Director, Head of Research, Smartkarma

Pranav Rao

Director, Head of Research

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

<ul>
<li>Welcome to Curator’s Cut - a fortnightly roundup of standout themes from the 1,600+ insights published on Smartkarma.</li>
<li>In this cut, we examine the global naval reinvestment cycle, survey stocks benefitting from nuclear power's comeback, and review the case for a couple of confirmed corporate spin-offs.</li>
<li>Want to dig deeper? Comment or message with the themes you’d like to see highlighted next.</li>
</ul>


Welcome to Curator’s Cut - a fortnightly roundup of standout themes from the 1,600+ insights published on Smartkarma.
In this cut, we examine the global naval reinvestment cycle, survey stocks benefitting from nuclear power's comeback, and review the case for a couple of confirmed corporate spin-offs.
Want to dig deeper? Comment or message with the themes you’d like to see highlighted next.


Curator's Cut: Naval Navigations, Nuclear Renaissance & Spin-Off Situations

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>The <a href="https://asia.nikkei.com/business/business-deals/toyota-supplier-denso-to-withdraw-proposal-to-take-over-rohm" target="_blank" rel="noopener">Nikkei reports</a> that <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a> will withdraw its proposal for <a href="https://www.smartkarma.com/entities/rohm-co-ltd" target="_blank" data-smartkarma-citation="entities:2953:1" rel="noopener">ROHM Co Ltd (6963 JP)</a> as the two sides were “<em>unable to see eye-to-eye on an offer.</em>” </li>
<li>Several factors, such as an unattractive offer, significant peer re-rating, and Rohm's preference for the standalone path (MoU with Toshiba/Mitsubishi Electric), likely contributed to Denso’s withdrawal. </li>
<li>The shares will be under pressure due to the deal break (estimated decline of around 10%). A re-rating in the medium term depends on execution, starting with the Toshiba MoU. </li>
</ul>


The Nikkei reports that Denso Corp (6902 JP) will withdraw its proposal for ROHM Co Ltd (6963 JP) as the two sides were “unable to see eye-to-eye on an offer.” 
Several factors, such as an unattractive offer, significant peer re-rating, and Rohm's preference for the standalone path (MoU with Toshiba/Mitsubishi Electric), likely contributed to Denso’s withdrawal. 
The shares will be under pressure due to the deal break (estimated decline of around 10%). A re-rating in the medium term depends on execution, starting with the Toshiba MoU. 


Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Japanese and Asian equity long/short strategies

Uzabase

Specialising in Japanese and Asian equity long/short strategies with a focus on rigorous, but targeted quantitative analysis to temper evaluations of company strategy, potential and vision. At Uzabase, our team of analysts provides coverage of industry dynamics with a local Asian flavour on Speeda, our financial information platform. Going forward we are aiming to channel our focus toward thematic research on emerging industries and company research.

Thematic (Sector/Industry)

<p>On the 4th of February the Nikkei <a href="http://asia.nikkei.com/Business/Deals/Toyota-near-tie-up-with-Suzuki-on-development-procurement" target="_blank">reported</a> that <a href="https://www.smartkarma.com/entities/73" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor Corp (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/732" target="_blank" data-smartkarma-citation="entities:732:1">Suzuki Motor Corp (7269 JP)</a> were in discussions regarding an alliance on development and procurement. This was confirmed by the companies today with the statement that the broad terms of the deal have been agreed upon. The move continues a series of tie-ups conducted by Toyota in recent years and could place pressure on other players to seek similar tie-ups. <a href="https://www.smartkarma.com/entities/20528" target="_blank" data-smartkarma-citation="entities:20528:1">Mazda Motor Corp (7261 JP)</a> may feel particularly pressured…</p>

On the 4th of February the Nikkei reported that Toyota Motor Corp (7203 JP) and Suzuki Motor Corp (7269 JP) were in discussions regarding an alliance on development and procurement. This was confirmed by the companies today with the statement that the broad terms of the deal have been agreed upon. The move continues a series of tie-ups conducted by Toyota in recent years and could place pressure on other players to seek similar tie-ups. Mazda Motor Corp (7261 JP) may feel particularly pressured…

Could Trump Add to Consolidation Pressure on Japan's Auto Industry

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>At the end of March, <a href="https://www.smartkarma.com/entities/mitsubishi-electric-corp" target="_blank" data-smartkarma-citation="entities:11171:1" rel="noopener">Mitsubishi Electric (6503 JP)</a>, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, and <a href="https://www.smartkarma.com/entities/rohm-co-ltd" target="_blank" data-smartkarma-citation="entities:2953:1" rel="noopener">ROHM Co Ltd (6963 JP)</a> agreed to have Mitsubishi Electric join the Toshiba/Rohm power semi talks.</li>
<li>The language in the documents released is worthwhile a close look. I expect a Rohm/Toshiba deal announcement within the quarter. If control/consolidation/stake levels are agreed, Mitsubishi won't be far behind.</li>
<li>Joining the three businesses creates lots of potential synergies, making the businesses #2 in the world. Separately, Kioxia's recent gains highlight the value of Rohm's Toshiba stake and Rohm's value.</li>
</ul>


At the end of March, Mitsubishi Electric (6503 JP), Toshiba Corp (6502 JP), and ROHM Co Ltd (6963 JP) agreed to have Mitsubishi Electric join the Toshiba/Rohm power semi talks.
The language in the documents released is worthwhile a close look. I expect a Rohm/Toshiba deal announcement within the quarter. If control/consolidation/stake levels are agreed, Mitsubishi won't be far behind.
Joining the three businesses creates lots of potential synergies, making the businesses #2 in the world. Separately, Kioxia's recent gains highlight the value of Rohm's Toshiba stake and Rohm's value.


[Japan M&A] Rohm (6963) - Refreshing Rohm's Stake Value in Toshiba, and Thinking About NEWCO

<ul>
<li>Effissimo Capital Management launched a partial Tender Offer for <a href="https://www.smartkarma.com/entities/sanken-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:6073:1" rel="noopener">Sanken Electric (6707 JP)</a> five years ago. The goal was 20%. That tender failed but 6mos later they were at 19%.</li>
<li>Effissimo bought more, and the company bought back 20% of shares; Effissimo is at 36% now. In late 2022, Oasis bought 6.8%. Now 9.8%. Activists effectively control the vote.</li>
<li>In Q3 2024, Sanken de-consolidated <a href="https://www.smartkarma.com/entities/allegro-microsystems-inc" target="_blank" data-smartkarma-citation="entities:29707:1" rel="noopener">Allegro MicroSystems (ALGM US)</a> but their stake is still 2x Sanken's market cap. The "core" business is weak, but should grow. The question is pressure.</li>
</ul>


Effissimo Capital Management launched a partial Tender Offer for Sanken Electric (6707 JP) five years ago. The goal was 20%. That tender failed but 6mos later they were at 19%.
Effissimo bought more, and the company bought back 20% of shares; Effissimo is at 36% now. In late 2022, Oasis bought 6.8%. Now 9.8%. Activists effectively control the vote.
In Q3 2024, Sanken de-consolidated Allegro MicroSystems (ALGM US) but their stake is still 2x Sanken's market cap. The "core" business is weak, but should grow. The question is pressure.


[Japan Activism] Activists Control Sanken (6707 JP) Going Forward - Watch For Better Plans

Japan

FUJI ELECTRIC CO.,LTD manufactures electric machinery and electronic devices. The Company's products include automatic vending machines, factory automation equipment, and power supplies, as well as information and electronic components such as power semiconductors and integrated circuits (ICs).

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Fuji Electric (6504 JP)

Curator's Cut: Naval Navigations, Nuclear Renaissance & Spin-Off Situations

This Curator's Cut issue highlights global naval reinvestment, nuclear power stocks, and corporate spin-offs from Smartkarma's insights. Comment...

Pranav Rao

ROHM (6963 JP): Denso Pulls the Plug

The shares will be under pressure due to the deal break (estimated decline of around 10%). A re-rating in the medium term depends on execution,...

Arun George

Could Trump Add to Consolidation Pressure on Japan's Auto Industry

On the 4th of February the Nikkei reported that Toyota Motor Corp (7203 JP) and Suzuki Motor Corp (7269 JP) were in discussions regarding an...

Mio Kato

[Japan M&A] Rohm (6963) - Refreshing Rohm's Stake Value in Toshiba, and Thinking About NEWCO

Adding Mitsubishi Elec to Toshiba/Rohm talks on combining power semi businesses is worded as if its in a hurry. That's good. NEWCO adds value....

Travis Lundy

[Japan Activism] Activists Control Sanken (6707 JP) Going Forward - Watch For Better Plans

Sanken Electric is 45-46% owned by two declared activists and there is probably more than 50% held by those two and hangers-on. It is cheap to its...

Travis Lundy

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Curator's Cut: Naval Navigations, Nuclear Renaissance & Spin-Off Situations

​This Curator's Cut issue highlights global naval reinvestment, nuclear power stocks, and corporate spin-offs from Smartkarma's insights. Comment...

Pranav Rao

ROHM (6963 JP): Denso Pulls the Plug

The shares will be under pressure due to the deal break (estimated decline of around 10%). A re-rating in the medium term depends on execution,...

Arun George

Could Trump Add to Consolidation Pressure on Japan's Auto Industry

On the 4th of February the Nikkei reported that Toyota Motor Corp (7203 JP) and Suzuki Motor Corp (7269 JP) were in discussions regarding an...

Mio Kato

[Japan M&A] Rohm (6963) - Refreshing Rohm's Stake Value in Toshiba, and Thinking About NEWCO

Adding Mitsubishi Elec to Toshiba/Rohm talks on combining power semi businesses is worded as if its in a hurry. That's good. NEWCO adds value....

Travis Lundy

[Japan Activism] Activists Control Sanken (6707 JP) Going Forward - Watch For Better Plans

Sanken Electric is 45-46% owned by two declared activists and there is probably more than 50% held by those two and hangers-on. It is cheap to its...

Travis Lundy

This Curator's Cut issue highlights global naval reinvestment, nuclear power stocks, and corporate spin-offs from Smartkarma's insights. Comment...