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

Equity Bottom-Up

<ul>
<li>Japan’s defense budget may be set to surge by about 50%, making NOF’s ammunition business a hot theme.</li>
<li>Be careful though. NOF’s munitions segment faces production limits and slow capacity expansion, capping near-term profit growth even with new defense spending.</li>
<li>We think NOF is overvalued, even as we acknowledge consensus forecasts are probably too low. But shorting now would probably just be fighting the tape. Save this idea for later.</li>
</ul>


Japan’s defense budget may be set to surge by about 50%, making NOF’s ammunition business a hot theme.
Be careful though. NOF’s munitions segment faces production limits and slow capacity expansion, capping near-term profit growth even with new defense spending.
We think NOF is overvalued, even as we acknowledge consensus forecasts are probably too low. But shorting now would probably just be fighting the tape. Save this idea for later.


Shorting NOF (4403) Just Now Is Probably a Very Bad Idea

<ul>
<li>Japan’s chemicals industry is finally undergoing a long-overdue consolidation that should lead to fewer companies, higher profitability, and less volatility.</li>
<li>These changes may be driving significant mispricing. Like most segments, RoE drives most of the variance in PBR, but with more frequent and far larger outliers.</li>
<li>KH Neochem, Daicel, and Mitsui Chemicals are the undervalued outliers, and all three are positioned for rapid growth in our view.</li>
</ul>


Japan’s chemicals industry is finally undergoing a long-overdue consolidation that should lead to fewer companies, higher profitability, and less volatility.
These changes may be driving significant mispricing. Like most segments, RoE drives most of the variance in PBR, but with more frequent and far larger outliers.
KH Neochem, Daicel, and Mitsui Chemicals are the undervalued outliers, and all three are positioned for rapid growth in our view.


Long-Overdue Consolidation in Japanese Chemicals Drives Growth & Mispricing

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>Stargate delays hitting semi-caps, while Texas Instruments cautious tone hitting power-semi's after hours.</li>
<li>Medical tech solution names IQVIA and Medpace surge may aid M3.</li>
<li>DR Hortons's numbers beat sparking enormous short squeeze for Home Builders - Sumitomo Forestry to follow.</li>
</ul>


Stargate delays hitting semi-caps, while Texas Instruments cautious tone hitting power-semi's after hours.
Medical tech solution names IQVIA and Medpace surge may aid M3.
DR Hortons's numbers beat sparking enormous short squeeze for Home Builders - Sumitomo Forestry to follow.


Japan Morning Connection: Trump Announces 15% Tariffs on Japan but Details Remain Scarce

<ul>
<li>Japan SPE names starting to stir day 1 of trading.</li>
<li>Watch oversold previous winners for renewed interest such as Disco, Screen and TEL now China concerns are priced in.</li>
<li>A good read for photoresist/semi-chem plays after TOK's better than expected MTP yesterday.</li>
</ul>


Japan SPE names starting to stir day 1 of trading.
Watch oversold previous winners for renewed interest such as Disco, Screen and TEL now China concerns are priced in.
A good read for photoresist/semi-chem plays after TOK's better than expected MTP yesterday.


AI Related Plays Out of the Gates Strong for 2025

<ul>
<li>Strong tech rebound off the morning lows with AI related names starting to pick up favour again helped by good numbers from Oracle.</li>
<li>The hefty price tag for Sony's PS5 Pro is unlikely to appeal to casual gamers, but should still boost sales in the interim as a mid-cycle boost for the PlayStation.</li>
<li>Fujitsu's IR day yesterday sets an upbeat tone, but lacks catalysts which could help push the stock to new highs.</li>
</ul>


Strong tech rebound off the morning lows with AI related names starting to pick up favour again helped by good numbers from Oracle.
The hefty price tag for Sony's PS5 Pro is unlikely to appeal to casual gamers, but should still boost sales in the interim as a mid-cycle boost for the PlayStation.
Fujitsu's IR day yesterday sets an upbeat tone, but lacks catalysts which could help push the stock to new highs.


Japan Morning Connection: Rotation Towards AI May See Japan SPE Gains

Japan

ASAHI KASEI CORPORATION produces synthetic fibers, industrial chemicals, petrochemicals, plastics (resins), and synthetic rubber.  The Company also operates and sells real estates, pharmaceuticals, medical equipments, electronics, construction materials, and consumer products.

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52-week Range	0.00 - 0.00
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Asahi Kasei (3407 JP)

Shorting NOF (4403) Just Now Is Probably a Very Bad Idea

Japan's defense budget increase may boost NOF's ammunition business, but production limits and slow capacity expansion could hinder profit growth....

Michael Allen

Long-Overdue Consolidation in Japanese Chemicals Drives Growth & Mispricing

Consolidation in Japan's chemicals industry leading to fewer companies, higher profitability, and potential for growth in undervalued outliers...

Michael Allen

Japan Morning Connection: Trump Announces 15% Tariffs on Japan but Details Remain Scarce

Tech risk off with delays for Stargate. Texas Instruments cautious tone affects power-semi's. M3 may benefit from Medspace surge. DR Horton's beat...

Andrew Jackson

Japan Morning Connection: Rotation Towards AI May See Japan SPE Gains

AI names gaining favor with Oracle's positive numbers. Sony's PS5 Pro may not attract casual gamers but could boost sales as a mid-cycle upgrade....

Andrew Jackson

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shorting NOF (4403) Just Now Is Probably a Very Bad Idea

​Japan's defense budget increase may boost NOF's ammunition business, but production limits and slow capacity expansion could hinder profit growth....

Michael Allen

Long-Overdue Consolidation in Japanese Chemicals Drives Growth & Mispricing

​Consolidation in Japan's chemicals industry leading to fewer companies, higher profitability, and potential for growth in undervalued outliers...

Michael Allen

Japan Morning Connection: Trump Announces 15% Tariffs on Japan but Details Remain Scarce

Tech risk off with delays for Stargate. Texas Instruments cautious tone affects power-semi's. M3 may benefit from Medspace surge. DR Horton's beat...

Andrew Jackson

AI Related Plays Out of the Gates Strong for 2025

​Watch JP SPE oversold previous winners like Disco, Screen, and TEL gaining renewed interest. A good read for photoresist/semi-chem plays after...

Andrew Jackson

Japan Morning Connection: Rotation Towards AI May See Japan SPE Gains

AI names gaining favor with Oracle's positive numbers. Sony's PS5 Pro may not attract casual gamers but could boost sales as a mid-cycle upgrade....

Andrew Jackson

Japan's defense budget increase may boost NOF's ammunition business, but production limits and slow capacity expansion could hinder profit growth....

Consolidation in Japan's chemicals industry leading to fewer companies, higher profitability, and potential for growth in undervalued outliers...

Watch JP SPE oversold previous winners like Disco, Screen, and TEL gaining renewed interest. A good read for photoresist/semi-chem plays after...