In today’s briefing:
- Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again…
- Tokyo Metro (9023 JP) IPO: Valuation Insights
- Aica Kogyo (4206) – Small Offering Chips Away At Cross-Holdings
- Rigaku Holdings (268A JP) IPO: The Bull Case
- Daiseki Co Ltd (9793 JP): 1H FY02/25 flash update
Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again…
- At end-September, the Nikkei 225 semi-annual review imposed a “cap” on Fast Retailing (9983 JP) in the Average, applying a 0.9 coefficient to the Price Adjustment Factor.
- At its current weight, Fast Retailing will be capped again in March 2025. If the stock outperforms Nikkei 225 by another 3% before 31 January 2025, it could be double-capped.
- And an additional 16% would mean ¥1.1trln of sales in March. But like last time, this is a rubber band which stretches. Too far, and selling pressure is obvious.
Tokyo Metro (9023 JP) IPO: Valuation Insights
- Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
- We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case and Tokyo Metro (9023 JP) IPO: The Bear Case.
- In this note, we discuss valuation. Our analysis suggests that Tokyo Metro is attractively valued at the IPO price compared to peer multiples.
Aica Kogyo (4206) – Small Offering Chips Away At Cross-Holdings
- On Monday, 30 September, shareholders of US$1.4bn market cap chemicals and housing materials supplier Aica Kogyo (4206 JP) announced a Secondary Share Sale. It’s small at 2% of market cap.
- The Offering is 2.1mm shares including greenshoe. The company also raised its H1 dividend guidance slightly (¥53/share to ¥56/share) and announced a buyback which should cover 57% of the offering.
- It’s a small deal. There are a lot more cross-holdings behind that but the company is cash-rich and the company is very cheap/underlevered on an LBO basis.
Rigaku Holdings (268A JP) IPO: The Bull Case
- Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
- In Japan, Rigaku’s XRD (X-ray diffraction) has a high market share of 75%. Around 70% of its revenue is derived from customers outside Japan.
- The bull case rests on high customer switching costs, peer-leading revenue growth, top-quartile profitability, FCF generation, and low leverage.
Daiseki Co Ltd (9793 JP): 1H FY02/25 flash update
- Consolidated 1H sales decreased by 8.3% YoY to JPY32.8bn, meeting the company’s target of JPY32.7bn.
- Consolidated operating profit for 1H decreased by 5.5% YoY to JPY7.3bn, exceeding the target of JPY6.7bn.
- Net income attributable to owners of the parent increased by 2.1% YoY to JPY4.9bn, surpassing company forecasts.
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