Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Aisin’s first-half FY3/25 results highlight short-term challenges, with operating profit falling 38% to JPY 56.1 billion due to weak sales and worsening product mix. </li>
<li>Management cut its full year operating profit guidance from JPY 220 billion to 200 billion. We believe that street expectations had already factored in weaker Toyota volumes.</li>
<li>Aisin’s long-term outlook remains strong, centred on the transition to EVs. We still see over 100% upside if the transition is successful. </li>
</ul>


Aisin’s first-half FY3/25 results highlight short-term challenges, with operating profit falling 38% to JPY 56.1 billion due to weak sales and worsening product mix. 
Management cut its full year operating profit guidance from JPY 220 billion to 200 billion. We believe that street expectations had already factored in weaker Toyota volumes.
Aisin’s long-term outlook remains strong, centred on the transition to EVs. We still see over 100% upside if the transition is successful. 


Aisin (7259) | Short-Term Challenges Amid Strategic Shift to EVs

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>13mos ago we saw a sea change. Toyota Group started the process of cross-holding unwinds. They've moved quickly. LOTS of unwinding and so far nearly ¥2trln in buybacks announced.</li>
<li>Aisin, Toyota, and Toyota Industries (TIC) sold Denso first. Then Denso sales of TIC and Renesas, then Aisin, then Exedy, now TIC is selling the rest of its Denso.</li>
<li>Denso announced lower guidance and an overwhelming buyback - as much as liquidity would allow - to offset TIC and non-life sellers. Reading between the lines, there are interesting details.</li>
</ul>


13mos ago we saw a sea change. Toyota Group started the process of cross-holding unwinds. They've moved quickly. LOTS of unwinding and so far nearly ¥2trln in buybacks announced.
Aisin, Toyota, and Toyota Industries (TIC) sold Denso first. Then Denso sales of TIC and Renesas, then Aisin, then Exedy, now TIC is selling the rest of its Denso.
Denso announced lower guidance and an overwhelming buyback - as much as liquidity would allow - to offset TIC and non-life sellers. Reading between the lines, there are interesting details.


Toyota Group Musical Shares - Toyota Industries' (6201) Big Multi-Year Denso (6902) Selldown & More

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>Silicon carbide chips and new electric vehicles are dominating the news in deep value space, highlighting Rohm, Honda, and Aisin.</li>
<li>We also highlight some juicy dividends that we think need to be taken seriously by growth managers.</li>
<li>This round-up is provided for thought provocation only. Comprehensive deep-dive analysis available to clients on request. </li>
</ul>


Silicon carbide chips and new electric vehicles are dominating the news in deep value space, highlighting Rohm, Honda, and Aisin.
We also highlight some juicy dividends that we think need to be taken seriously by growth managers.
This round-up is provided for thought provocation only. Comprehensive deep-dive analysis available to clients on request. 


Unloved Japan Roundup: Rohm, Honda, Aisin, Jtekt

<ul>
<li>Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.</li>
<li>Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.</li>
<li>But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.</li>
</ul>


Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.
Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.
But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.


<ul>
<li>In late May, Toyota Group member <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> announced it would sell its 37% stake in <a href="https://www.smartkarma.com/entities/exedy-corp" target="_blank" data-smartkarma-citation="entities:6516:1" rel="noopener">Exedy Corp (7278 JP)</a> . The market dropped. But that was the opportunity.</li>
<li>On 30 May, I said <em>"Buy the deal, buy in the market. It's cheap and vulnerable."</em> It's up 21.5% since (the day after). Peers are down 15-20%. </li>
<li>The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There's LOTS of cash left. </li>
</ul>


In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP) . The market dropped. But that was the opportunity.
On 30 May, I said "Buy the deal, buy in the market. It's cheap and vulnerable." It's up 21.5% since (the day after). Peers are down 15-20%. 
The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There's LOTS of cash left. 


[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) - LOTS of Room Left To Run

Japan

Aisin Corporation manufactures and distributes motor vehicle parts. The Company produces drive train, transmissions, clutches, disc brakes, anti-skid brake system, suspensions, oil pumps, power windows, power door locks, and more. Aisin operates sales and production subsidiaries worldwide.

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Aisin (7259 JP)

Aisin (7259) | Short-Term Challenges Amid Strategic Shift to EVs

Aisin faces short-term challenges with operating profit falling 38%, but long-term outlook remains strong with potential for over 100% upside in...

Mark Chadwick

Toyota Group Musical Shares - Toyota Industries' (6201) Big Multi-Year Denso (6902) Selldown & More

Toyota Group cross-holding unwinds are more than ¥1trln already and buybacks are close to ¥2trln since The Aisin Announcement. Today, TIC sells,...

Travis Lundy

Unloved Japan Roundup: Rohm, Honda, Aisin, Jtekt

New product launches could be the start of a deluge of Silicon carbide-based chips that improve performance and reduce costs of high-powered...

Michael Allen

Unloved Japan Roundup: Bracing for Q3

Mazda’s domestic volume up 24% in September, compared to industrywide average of 1.1%. Q2 estimates down by 32% in 3 months, but yield over 6%,...

Michael Allen

[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) - LOTS of Room Left To Run

Murakami-san is up to 18% in Exedy. But that is 20.9% of voting rights. And that is at a price higher than pre-offering announcement. Since he...

Travis Lundy

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52-week Range

Market Cap (USDm)

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Aisin (7259) | Short-Term Challenges Amid Strategic Shift to EVs

​Aisin faces short-term challenges with operating profit falling 38%, but long-term outlook remains strong with potential for over 100% upside in...

Mark Chadwick

Toyota Group Musical Shares - Toyota Industries' (6201) Big Multi-Year Denso (6902) Selldown & More

Toyota Group cross-holding unwinds are more than ¥1trln already and buybacks are close to ¥2trln since The Aisin Announcement. Today, TIC sells,...

Travis Lundy

Unloved Japan Roundup: Rohm, Honda, Aisin, Jtekt

New product launches could be the start of a deluge of Silicon carbide-based chips that improve performance and reduce costs of high-powered...

Michael Allen

Unloved Japan Roundup: Bracing for Q3

Mazda’s domestic volume up 24% in September, compared to industrywide average of 1.1%. Q2 estimates down by 32% in 3 months, but yield over 6%,...

Michael Allen

[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) - LOTS of Room Left To Run

Murakami-san is up to 18% in Exedy. But that is 20.9% of voting rights. And that is at a price higher than pre-offering announcement. Since he...

Travis Lundy

Aisin faces short-term challenges with operating profit falling 38%, but long-term outlook remains strong with potential for over 100% upside in...