In today’s briefing:
- Revised Couche-Tard Bid for 7&I and a Flurry of News Items Ahead of Earnings
- Seven & I Holdings (3382 JP): Pressure Mounts with a Couche-Tard Revised Offer
- Mercari, Inc. (4385) – Tuesday, Jul 9, 2024
- Rigaku Holdings IPO – Upside Remains Attractive
- Oisix Targeting ¥300 Billion by 2030
- Companies’ Interest in Lowering Market Cap Threshold and Timing of Scope 3 Disclosure Requirements
- Nakamoto Packs (7811 JP): 1H FY02/25 flash update
- Aeon Fantasy (4343 JP): 1H FY02/25 flash update
- Aeon Delight (9787 JP): 1H FY02/25 flash update
Revised Couche-Tard Bid for 7&I and a Flurry of News Items Ahead of Earnings
- This AM, partway through the morning session, Bloomberg carried an article saying Alimentation Couche-Tard (ATD CN) had upped its bid for Seven & I Holdings (3382 JP) to US$18.19/share.
- The stock popped, then faded sharply. Near and after the close we got more headlines. Some of these preview tomorrow’s earnings report. Some preview the restructuring announcements.
- The Nikkei comment regarding an earnings shortfall vs Plan suggests weaker US convenience store sales and consumer footfall are to blame. Details will matter. But I’d buy dips.
Seven & I Holdings (3382 JP): Pressure Mounts with a Couche-Tard Revised Offer
- In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a revised non-binding proposal from Alimentation Couche-Tard (ATD CN).
- The rumoured revised offer is US$18.19, a 22.4% premium to the initial US$14.86 offer. The revised terms are attractive vs precedent transactions and analyst price targets.
- The Board would cite regulatory concerns and the revised offer’s implied discount compared to peer multiples. At tomorrow’s results, the Board must present a credible alternative value generation path.
Mercari, Inc. (4385) – Tuesday, Jul 9, 2024
- Mercari is a Japanese e-commerce company known for operating the leading online used goods marketplace in Japan with over 23 million monthly active users and significant annual GMV.
- The company’s strong network effects moat and growth prospects in Japan’s second-hand goods market suggest substantial potential value, despite investor frustration with loss-making initiatives like Mercari US and its Fintech segment.
- Analysts believe that Mercari Japan alone is worth nearly double the company’s current market cap, highlighting potential for significant upside.
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Rigaku Holdings IPO – Upside Remains Attractive
- Rigaku Holdings (268A JP) is looking to raise up to US$756m in its Japan IPO.
- Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
- In our earlier notes, we looked at the firm’s past performance and discussed our thoughts on valuation. In this note, we look at Rigaku’s valuation at the final indicative range.
Oisix Targeting ¥300 Billion by 2030
- Oisix is planning to double its sales by 2030 and looks set to reach this targets early through both organic expansion and M&A.
- The recent acquisition of several B2B and other companies will help sales grow 72% this year alone.
- But the longer-term consumer-facing business continues to look positive thanks to continued demand for convenience meal kits and home delivery of quality foods. Profit though remains anaemic.
Companies’ Interest in Lowering Market Cap Threshold and Timing of Scope 3 Disclosure Requirements
- A comparison of two surveys shows progress in disclosing GHG emissions over half-year, with small increase in Scope 1 and Scope 2, while little progress was made in Scope 3.
- Many companies are cautious about disclosing in annual securities reports, even if they are certified by a third-party certification body or stated in their own integrated reports.
- However, FSA will require companies with over 3 trillion yen in market capitalization to disclose to Scope 3 in FY3/2027, and most companies are likely to comply with this requirement.
Nakamoto Packs (7811 JP): 1H FY02/25 flash update
- Revenue for 1H FY02/25 was JPY24.4bn, a 9.4% YoY increase, surpassing the company forecast of JPY23.9bn.
- Operating profit rose 53.0% YoY to JPY1.6bn, exceeding the forecast of JPY1.0bn, with OPM at 6.4%.
- Net income attributable to owners surged 82.0% YoY to JPY1.2bn, surpassing the forecast of JPY705mn.
Aeon Fantasy (4343 JP): 1H FY02/25 flash update
- Sales were JPY43.9bn (+7.5% YoY), operating profit JPY2.9bn (+41.8% YoY), and net income JPY374mn (-68.3% YoY).
- In Japan, sales reached record highs due to weather-driven demand, while China faced delayed sales recovery.
- The company opened 92 facilities and closed 52, totaling 1,207 facilities, with 737 in Japan and 470 overseas.
Aeon Delight (9787 JP): 1H FY02/25 flash update
- Sales increased YoY across multiple segments, driven by price revisions and new contracts, despite rising costs.
- Aeon Delight’s medium-term plan focuses on efficiency, consulting capabilities, and expanding the Construction Work business.
- The company plans JPY20.0bn investment in productivity, new services, and human capital for sustained growth.