Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

<ul>
<li>DOWA has re-rated from ¥4,500 to ~¥7,000 on risk compression and commodity optionality, not improved structural returns.</li>
<li>FY25 earnings were revised upward, but ROIC remains mid-single digit, with Electronic Materials a persistent structural drag.</li>
<li>Even at elevated silver prices, valuation appears largely priced in, supporting a Neutral stance.</li>
</ul>


DOWA has re-rated from ¥4,500 to ~¥7,000 on risk compression and commodity optionality, not improved structural returns.
FY25 earnings were revised upward, but ROIC remains mid-single digit, with Electronic Materials a persistent structural drag.
Even at elevated silver prices, valuation appears largely priced in, supporting a Neutral stance.


DOWA Holdings (5714 JP): Risk Reset Completed; Optionality Priced In

<ul>
<li>DOWA reported flat FY24 profits at ¥27.1 bn; FY25 guidance projects stable revenue at ¥692 bn and slightly lower profit of ¥27.0 bn.</li>
<li>Diversified businesses in recycling, smelting, and materials processing are positioned to support long-term trends in resource efficiency and circular economy development.</li>
<li>Valuations appear cheap despite low near-term growth visibility. We aligned to global trends towards recycling and sustainability.</li>
</ul>


DOWA reported flat FY24 profits at ¥27.1 bn; FY25 guidance projects stable revenue at ¥692 bn and slightly lower profit of ¥27.0 bn.
Diversified businesses in recycling, smelting, and materials processing are positioned to support long-term trends in resource efficiency and circular economy development.
Valuations appear cheap despite low near-term growth visibility. We aligned to global trends towards recycling and sustainability.


DOWA Holdings (5714.T): Diversified Industrial Business Positioned for Circular Economy Growth

<ul>
<li>Earnings re-based higher: FY2025–27 EPS upgraded ~20%, driven by copper and gold prices; resource earnings dominate while smelting volatility remains largely accounting-driven.</li>
<li>Valuation near fair value: At ~¥6,000, SMM trades around mid-cycle value; upside depends on sustained copper/gold strength rather than multiple expansion.</li>
<li>Downside cushioned: Strong balance sheet and ~2× FCF dividend cover limit downside, with pullbacks offering better entry than chasing spot-driven rallies.</li>
</ul>


Earnings re-based higher: FY2025–27 EPS upgraded ~20%, driven by copper and gold prices; resource earnings dominate while smelting volatility remains largely accounting-driven.
Valuation near fair value: At ~¥6,000, SMM trades around mid-cycle value; upside depends on sustained copper/gold strength rather than multiple expansion.
Downside cushioned: Strong balance sheet and ~2× FCF dividend cover limit downside, with pullbacks offering better entry than chasing spot-driven rallies.


Sumitomo Metal Mining (5713.T): Resources Anchor Earnings; Upside Linked to Copper & Gold

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Index Rebalance

Pan Pacific International Holdings / Index Rebalance

<ul>
<li>The March 2026 review for the Nikkei 225 is turning out to be a little more interesting than one might have expected a few months ago. </li>
<li>As of the end of August, the 3mo ADTV for Kioxia (285A) was ¥18bn despite expectations it would go into M _ _ _. The 1mo average today? ¥383bn.</li>
<li>That means it has rapidly climbed into the top echelons of 5yr trading history. Importantly, <a href="https://www.smartkarma.com/entities/jx-advanced-metals-corporation" target="_blank" data-smartkarma-citation="entities:44346:1" rel="noopener">JX Advanced Metals (5016 JP)</a> and <a href="https://www.smartkarma.com/entities/kokusai-electric-corp" target="_blank" data-smartkarma-citation="entities:40152:1" rel="noopener">Kokusai Electric (6525 JP)</a> are not far behind.</li>
</ul>


The March 2026 review for the Nikkei 225 is turning out to be a little more interesting than one might have expected a few months ago. 
As of the end of August, the 3mo ADTV for Kioxia (285A) was ¥18bn despite expectations it would go into M _ _ _. The 1mo average today? ¥383bn.
That means it has rapidly climbed into the top echelons of 5yr trading history. Importantly, JX Advanced Metals (5016 JP) and Kokusai Electric (6525 JP) are not far behind.


[Quiddity Index] Nikkei 225 Mar26 - Kioxia (285A) On the Menu, Others Not Far Behind

<ul>
<li>Today we saw the culmination of the ridiculously wrong-way Nikkei 225 Sep25 rebalance. <a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> looked like a classic deletion, not addition.</li>
<li>93.3% of the observation period has now passed, which means we can look at the March 2026 Periodic Review with a fair bit of accuracy.</li>
<li>It is likely to be the runner-ups in the Sep25 review from the Consumer Goods sector, though the second-runner-up ADD needs a stock split to have any chance. More below.</li>
</ul>


Today we saw the culmination of the ridiculously wrong-way Nikkei 225 Sep25 rebalance. Shift Inc (3697 JP) looked like a classic deletion, not addition.
93.3% of the observation period has now passed, which means we can look at the March 2026 Periodic Review with a fair bit of accuracy.
It is likely to be the runner-ups in the Sep25 review from the Consumer Goods sector, though the second-runner-up ADD needs a stock split to have any chance. More below.


[Quiddity Index] Oct25 Leaderboard for Nikkei 225 Mar26 Review; One In One Out Likely

Japan

DOWA HOLDINGS, CO., LTD. mines, refines, smelts, and produces various metalrelated products.  The Company's main products include minerals, precious metals, battery materials, semiconductor and superconductivity materials, magnetic materials, and optical devices.

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Dowa Holdings (5714 JP)