In today’s briefing:
- [Japan Activism] Exedy (7278 JP) – Buying Back Bigly
- Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
- Japanese Midcap Banks – Hachijuni (8359 JP) Is Our Top Pick
- 3 D Matrix Ltd (7777 JP): 1H FY04/25 flash update
- Guarantee Program for GHG Disclosure Will Start in FY3/2028 with Limited Guarantee for Scope 1 and 2
- CellSource (4880 JP): Full-year FY10/24 flash update
- CRE Inc/Japan (3458 JP): Q1 FY07/25 Flash update
[Japan Activism] Exedy (7278 JP) – Buying Back Bigly
- Exedy Corp (7278 JP) announced an offering of 36% of its shares at end-May. Long-time “owner” Aisin (7259 JP) was getting out. Since then, the company has bought back shares.
- Activist Murakami Group has bought 27% of the company. Between Murakami and the buyback, the public has net sold 5% of the company since end-March. Kinda shocking.
- There is another 35% of Max Real World Float to buy back, and at current pace, they’ll be done by mid-March 2025. Then what? That’s the really big question.
Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
- ~4 weeks ago, Fuji Soft Inc (9749 JP) responded to Bain’s Proposal to take over the company but got KKR to bid ¥1 more, then said that covered it.
- The Special Committee then asked the FSI Board to halt further negotiations with Bain, and to ask Bain to destroy all confidential documentation.
- Bain rejected saying it contravened METI Guidelines on Corporate Takeovers and reappeared 2 days ago with a ¥9,600 bid. The structure/details of Bain’s bid was probably a strategy mistake.
Japanese Midcap Banks – Hachijuni (8359 JP) Is Our Top Pick
- We update our views on ten Japanese midcap banks targeting attractively valued beneficiaries of the realization of big strategic shareholdings, as well as beneficiaries of the improving interest rate outlook
- We re-iterate our buys on Hachijuni Bank and Hokuhoku Financial; there is potential to realize their large strategic holdings relative to their market capitalizations combined with their attractive PTBV ratios
- We take Gunma Bank off the buy list, replacing it with Iyogin; Iyogin has a constructive mix of large strategic holdings, attractive valuations and healthy gearing to higher interest rates
3 D Matrix Ltd (7777 JP): 1H FY04/25 flash update
- Operating revenue increased by 78.3% YoY to JPY3.3bn, driven by sales of TDM-621 across multiple regions.
- Operating loss narrowed to JPY532mn, with a recurring loss of JPY798mn and a net loss of JPY806mn.
- US sales grew 151.4% YoY, achieving profitability; Europe and Japan also reported significant YoY sales growth.
Guarantee Program for GHG Disclosure Will Start in FY3/2028 with Limited Guarantee for Scope 1 and 2
- From FY3/2027, companies with market capitalization of over 3 trillion yen will be required to disclose GHG sequentially. 76% of companies with market capitalization of over 500 billion yen disclose.
- A guarantee program is scheduled to be introduced in FY3/2028, but only 21% of companies with market capitalization of over 500 billion yen have disclosed their guarantees.
- The guarantee program will begin in Scope 1 and 2 with limited guarantees. Disclosure of guarantees will increase once the discussion on qualification system for guarantee service providers is finalized.
CellSource (4880 JP): Full-year FY10/24 flash update
- Revenue for FY10/24 was JPY4.4bn, a 3.4% YoY decrease, with operating profit down 89.4% YoY to JPY129mn.
- FY10/25 forecasts include revenue of JPY4.5bn (+3.4% YoY) and operating profit of JPY370mn (+186.5% YoY).
- Contract processing services revenue declined 12.8% YoY in FY10/24, with orders decreasing by 13.9% YoY.
CRE Inc/Japan (3458 JP): Q1 FY07/25 Flash update
- In Q1 FY07/25, the company reported sales of JPY11.5bn and business profit of JPY1.2bn, showing YoY growth.
- Logistics Investment business saw increased leasing income, with sales of JPY5.9bn and segment profit of JPY820mn, up 70.5% YoY.
- The company sold LogiSquare Narita, resulting in sales of JPY4.5bn and segment profit of JPY583mn, reversing previous losses.
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