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>Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.</li>
<li>The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.</li>
<li>Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.</li>
</ul>


Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.
The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.
Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.


Global Materials | Industrials | Commodities

Rahul Jain

<ul>
<li>Kobelco has delivered ~20–25% returns over the past three months, reflecting investor interest in stable domestic steel demand and growing overseas engineering orders.</li>
<li>Q1–Q2 FY2025 showed steady operational performance with stable steel margins and moderate growth in engineering and construction segments, supporting management’s guidance for the full year.</li>
<li>Stock trades at a modest forward P/E of ~7× with an attractive dividend yield (~4%), though risks include steel margin volatility, global semi-cycle fluctuations, and potential project execution delays.</li>
</ul>


Kobelco has delivered ~20–25% returns over the past three months, reflecting investor interest in stable domestic steel demand and growing overseas engineering orders.
Q1–Q2 FY2025 showed steady operational performance with stable steel margins and moderate growth in engineering and construction segments, supporting management’s guidance for the full year.
Stock trades at a modest forward P/E of ~7× with an attractive dividend yield (~4%), though risks include steel margin volatility, global semi-cycle fluctuations, and potential project execution delays.


Kobelco (5406.T) – Diversified Japanese Industrial with Stable Steel and Engineering Exposure

Thematic (Sector/Industry)

<ul>
<li>China’s steel exports have surged to multi-year highs, flooding global markets and forcing a wave of trade-defense actions across Asia.</li>
<li>Weak domestic demand, squeezed margins, and policy shifts have pushed Chinese mills to lean heavily on exports — prompting Beijing to cap output and link cuts to carbon goals.</li>
<li>Clear winners: Integrated Indian producers and Japan/Korea premium mills, which gain pricing power and margin upside as safeguards and curbs tighten supply.</li>
</ul>


China’s steel exports have surged to multi-year highs, flooding global markets and forcing a wave of trade-defense actions across Asia.
Weak domestic demand, squeezed margins, and policy shifts have pushed Chinese mills to lean heavily on exports — prompting Beijing to cap output and link cuts to carbon goals.
Clear winners: Integrated Indian producers and Japan/Korea premium mills, which gain pricing power and margin upside as safeguards and curbs tighten supply.


China’s Steel Curbs + Asian Safeguards: Pricing Tailwinds for Premium Mills

Commodities

<ul>
<li>Silver has rallied nearly 40% over the past year, outpacing other precious metals on the back of record industrial demand and renewed investor flows.</li>
<li>Persistent structural deficits, led by solar PV and EVs, point to a supportive multi-year backdrop even if investment flows remain volatile.</li>
<li>For Japan, Dowa Holdings’ 30% stake in Los Gatos offers the only meaningful listed exposure to primary silver mining, with earnings leverage that is underappreciated by the market.</li>
</ul>


Silver has rallied nearly 40% over the past year, outpacing other precious metals on the back of record industrial demand and renewed investor flows.
Persistent structural deficits, led by solar PV and EVs, point to a supportive multi-year backdrop even if investment flows remain volatile.
For Japan, Dowa Holdings’ 30% stake in Los Gatos offers the only meaningful listed exposure to primary silver mining, with earnings leverage that is underappreciated by the market.


Silver in Focus: Global Deficits, Japan’s Reliance, and Dowa’s Hidden Leverage

<ul>
<li>Once driven by domestic infrastructure and shipbuilding, Japan’s steel industry is now navigating aging demand and declining consumption by pivoting to exports and specialty steel.</li>
<li>Japanese steelmakers are embracing high-grade flat steel exports, electric arc furnace (EAF) transitions, and decarbonization-linked innovation — while deepening select offshore bets like AM/NS India and JSW Steel.</li>
<li>JFE offers deep value via JSW exposure; Kobe adds margin stability through EAF and engineering, while Nippon faces capex strain and U.S. Steel integration risk.</li>
</ul>


Once driven by domestic infrastructure and shipbuilding, Japan’s steel industry is now navigating aging demand and declining consumption by pivoting to exports and specialty steel.
Japanese steelmakers are embracing high-grade flat steel exports, electric arc furnace (EAF) transitions, and decarbonization-linked innovation — while deepening select offshore bets like AM/NS India and JSW Steel.
JFE offers deep value via JSW exposure; Kobe adds margin stability through EAF and engineering, while Nippon faces capex strain and U.S. Steel integration risk.


Japan Steel: From Domestic Giant to Export-Driven Value Play

Japan

JFE Holdings, Inc. is a holding company which was established through the merger of NKK Corp and Kawasaki Steel Corp.  The Company manages and conducts its subsidiaries' business, which is steel production and integrated engineering services.

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JFE Holdings (5411 JP)

Unloved Japan Round-Up

Some Autos, Steel, and Electric Power companies in Japan now offering yields that compete with U.S. Treasuries. The end of the hurricane season...

Michael Allen

Kobelco (5406.T) – Diversified Japanese Industrial with Stable Steel and Engineering Exposure

Kobelco's strong performance driven by stable steel demand and overseas orders, with potential risks in steel margin volatility and project delays.

Rahul Jain

China’s Steel Curbs + Asian Safeguards: Pricing Tailwinds for Premium Mills

China's steel exports surge, prompting trade-defense actions; Indian and Japanese/Korean mills benefit from tightening supply.

Rahul Jain

Silver in Focus: Global Deficits, Japan’s Reliance, and Dowa’s Hidden Leverage

Silver's rally driven by record industrial demand and investor flows, with Japan's Dowa Holdings offering unique exposure to primary silver mining.

Rahul Jain

Japan Steel: From Domestic Giant to Export-Driven Value Play

Japan's steel industry shifts focus to exports and specialty steel amid declining domestic demand, embracing innovation and offshore investments...

Rahul Jain

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Unloved Japan Round-Up

Some Autos, Steel, and Electric Power companies in Japan now offering yields that compete with U.S. Treasuries. The end of the hurricane season...

Michael Allen

Kobelco (5406.T) – Diversified Japanese Industrial with Stable Steel and Engineering Exposure

​Kobelco's strong performance driven by stable steel demand and overseas orders, with potential risks in steel margin volatility and project delays.

Rahul Jain

China’s Steel Curbs + Asian Safeguards: Pricing Tailwinds for Premium Mills

​China's steel exports surge, prompting trade-defense actions; Indian and Japanese/Korean mills benefit from tightening supply.

Rahul Jain

Silver in Focus: Global Deficits, Japan’s Reliance, and Dowa’s Hidden Leverage

​Silver's rally driven by record industrial demand and investor flows, with Japan's Dowa Holdings offering unique exposure to primary silver mining.

Rahul Jain

Japan Steel: From Domestic Giant to Export-Driven Value Play

​Japan's steel industry shifts focus to exports and specialty steel amid declining domestic demand, embracing innovation and offshore investments...

Rahul Jain

Kobelco's strong performance driven by stable steel demand and overseas orders, with potential risks in steel margin volatility and project delays.

China's steel exports surge, prompting trade-defense actions; Indian and Japanese/Korean mills benefit from tightening supply.

Silver's rally driven by record industrial demand and investor flows, with Japan's Dowa Holdings offering unique exposure to primary silver mining.

Japan's steel industry shifts focus to exports and specialty steel amid declining domestic demand, embracing innovation and offshore investments...