WM Motors, Japanese Banks, Hong Kong Aerospace, CP ALL/MAKRO
Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs

Last Week In SPACE: Bank of Kyoto, WM Motors, Japanese Banks, Hong Kong Aerospace, CP ALL/MAKRO

By David Blennerhassett

Japanese banks are the hottest new thing but unless you think Bank of Kyoto is going to change its spots, it’s still best thought of as a range trade.
WM Motors opts for a backdoor listing via merging with WE Solutions Limited (860 HK). There’s probably a good reason for doing so.
You pay for the liquidity of Japanese banks by paying a higher PBR against not as much improvement in ROE. That’s life.

Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs

METI’s survey confirms that “the number of outside directors has increased, but they aren’t completely independent, as they’re sometimes appointed by people with ties to the company” isn’t incorrect statement.
The reality is that the parent companies of Japan’s large asset management companies are financial institutions, and it’s high hurdle to vote against proposals by clients of the parent company.
The BOJ is a major shareholder in many companies through its ETF holdings. If the exercise of those voting rights changes, the management of listed companies in Japan should change.

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Jan 20

Daily Brief Japan: Anycolor, Fanuc Corp, Aoyama Trading, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Anycolor (5032 JP) Shareholder Structure Now And Future
Fanuc (6954) | Bullish on Robots
Fewer but Better Suits from Aoyama and Its Competitors
If ESG Is Related to Improved Corporate Value, Doesn’t Slow ROE Imply Stalled in Real ESG Efforts?

Anycolor (5032 JP) Shareholder Structure Now And Future

Anycolor (5032 JP) is conducting a Secondary Offering so that three major pre-IPO shareholders can sell their shares. Legend Capital, Skyland Ventures, and Highsino Group are selling.
That should bring minimum publicly-traded longs to 6.3685mm shares, but it could easily be higher.
Based on the most conservative read of all the data, Real World Float is a net 21.2% after this offering. In reality, probably higher. But there’s still overhang.

Fanuc (6954) | Bullish on Robots

Fanuc is a core structural growth stock that has fallen by -4% over the past year. We turn bullish with 8 days to earnings
We believe that Fanuc is a key beneficiary of continued investment in automation and realignment of supply chains globally
We focus on Fanuc’s core value drivers – revenue, margins, risk and investment – and see 25% upside for long term investors

Fewer but Better Suits from Aoyama and Its Competitors

Fewer people wear suits as a regular office uniform and there are also fewer working age Japanese.
Combined with the fact that more people work from home some days a week, this has meant a drastic decline in suit sales
In response, the big retailers are exploiting the growing popularity of custom and premium suits but the shift won’t offset the decline.

If ESG Is Related to Improved Corporate Value, Doesn’t Slow ROE Imply Stalled in Real ESG Efforts?

Japanese companies need to resolve these issues in future, as evidenced by the fact that they have only just begun to resolve issues related to human rights and human capital.
There is risk that less accurate disclosure of ESG initiatives may emerge in future. Attention will be focused on annual securities reports that have mandate to include sustainability-related information.
The slow growth in ROE raises concerns that ESG efforts are not progressing as expected or are being formally mended, but have not improved enough to positively impact corporate value.

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Jan 19

Daily Brief Japan: Anycolor, Kyocera Corp, Jafco Co Ltd, Sosei Group, Calbee Inc, Rakuten Inc and more

In today’s briefing:

Anycolor (5032) Overseas Offering – Pre-IPO VCs Selling This High Growth Name
Anycolor Placement – First Placement Since Listing but Should Do Fine
Kyocera (6971 JP): Another Leg Down
JAFCO (8595) Tender Offer Close Imminent – Decent Conviction to Not Be Long
Sosei Group (4565 JP): Partners’ Pipeline Progress Reflects Power of Drug Discovery Platform
Calbee’s FY24 OP Is Bound to Exceed ¥30.0bn
Seiyu Plans ¥100 Billion Investment

Anycolor (5032) Overseas Offering – Pre-IPO VCs Selling This High Growth Name

In late December, I wrote 2023 High Conviction – Anycolor (5032) Aiming at TSE Prime and TOPIX – And How!. Shares closed at ¥6,470 that day. Then went to ¥5,500.
They have since rebounded some, and now 3 pre-IPO VC investors have announced an overseas offering. This was NOT unexpected. They need more shares to get their TSE Prime listing.
The Offering is 3.27mm shares which is 5-6 days of volume. This lifts the TSE Prime inclusion amount, eventually, but the story is still about growth and model.

Anycolor Placement – First Placement Since Listing but Should Do Fine

By Ethan Aw

Some shareholders of Anycolor (5032 JP) are looking to raise US$151.5m via an International Only Follow-on offering.
The deal is a relatively small one to digest in terms of ADV, representing only 4 days of three-month ADV. Although, it is still 10% of current mcap.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Kyocera (6971 JP): Another Leg Down

By Scott Foster

Kyocera’s aggressive long-term investment plan makes sense: abandon an unnecessary zero-debt policy and borrow while interest rates are still low. The resulting debt/equity ratio should be manageable.
But the near- to medium-term outlook is not encouraging. Semiconductor inventories are still too high and demand is down. Recovery is likely to be slow.
The shares have dropped 21% since mid-September, but FY Mar-23 guidance looks too high and both consumer and corporate spending are weak. Wait for capitulation.

JAFCO (8595) Tender Offer Close Imminent – Decent Conviction to Not Be Long

The Jafco Co Ltd (8595 JP) Greenmail Tender Offer to take Murakami-san out of his position is nearing its close.
Investors should make a decision imminently about where they believe the stock should trade in Price/NAV terms after the buyback is complete, once management is “stabilised.”
My earlier piece written on the day of the announcement needs a few corrections. Those are below.

Sosei Group (4565 JP): Partners’ Pipeline Progress Reflects Power of Drug Discovery Platform

Sosei Group (4565 JP) is currently eligible for total milestone payment of more than $9.5B for its existing collaborations. During 9MFY23, Sosei reported revenue growth of 141% YoY to ¥8.6B.
Pfizer Inc (PFE US) has dosed first subject in phase 2 clinical trial of type 2 diabetes drug candidate PF-07081532. Achievement of this milestone triggers a $10M payment to Sosei.
Sosei has four programs in preclinical studies and 10+ in discovery phase, which are still unpartnered. The company has a cash runway into 2025 to fund its drug discovery activities.

Calbee’s FY24 OP Is Bound to Exceed ¥30.0bn

By Oshadhi Kumarasiri

Japan’s largest snacks maker, Calbee Inc (2229 JP) has raised prices by 10-20% for almost 75% of its product range.
Meanwhile, main inputs such as potatoes and palm oil have seen extensive price drops in the past few months.
With margin pressures alleviating from both angles (revenue & cost), we think Calbee’s FY24 OP is bound to exceed ¥30.0bn.

Seiyu Plans ¥100 Billion Investment

Rakuten only has a 15% stake in Seiyu, alongside majority shareholder, KKR, but the pivot by Seiyu post-acquisition shows the potential for Rakuten in this sector.
Building on the 5 year plan that it set out in 2021, Seiyu last month announced a ¥100 billion in investment over the next 5 years.
Funds will be used to increase integration with Rakuten’s online supermarket, with the aim to become the biggest GMS retailer.

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Jan 18

Daily Brief Japan: Tsi Holdings, Fast Retailing, Money Forward, Nippon Steel Corporation, Amvis Holdings Inc and more

In today’s briefing:

TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap
Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages
Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability
Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?
Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan

TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap

Last April I wrote about Tsi Holdings (3608 JP) which was trading at 0.5x EV/EBITDA and where I suggested it could double in 2-3yrs.
The day after I wrote, the stock closed at ¥312/share, briefly touched ¥480 before ending the year at ¥444. On Friday they announced Q3 earnings, now TTM EV/EBITDA is 2.5x.
They also announced a buyback, and the stock is up further. It is worth looking into the details both near-term and what they mean longer-term.

Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages

By Oshadhi Kumarasiri

Fast Retailing (9983 JP)’s 1QFY23 results were below consensus estimates with OP missing consensus by 13.2%.
The outlook for the rest of the year doesn’t seem too well either with Domestic profitability held back by rising wages and growth markets affected by slowing demand for apparel.
Even though China could emerge from COVID to boost Uniqlo’s profits, we see significant downside risk to Fast Retailing’s FY23 guidance.

Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability

Money Forward (3994 JP) reported 4QFY11/2022 results yesterday. Revenue increased 42.5% YoY to JPY6.2bn (vs consensus JPY6.0bn) driven by growth in both MF Business and MF Home.
Operating losses for the quarter widened to JPY2.2bn (34.8% of revenue) from JPY661m (15.2% of revenue) in the same quarter last year (vs consensus JPY2.0bn).
Though MF’s top line continues to grow, we have not yet seen a meaningful improvement in its profitability, and we think, MF’s shares are overvalued compared to its counterpart freee.

Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?

With the shrinking domestic market, the steel brokerage business is no longer a profitable business for trading companies, so Nippon Steel needs to strengthen its own sales capabilities.
While this TOB will have negative impact on Nippon Steel’s balance sheet and profit margins in the short term, the steel market may be moving more significantly than we think.
While it would be better for Nippon Steel to make NISSOL 100% subsidiary, I suspect that NISSOL is still being kept as a card to be sold for cash generation.

Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan