In today’s briefing:
- Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- Shiseido (4911) | Makeup for Lost Time: Shiseido’s Turnaround Strategy
- Paris Miki Holdings (7455 JP): 1H FY03/25 report update
- Workman Under Pressure
- Aoyama Zaisan Networks Company (8929 JP) – Proactive Capital Allocation
- Independent Directors Are Responsible for Disclosures that Have Gaps from the Investors’ Perspective
Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion.
- The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
- The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer.
Shiseido (4911) | Makeup for Lost Time: Shiseido’s Turnaround Strategy
- Shiseido’s stock price has dropped 70% from its post-pandemic peak, presenting a buying opportunity amid ongoing industry challenges.
- The company’s two-year action plan aims to restore profitability through aggressive cost-cutting and restructuring measures.
- Successful execution could drive significant upside, while failure may attract acquisition interest due to Shiseido’s strong Asia-Pacific brand presence.
Paris Miki Holdings (7455 JP): 1H FY03/25 report update
- Sales increased 3.6% YoY to JPY26.1bn, while operating profit decreased 25.3% YoY to JPY1.2bn.
- Japan segment sales rose 4.2% YoY to JPY23.2bn, driven by inbound demand and higher unit prices.
- SG&A expenses grew 4.1% YoY to JPY16.5bn, with a 0.4pp increase in the SG&A ratio to 63.3%.
Workman Under Pressure
- Workman was a purveyor of durable gear for workers in jobs like construction but then had the brilliant idea to transpose that expertise to create activewear like Decathlon.
- This was working well but then it decided to take on the likes of Fast Retailing and Shimamura by moving into casual clothing.
- Since then, same-store sales growth has been negative in many months and profits have fallen. The outlook is increasingly poor.
Aoyama Zaisan Networks Company (8929 JP) – Proactive Capital Allocation
- By driving double-digit sales and OP growth at both Wealth Consulting and Real Estate Solutions during Q1-3 FY12/24, the company continues to demonstrate positive earnings momentum as well as its ability to ride the powerful trend in Japan’s aging demographics.
- Management continues to show improvement in capital allocation by announcing an earnings- accretive acquisition of the Chester Group, a domestic inheritance specialist firm, together with a 5.12% share buyback program.
- This approach to reinvesting capital into the growth of the business together with the buyback shows an effort to offset dilution, demonstrating a commitment to shareholder value and financial strength.
Independent Directors Are Responsible for Disclosures that Have Gaps from the Investors’ Perspective
- In many cases of bad disclosures where the capital allocation policy has not been adequately considered, the company often fails to develop a concrete growth strategy using cash.
- The reason for the misaligned disclosures with investors may be that the company lacks the process to produce projected financial statements and to estimate corporate value/share price calculated from DCF.
- If a plan containing unreasonable figures is disclosed as is, the independent outside director may not be involved in the decision making or may not be accompanied by adequate skills.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
