Materials| Industrials |Commodities

Rahul Jain

Equity Bottom-Up

Nippon Steel Corporation / Equity Bottom-Up

<ul>
<li>Nippon paid full price despite governance restrictions; with no credible rival, rejecting the golden share risked collapsing the deal.</li>
<li>Historical golden share precedents imply 10–20% valuation discounts, yet Nippon accepted late-stage constraints without renegotiation.</li>
<li>Funding mix includes bridge loans, hybrids, and asset sales, but proposed equity issuance near 40% below book risks EPS dilution and undermines capital discipline messaging.</li>
</ul>


Nippon paid full price despite governance restrictions; with no credible rival, rejecting the golden share risked collapsing the deal.
Historical golden share precedents imply 10–20% valuation discounts, yet Nippon accepted late-stage constraints without renegotiation.
Funding mix includes bridge loans, hybrids, and asset sales, but proposed equity issuance near 40% below book risks EPS dilution and undermines capital discipline messaging.


Nippon Steel (5401 JP) – No Rival, No Discount, Limited Control

<ul>
<li>Nippon Steel has acquired U.S. Steel for $14.2 billion in cash, adding 23 Mt of crude steel capacity and a full U.S. and EU footprint.</li>
<li>The acquisition marks a bold step toward NS’s “100 MT Vision,” diversifying earnings beyond Japan and strengthening presence in a geopolitically stable market.</li>
<li>U.S. Steel remains heavily BF–based and tied to a structurally flat demand market; long-term steel consumption in the U.S. has declined, making returns dependent on aggressive modernization &amp; macro tailwinds.</li>
</ul>


Nippon Steel has acquired U.S. Steel for $14.2 billion in cash, adding 23 Mt of crude steel capacity and a full U.S. and EU footprint.
The acquisition marks a bold step toward NS’s “100 MT Vision,” diversifying earnings beyond Japan and strengthening presence in a geopolitically stable market.
U.S. Steel remains heavily BF–based and tied to a structurally flat demand market; long-term steel consumption in the U.S. has declined, making returns dependent on aggressive modernization &amp; macro tailwinds.


Nippon Steel (5401) – $14.2B U.S. Steel Bet Targets Growth, Faces U.S. Market Maturity Risks

<ul>
<li>Nippon Steel targets over 100 Mt capacity by 2030, focusing on global growth as Japan’s domestic demand shrinks.</li>
<li>It plans to acquire U.S. Steel for $14.9B and expand in India via AMNS joint ventures.</li>
<li>FY24 profit rose 36%, but export reliance, ESG lag, and U.S. deal hurdles pose risks.</li>
</ul>


Nippon Steel targets over 100 Mt capacity by 2030, focusing on global growth as Japan’s domestic demand shrinks.
It plans to acquire U.S. Steel for $14.9B and expand in India via AMNS joint ventures.
FY24 profit rose 36%, but export reliance, ESG lag, and U.S. deal hurdles pose risks.


Nippon Steel (5401 JP): Navigating Decline at Home, Expanding Abroad

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>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.


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.</li>
<li>Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies. </li>
<li>Of these, they have a combined stake of over US$1bn in 23 companies.</li>
</ul>


Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.
Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies. 
Of these, they have a combined stake of over US$1bn in 23 companies.


Japan Cross-Shareholding - Summary Matrix - Over US$100bn of Selling in 118 Companies

Japan

Nippon Steel Corp is an integrated steel maker. The Company produces various types of steel products used for industrial machinery & equipment and exports them worldwide.  Nippon Steel provides plant construction and urban development and also develops new businesses such as chemicals, ceramics, electronic equipment and information & communication systems.

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Nippon Steel Corporation (5401 JP)

Nippon Steel (5401 JP) – No Rival, No Discount, Limited Control

Nippon paid full price for deal despite governance restrictions, risking collapse without credible rival. Funding mix includes bridge loans and...

Rahul Jain

Nippon Steel (5401) – $14.2B U.S. Steel Bet Targets Growth, Faces U.S. Market Maturity Risks

Nippon Steel acquires U.S. Steel for $14.2 billion, expanding global footprint and diversifying earnings beyond Japan. Challenges ahead with U.S....

Rahul Jain

Nippon Steel (5401 JP): Navigating Decline at Home, Expanding Abroad

Nippon Steel aims for global growth with plans to expand capacity, acquire U.S. Steel, and focus on India joint ventures, despite risks of export...

Rahul Jain

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

Japan Cross-Shareholding - Summary Matrix - Over US$100bn of Selling in 118 Companies

Toyotal has just announced that it will buy back around 290m (around 2% of the stock) of its own shares from MS&AD, Tokio Marine, MUFG and SMFG. In...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nippon Steel (5401 JP) – No Rival, No Discount, Limited Control

​Nippon paid full price for deal despite governance restrictions, risking collapse without credible rival. Funding mix includes bridge loans and...

Rahul Jain

Nippon Steel (5401) – $14.2B U.S. Steel Bet Targets Growth, Faces U.S. Market Maturity Risks

​Nippon Steel acquires U.S. Steel for $14.2 billion, expanding global footprint and diversifying earnings beyond Japan. Challenges ahead with U.S....

Rahul Jain

Nippon Steel (5401 JP): Navigating Decline at Home, Expanding Abroad

​Nippon Steel aims for global growth with plans to expand capacity, acquire U.S. Steel, and focus on India joint ventures, despite risks of export...

Rahul Jain

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

Japan Cross-Shareholding - Summary Matrix - Over US$100bn of Selling in 118 Companies

Toyotal has just announced that it will buy back around 290m (around 2% of the stock) of its own shares from MS&AD, Tokio Marine, MUFG and SMFG. In...

Sumeet Singh

Nippon paid full price for deal despite governance restrictions, risking collapse without credible rival. Funding mix includes bridge loans and...

Nippon Steel acquires U.S. Steel for $14.2 billion, expanding global footprint and diversifying earnings beyond Japan. Challenges ahead with U.S....

Nippon Steel aims for global growth with plans to expand capacity, acquire U.S. Steel, and focus on India joint ventures, despite risks of export...