In today’s briefing:
- Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity
- Stanley Electric (6923) – Salutary Q1 and BIG Buyback
- Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder
- Big (Relatively Speaking) NEG (5214 JP) Buyback – Walking The Walk, Faster
- Fanuc (6954) | Improved Orders and Margins Amid Long-Term Challenges
- M3: No Tangible Recovery in Earnings Yet
- Seven & I’s Ito-Yokado Hopes Branded Deli Will Boost Recovery
- Monex Group Inc (8698 JP): Q1 FY03/25 flash update
- Kokuyo Co Ltd (7984 JP): 1H FY12/24 flash update
- Paramount Bed Holdings Co Lt (7817 JP): Q1 FY03/25 flash update
Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity
- The Kirin Holdings (2503 JP) Tender Offer to buy out minorities in Fancl Corp (4921 JP) closes today. Or at least the current one does.
- The original deal announced was light, and the stock has traded above terms since the announcement, with one fund buying up to 7.94%.
- I expect Kirin to extend and bump next week, or bump/extend now, depending on their visibility on Fancl Q1.
Stanley Electric (6923) – Salutary Q1 and BIG Buyback
- Today after the close Stanley Electric (6923 JP) announced a salutary Q1 result which was “ahead of in-line” in most metrics towards unchanged H1 and FY guidance.
- The company also announced a BIG on-market buyback at 8.1% of shares out, to be bought back with a delayed start over the 7.5mos starting 13 August.
- At last price, the buyback is ~10mm shares. The details are interesting and are worth a look.
Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder
- Murakami’s entity, City Index Eleventh, and daughter reported a 5.05% position in Heiwa Real Estate (8803 JP). The shares were purchased from 24 May to 22 July.
- Murakami’s average buy-in price is JPY3,907.38, a 6.7% discount to the last close price. Recently, Simplex (the previous largest shareholder) sold its entire stake to Taisei Co Ltd (4649 JP).
- Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate the latter.
Big (Relatively Speaking) NEG (5214 JP) Buyback – Walking The Walk, Faster
- Today, Nippon Electric Glass (5214 JP) announced an on-market buyback of up to 7.0mm shares (8.08%) spending up to ¥20bn from tomorrow through end-January 2025.
- An impressive headline, but fewer shares. Importantly, this follows a ¥20bn buyback from last November. They are moving through their MTMP more quickly than expected.
- This new buyback is worth about 25% of the inbound cross-holdings. And some of those holders plan to sell. This may be designed to let them sell in the market.
Fanuc (6954) | Improved Orders and Margins Amid Long-Term Challenges
- Fanuc reported slightly better-than-expected Q1 sales and OP forecasts, mainly due to a recovery in sales of FA equipment
- Fanuc’s results are consistent with a bottoming out of Japan’s machine tool orders in the first half of the year
- We turn bullish on the stock given the cyclical bottoming out of orders and margins. However, the stock is still not “cheap” and the company faces a number of challenges
M3: No Tangible Recovery in Earnings Yet
- M3 Inc (2413 JP) reported 1QFY03/2025 results on Friday. Both revenue and OP for the quarter beat consensus estimates by 3.5% and 11.0% respectively despite earnings continue to decline.
- Medical Platform segment’s earnings have continued to decline as a result of pharma marketing whose revenues are impacted due to spending cuts by pharmaceutical companies.
- M3’s share price has declined by more than 35% YTD and we don’t see any tangible recovery in the company’s earnings as overseas and other businesses face challenges.
Seven & I’s Ito-Yokado Hopes Branded Deli Will Boost Recovery
- Deli foods already account for 20% of all food sales in Japan but are growing fast as busier consumers demand more convenience.
- Most food chains only offer generic items but, last month, Seven & I’s Ito-Yokado began sales of a branded range called York Deli, aiming to differentiate from competitors.
- Exclusive ranges will be a key factor as it shifts towards a focus on food but is unlikely to be enough.
Monex Group Inc (8698 JP): Q1 FY03/25 flash update
- Consolidated net operating revenue: JPY17.0bn (-16.0% YoY; -2.7% QoQ), with commissions received at JPY8.7bn (-11.5% YoY; +10.0% QoQ).
- US segment: Net operating revenue USD74.1mn (+4.5% YoY; +0.7% QoQ), SG&A expenses USD59.4mn (-1.1% YoY; -4.5% QoQ).
- Crypto Asset segment: Net operating revenue JPY3.1bn (+164.3% YoY; -29.6% QoQ), SG&A expenses JPY2.5bn (+55.3% YoY; +22.4% QoQ).
Kokuyo Co Ltd (7984 JP): 1H FY12/24 flash update
- Revenue increased by JPY5.1bn (+2.9% YoY), driven by growth in the Furniture and Stationery Businesses.
- Operating profit declined by JPY97mn (-0.6% YoY) due to lower profit in the Interior Retail business and increased adjustments.
- Gross profit margin rose to 39.9%, while the SG&A expense ratio increased to 31.1% due to strategic spending.
Paramount Bed Holdings Co Lt (7817 JP): Q1 FY03/25 flash update
- Revenue: JPY23.1bn (-4.8% YoY), Operating profit: JPY1.6bn (-51.1% YoY), Recurring profit: JPY2.1bn (-48.9% YoY).
- Domestic revenue: JPY20.9bn (-4.0% YoY), Overseas revenue: JPY2.2bn (-11.9% YoY), Medical care business revenue: JPY7.9bn (-13.6% YoY).
- Nursing care business revenue: JPY14.3bn (+2.5% YoY), Health promotion business revenue: JPY2.2bn (-12.2% YoY).
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