In today’s briefing:
- To Tender Or Not – Gauging The Future of Sun Corp (6736)
- Softbank (9984 JP): The NAV Discount High Offers an Investment Opportunity
- Asics (7936) | Raceing Ahead—But Can They Keep Pace?
- LaKeel (4074 JP): 1H FY12/24 flash update
- Smaller PE Funds May Have Opportunities to Invest in MBOs of TSE Growth Market Companies
- AI Inside (4488 JP): Q1 FY03/25 flash update
- Nitta Gelatin (4977 JP): Q1 FY03/25 flash update
- Toyo Ink SC Holdings (4634 JP): 1H FY12/24 flash update
- Toyo Kanetsu K K (6369 JP): Q1 FY03/25 flash update
- Nanocarrier (4571 JP): Q1 FY03/25 flash update
To Tender Or Not – Gauging The Future of Sun Corp (6736)
- The revised/final True Wind Tender Offer for up to 19% of Sun Corp (6736 JP) ends this week. With the “excitement” the last two weeks, the SunCorp/CLBT ratio is higher.
- The minimum threshold is relatively low. The Tender will most likely succeed with very high pro-ration.
- For those on the edge, I discuss possibilities on the back end. It will be less liquid, but that may not be bad.
Softbank (9984 JP): The NAV Discount High Offers an Investment Opportunity
- The announcement of JPY500bn share buybacks is a positive for SoftBank group minority shareholders, and confirms the positive impact of the emergence of Elliott as an activist shareholder
- The combination of the big weighting of Arm Holdings in the group’s equity value and the impact of the appreciating JPY has driven the NAV discount to very high levels
- Much bad news seems priced in following the market turbulence; we remain positive on Softbank shares as they trade at a historically high 57%+ discount to the estimated NAV
Asics (7936) | Raceing Ahead—But Can They Keep Pace?
- Strong Q2 performance: Asics delivered impressive profit growth and margin improvement, exceeding expectations with operating profit surging 119% YoY to 25 billion yen.
- Market share gains: Asics continues outpacing Nike across key regions, with strong growth in Japan, Europe, China, and the US, driven by Sportstyle and Performance Running.
- Bullish outlook, limited upside: Recent guidance revision and current FX rates cap near-term gains; stock trades at 19x NTM EV/EBIT with 15% upside to fair value.
LaKeel (4074 JP): 1H FY12/24 flash update
- Revenue: JPY4.2bn (+12.3% YoY), EBITDA: JPY653mn (+39.5% YoY), Operating profit: JPY437mn (+49.8% YoY), Recurring profit: JPY424mn (+47.5% YoY), Net income: JPY287mn (+49.3% YoY).
- Product Services revenue: JPY2.4bn (+12.9% YoY), Professional Services revenue: JPY1.8bn (+11.7% YoY), licenses: JPY233mn (+110.6% YoY), subscriptions (LaKeel products): JPY568mn (+22.4% YoY).
- LaKeel product user companies: 344 (+15.8% YoY), ARPU: JPY291,000 (+9.0% YoY), one-time revenue: JPY193mn (+250.4% YoY), recurring revenue: JPY1.6bn (+3.0% YoY).
Smaller PE Funds May Have Opportunities to Invest in MBOs of TSE Growth Market Companies
- TSE growth market, which institutional investors distance themselves from due to its low liquidity, is a market where gamblers who focus on price movements gobble up one IPO after another.
- To convert users from gamblers to investors, companies with long-term growth potential should be listed. Raising the market capitalization criteria for Growth Market could improve the quality of IPOs.
- Meanwhile, in order to improve the quality of the TSE Growth Market, existing listed companies should consider going private through an MBO.
AI Inside (4488 JP): Q1 FY03/25 flash update
- Revenue in Q1 FY03/25 increased 3.7% YoY to JPY1.0bn, with DX Suite user licenses rising to 2,877.
- Gross profit rose 6.4% YoY to JPY830mn, while SG&A expenses increased 9.3% YoY to JPY781mn, reducing operating profit by 25.2%.
- Q1 progress rates for FY03/25 forecasts were 22.0% for revenue, 12.2% for operating profit, 11.2% for ordinary profit, and 0.3% for net income.
Nitta Gelatin (4977 JP): Q1 FY03/25 flash update
- Revenue was JPY10.4bn (+10.4% YoY), operating profit JPY1.0bn (+111.2% YoY), recurring profit JPY1.4bn (+86.2% YoY), net income JPY616mn (+148.4% YoY).
- Achievement rates against full-year forecast: 26.6% revenue, 34.4% operating profit, 46.0% recurring profit, 38.5% net income.
- Revenue by category: Gelatin JPY7.7bn (+9.6% YoY), collagen peptides JPY1.7bn (+22.6% YoY), food materials JPY854mn (-4.3% YoY), biomedical JPY80mn (+33.3% YoY).
Toyo Ink SC Holdings (4634 JP): 1H FY12/24 flash update
- 1H FY12/24 results: Sales JPY172.3bn (+12.1% YoY), Operating profit JPY10.6bn (+122.0% YoY), Net income JPY9.4bn (+143.5% YoY).
- Segment performance: Colorants & Functional Materials sales JPY43.8bn (+11.3% YoY), Polymers & Coatings sales JPY42.6bn (+17.3% YoY), Packaging Materials sales JPY44.3bn (+9.9% YoY).
- Revised FY12/24 forecast: Sales JPY355.0bn, Operating profit JPY20.0bn, Net income JPY16.5bn, EPS JPY311.12, Annual dividend forecast JPY100.
Toyo Kanetsu K K (6369 JP): Q1 FY03/25 flash update
- Revenue increased YoY in Logistics Solutions, declined in Plant Business; operating profit driven by Logistics Solutions’ strong performance.
- Q1 FY03/24 extraordinary gains of JPY519mn included flood damage losses; Q1 FY03/25 extraordinary losses were JPY10mn.
- Revised FY03/25 forecast: revenue JPY59.5bn, operating profit JPY3.9bn, recurring profit JPY4.1bn, net income JPY2.8bn.
Nanocarrier (4571 JP): Q1 FY03/25 flash update
- The company reported no sales in Q2 FY03/23, with operating and recurring losses narrowing YoY due to decreased SG&A expenses.
- The company shifted its focus to mRNA drug candidates and IP licensing, enhancing collaborations and research progress.
- The company ended its fertility treatment support business in May 2024 and ceased sales of Depth products in December 2022.
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