Daily Brief Japan: Chilled & Frozen Logistics Holdings, Fancl Corp, Daifuku Co Ltd, SJM Holdings and more

• In late March, AZ-Com Maruwa Holdings (9090 JP) made an unsolicited (“hostile”) bid for Chilled & Frozen Logistics Holdings (9099 JP) at a near 50% premium at ¥3,000/share.
• It traded through, then C&F ran a bid solicitation process, got four bids. Since the day AFTER that announcement, the stock is up 56%. We approach Alps Logistics multiples.
• This deal doesn’t get the split price benefit that HTS and Alps Logistics did. And it is a fundamentally different logistics business. And target management dynamics are different.

• Fancl Corp (4921 JP)‘s share price has declined 18% year-to-date, greatly under-performing the Nikkei 225 (NKY INDEX) which was up 17% year-to-date. 
• The company recently announced FY24 results (fiscal year ending March).  Sales grew 7% yoy and operating profit grew 60% yoy in FY24. 
• I believe the stock price is attractive at 23x 2024 PE with 15% expected earnings CAGR for the next 3 years.

• Daifuku released FY3/24 results on 10 May. Since then the share price has declined by 15%, giving investors an attractive entry point.
• Daifuku is a key beneficiary of warehouse automation, which is forecast to grow at a CAGR of over 6%, with industry spend projected to reach $37 billion by 2030
• We expect the market to price in an order recovery in the core electronics segment and believe that the MTP is yet to be factored into the current share price.

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.

• SJM Holdings
• Softbank Group
• Yankuang Energy Group