Daily Brief Japan: Tryt Inc, Takara Bio Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

TRYT IPO: Valuation Insights
Takara Bio (4974 JP): Corona Cliff Set to Jeopardize FY24 Financial; Formulated FY26 Management Plan
What Changes in the External Environment Are Changing the Mindset of Managers?

TRYT IPO: Valuation Insights

Tryt Inc (9164 JP), a leading professional recruiting and temporary staffing service in Japan, seeks to raise US$450 million. Pricing is on 5 July, and book-building is 6-11 July.
We previously discussed the IPO in TRYT IPO: The Bull Case and TRYT IPO: The Bear Case.
In this note, we discuss valuation. Our analysis suggests that Tryt is unattractively valued at the IPO reference price of JPY1,620 per share. We would pass on the IPO.

Takara Bio Inc (4974 JP) is anticipating 32% YoY decline in revenue to ¥53B in FY24. Both operating and net profits are expected to decline more than 60% YoY in FY24.
The company has formulated the medium-term management plan 2026 for the three-year period ending in FY26, with the final-year quantitative targets being operating profit of ¥15 billion and ROE 8%.
Considering Takara Bio’s FY24 operating profit guidance of ¥8B, FY26 target seems to be aggressive and difficult to achieve.

Given the history of changes in the external environment that have changed managers’ mindsets all at once, inflation and rising foreign shareholdings are likely to be the catalysts for change.
Given that some companies still do not show capital efficiency as a KPI, it is dangerous to expect much from individual companies’ efforts to improve capital efficiency.
Whether or not to engage in management improvement is a matter for managers, but the catalyst is often an increase in foreign shareholdings. Changes are taking place in some companies.

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