In today’s briefing:
- Couche-Tard Bid for 7&I (3382) – FEFTA and Economic Security
- Rohm (6963): Search for the Bottom
- Back to Jafco- Continues to Be in the Right Place and at the Right Time
- Toyo Corporation (8151 JP) – Q3 FY9/24 Results Update
- Golf Digest Online (3319 JP) – 2Q Follow-Up
- LaKeel (4074 JP) – Continuing to Build a Track Record
Couche-Tard Bid for 7&I (3382) – FEFTA and Economic Security
- The largest potential inbound cross-border M&A in years – for a national champion no less – gets a lot of press coverage.
- This morning, a Nikkei article noted Alimentation Couche-Tard (ATD CN) was likely to need “prior approval” from Japanese regulatory authorities for its takeover “the Nikkei has learned.”
- It wasn’t difficult for the Nikkei to learn that. METI publishes a FEFTA List. 7&i has been on it for years as Type II Designated Business, requiring prior approval.
Rohm (6963): Search for the Bottom
- Rohm’s cyclical turning points in revenue typically lag the turn METI production %YoY less inventory % YoY for electronic devices and components by 12 months.
- Investors were disappointed with Q1 results, but the company cleanly outperformed most peers in the power semiconductor space, and recovery now looks inevitable.
- We believe the fair value of shares to be around ¥3,300, 2x the current price, but investors should ask, “When?” Not “How much.”
Back to Jafco- Continues to Be in the Right Place and at the Right Time
- Its portfolio of Japanese investments should benefit from the change in investor focus to domestic names.
- Has shown strong outperformance since the sell-off presaging future relative strength
- The business itself progressing as planned for increased shareholder returns
Toyo Corporation (8151 JP) – Q3 FY9/24 Results Update
- Toyo Corporation announced a share buyback of up to 1.2 million shares or ¥1.5 billion for FY9/24, which equals about 5% of the current shares outstanding in addition to an upward revision of DPS to ¥67 from ¥62.
- This reflects Toyo’s commitment to improving total shareholder returns and ROE. OP margin declined significantly (-6.4% Q3 FY9/23, -6.5% Q3 FY9/24) but it was due to cyclicality.
- Physics / Energies continued to see strong growth (+35.0% YoY) on the back of robust demand for carbon neutrality.
Golf Digest Online (3319 JP) – 2Q Follow-Up
- GDO announced 1H FY24/12 consolidated financial results at 15:00 on Thursday 8/8, and it held a results briefing at 16:00 via Zoom webinar, hosted by CEO Ishizaka, COO Yoshikawa and CFO Nakamura.
- Headline figures were net sales +10.2% YoY, EBITDA -26.9%, the operating loss expanding and profit attributable to owners of parent dropping into loss.
- While headline numbers on the surface appear to indicate an extremely challenging environment, it is worth noting that the trend for 2Q-only profit improved sequentially at all levels (see red circles in the table below), and management is confident that profit will return to profitability in the 2H as measures to improve GPM and control costs contribute going forward.
LaKeel (4074 JP) – Continuing to Build a Track Record
- Q1-2 FY12/24 results were ahead of company guidance for profits, with the company driving earnings through a combination of sales growth for the higher return Product Service segment, and sound cost management with flat SG&A costs YoY.
- We believe quarterly Q2 FY12/24 SaaS metrics for LaKeel Products were positive, demonstrating an acceleration in growth for ARPU (+9% YoY) and MRR (+26.2% YoY).
- This strategically important product line contributed 14% of Q1-2 FY12/24 sales, and continued execution of scaling will allow the company to improve both the sales mix as well as the quality of earnings.
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