In today’s briefing:
- Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal
- Aequitas 2024 IPOs and Placements Performance Review-India Driving Volumes as HK Shows Signs of Life
- Reducing Cross-Held Shares Is Precisely What Is Needed to Promote Management Change
- Ryobi (5851) – Global Growth Opportunities from Auto Industry Transformation
- Daiseki Co Ltd (9793 JP): Q3 FY02/25 flash update
- SHIMOJIMA (7482 JP) – December 25, 2024
- Full Report: P-Ban.com Corp. (3559 JP) – December 18, 2024
- Q1 Follow-Up: Ohba (9765 JP) – December 13, 2024
- Mitsubishi Research Institute (3636 JP) – 6 January 2025
Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal
- Overnight, we got news that the JIC Consortium Deal for Shinko Electric Industries (6967 JP) was approved 27Dec2024. That was the last approval required (other than TSE TOB Launch approval).
- This is “on schedule” or slightly early from the previously-announced expected launch date.
- This morning, the stock is up sharply and is trading <0.75% from terms. Expect an announcement within two weeks. Current arb annualised at high 6% is OK. One could hold.
Aequitas 2024 IPOs and Placements Performance Review-India Driving Volumes as HK Shows Signs of Life
- 2024 marked our ninth year covering Equity Capital Markets in Asia-Pacific. In 2024, IPO volumes were mainly driven by India, even as Hong Kong showed signs of turning a corner.
- We ended 2024 with an accuracy rate of 79.4% across 68 IPOs that we covered and 68.8% across 109 placements.
- For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.
Reducing Cross-Held Shares Is Precisely What Is Needed to Promote Management Change
- The problem with cross-held shares is that management facing shareholders tends to be neglected if they remain protected by a defensive wall rather than a lower return on capital.
- The start of mandatory disclosure of policy shareholding policies from FY3/2025 will also help reduce policy shareholdings, which are expected to decrease gradually, but may remain as deemed shareholdings.
- To improve capital profitability, profit margins must increase, so restructuring the business portfolio and investing for growth are key. Management changes are required to implement these changes.
Ryobi (5851) – Global Growth Opportunities from Auto Industry Transformation
- Ryobi is a leading Japanese manufacturer of die casts, predominantly serving the global auto industry, with an estimated top domestic share of about 20%.
- As the transition out of internal combustion engines (ICE) and into battery electric-powered vehicles (BEV) gathers pace, Ryobi is well placed to capitalize on the demand for lightweight aluminum auto parts, including chassis, e-axle, and battery cases, door frame hinges, and many more parts.
- Although meeting demand generated by this once-in-a -lifetime industrial transformation requires capital expenditures, the company is also focused on improving operating margins over the long term and enhancing shareholder returns, keen to raise its PBR to 1x.
Daiseki Co Ltd (9793 JP): Q3 FY02/25 flash update
- Daiseki Co.’s cumulative Q3 sales decreased 6.7% YoY to JPY50.0bn, exceeding the forecast of JPY49.6bn.
- DES’s sales declined 27.6% YoY, impacting consolidated operating profit, which decreased 6.8% YoY to JPY11.0bn.
- FY02/25 forecasts revised upward: sales JPY66.0bn, operating profit JPY14.6bn, with OPM increasing by 0.7pp YoY.
SHIMOJIMA (7482 JP) – December 25, 2024
- Founded over a century ago in 1920 as a wholesaler of packaging materials, SHIMOJIMA is a leading trading company specialized in providing comprehensive packaging materials, products and supplies, offering over 1,000,000 items, through its unique wholesale and retail omnichannel distribution structure.
- The Company’s nationwide omnichannel distribution network includes 16 regional sales offices, 18 SHIMOJIMA stores, 20 directly managed Package Plaza stores, and roughly 220 Package Plaza FC stores nationwide, the largest chain of packaging supplies specialty stores in Japan, in addition to the EC site ‘SHIMOJIMA Online Shop,’ as well as sales by Group companies with the ultimate benefit of building an easily identifiable brand image.
- SIR believes this will be a competitive advantage in capturing the upside opportunity from the four simultaneous growth drivers examined in this report.
Full Report: P-Ban.com Corp. (3559 JP) – December 18, 2024
- For some time now, the manufacturing industry has been calling for digital transformation, and the printed circuit board (PCB) ordering platform that p-ban.com Corp. started when it was founded in 2002 has been recognized as an innovative service.
- After its earnings temporarily declined due to a shortage of electronic components during the Covid-19 pandemic, the company established a new system and introduced new services to overcome that challenge.
- In line with its new medium- term management plan, the company aims to generate strong growth, which can be called its second creation phase.
Q1 Follow-Up: Ohba (9765 JP) – December 13, 2024
- Share Price: OHBA‘s share price has generally remained flat at a little over JPY 1,000 for the past six months.
- Its share price had risen linearly for a little over a year from JPY 645 at the beginning of 2023, thanks to the Company’s strong shareholder return policy announced in July 2023 targeting a 60% total shareholder return, as well as market recognition and understanding of the Company’s solid growth performance demonstrated by 13 consecutive fiscal years of operating profit growth through FY2024/5.
- However, its share price has recently plateaued.
Mitsubishi Research Institute (3636 JP) – 6 January 2025
- Mitsubishi Research Institute (MRI) provides consulting services, as well as research and analysis, for the financial sector, government agencies, and the private sector.
- Profitability is poised to expand through acquiring new clients, growing recurring business, and focusing on profitable projects by moving up the value chain towards upstream consulting within the current medium-term plan (FY9/24-FY9/26).
- MRI aims to achieve 12% ROE by FY9/26 with such initiatives (7.5% FY9/24). Having a strong balance sheet with a net cash position, MRI plans to increase capital allocation to M&A, driving non-organic growth.
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