In today’s briefing:
- Hillhouse To Buy Out Minorities In Samty Holdings (187A) – Small Premium, High Leverage, Hmmm
- Shift Inc (3697 JP): Full-year FY08/24 flash update
- Japanese Midcap Banks – Three Key Picks
- Hisamitsu Pharmaceutical (4530 JP): H1FY25 Witness Strong Growth; FY25 Guidance Reiterated
- Reducing Cross-Shareholdings Returns Companies to Basics of Sustained Growth in Shareholder Returns
- EJ Holdings Inc (2153 JP): Q1 FY05/25 flash update
- Shin Pro Maint (6086 JP): 1H FY02/25 flash update
- Usen-Next Holdings Co Ltd (9418 JP): Full-year FY08/24 flash update
Hillhouse To Buy Out Minorities In Samty Holdings (187A) – Small Premium, High Leverage, Hmmm
- Today, Hillhouse announced it would buy the 63% of SAMTY HOLDINGS Co Ltd (187A JP) not owned by Daiwa Securities Group (8601 JP) at an 18% premium.
- It’s a highly-levered real estate company. Huge inventory. Decent margins on sale so embedded profit sitting in inventory. Not a very big premium, but an all-time high.
- Retail including some large former insiders and passive own the vast bulk of the float here. The former get this done. Or not.
Shift Inc (3697 JP): Full-year FY08/24 flash update
- In FY08/24, the company reported sales of JPY110.6bn (+25.7% YoY) and operating profit of JPY10.5bn (-8.9% YoY).
- Software Testing Related Services segment sales reached JPY71.3bn (+22.4% YoY), with operating profit of JPY16.2bn (+11.4% YoY).
- For FY08/25, the company forecasts sales of JPY130.0bn (+17.5% YoY) and operating profit of JPY13.5bn (+28.1% YoY).
Japanese Midcap Banks – Three Key Picks
- We analyse ten Japanese midcap banks to target beneficiaries of the realization of strategic shareholdings, as well as beneficiaries of the improving interest rate outlook
- We add Hachijuni Bank and Hokuhoku Financial to the buy list, based on the potential for realization of strategic holdings; these share-holdings are large relative to their respective market capitalizations
- We maintain Gunma Bank on the buy list, primarily for its very strong gearing into the rising interest cycle and its attractive PE multiples
Hisamitsu Pharmaceutical (4530 JP): H1FY25 Witness Strong Growth; FY25 Guidance Reiterated
- Hisamitsu Pharmaceutical Co (4530 JP) has reported double-digit revenue growth in H1FY25, mainly driven by 17% YoY growth in OTC pharmaceutical product, Salonpas. Net profit grew 8%.
- Rx business revenues grew 5% as Zicthoru, Apohide etc clocked healthy numbers, while Mohrus product line continues to decline. Since Q1FY24, Zicthoru’s quarterly revenue run-rate has been surpassing ¥1B.
- Hisamitsu has reiterated its FY25 guidance of ¥152B revenue, operating profit of ¥14.5B, and net profit of ¥15.8B. With H1FY25 progress rate, the company is expected to beat the guidance.
Reducing Cross-Shareholdings Returns Companies to Basics of Sustained Growth in Shareholder Returns
- Business portfolio reforms are lagging and improving profitability, the driver of ROE, will take more time. Further Reducing policy shareholdings and cash on hand are needed to improve capital profitability.
- In days of cross-shareholdings, management tended to be less conscious of the goal of sustainable growth in shareholder interests because they need not listen to opinions of other minority shareholders.
- Cross-Shareholdings have decreased, and management is now required to be more conscious of capital profitability. ”TSE’s request” will hopefully prevent this change from going backwards.
EJ Holdings Inc (2153 JP): Q1 FY05/25 flash update
- Revenue for Q1 FY05/25 was JPY3.1bn, a decrease of 3.9% YoY, with an operating loss of JPY1.1bn.
- Orders received in Q1 FY05/25 totaled JPY9.0bn, an 8.4% YoY decrease, aligning with initial expectations.
- Full-year earnings forecast remains unchanged due to stable production performance and order backlog, despite uncertain subsidiary impact.
Shin Pro Maint (6086 JP): 1H FY02/25 flash update
- Revenue increased 15.0% YoY to JPY13.2bn, driven by strong performance in Emergency and Preventive Maintenance Services.
- Operating profit rose 22.5% YoY to JPY921mn, with an operating profit margin increase of 0.4pp to 7.0%.
- The company expanded market share by acquiring new customers and projects, focusing on air conditioning and ventilation systems.
Usen-Next Holdings Co Ltd (9418 JP): Full-year FY08/24 flash update
- FY08/24 revenue was JPY326.7bn (+18.2% YoY), with operating profit at JPY29.1bn (+35.0% YoY), exceeding forecasts.
- Subscriber growth and merger boosted FY08/24 revenue to JPY109.1bn (+31.1% YoY), operating profit rose 39.2% YoY.
- FY08/25 forecast: revenue JPY360.0bn (+10.2% YoY), operating profit JPY31.0bn (+6.5% YoY), EBITDA JPY42.5bn (+7.5% YoY).
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