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>Sega Sammy has destroyed enormous value through poor execution and undisciplined acquisitions, but Tier-1 global intellectual property and a fortress balance sheet remain in-tact.</li>
<li>Management has pivoted hard with a freeze on M&amp;A, a promise of massively higher shareholder returns and renewed focus on monetizing its transmedia licensing opportunities,</li>
<li>The market has priced in a structural decline, but with new IP-led growth and margins set to normalize, the stock could double within the next year.</li>
</ul>


Sega Sammy has destroyed enormous value through poor execution and undisciplined acquisitions, but Tier-1 global intellectual property and a fortress balance sheet remain in-tact.
Management has pivoted hard with a freeze on M&amp;A, a promise of massively higher shareholder returns and renewed focus on monetizing its transmedia licensing opportunities,
The market has priced in a structural decline, but with new IP-led growth and margins set to normalize, the stock could double within the next year.


Sega Sammy (6460): Lessons Learned the Hard Way Are Often Learned the Best

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We discussed in last week's June 19 report how bullish price and RS trends on Israel's TA-125 was our tell that global equities were looking past Israel-Iran tensions.</li>
<li>Now completely in the rear-view mirror.  We also discussed how we were expecting short-term support on ACWI-US at $123-$123.50 (6.5-month base support), and ACWI-US bottomed at $123.20 on Monday.</li>
<li>As a result, we remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass).</li>
</ul>


We discussed in last week's June 19 report how bullish price and RS trends on Israel's TA-125 was our tell that global equities were looking past Israel-Iran tensions.
Now completely in the rear-view mirror.  We also discussed how we were expecting short-term support on ACWI-US at $123-$123.50 (6.5-month base support), and ACWI-US bottomed at $123.20 on Monday.
As a result, we remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass).


Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>A 1.5% gain last week lifted the benchmark to 38,403, its highest in four months; Semiconductor stocks surged</li>
<li>Japan’s 10-year government bond yield dipped to 1.39%, while the yen fell 1.1% to ¥145.32 against the dollar - its weakest in three weeks.</li>
<li>Sega Sammy surged 18% this week following a well-received management meeting that emphasized clear strategic direction and strong shareholder engagement.</li>
</ul>


A 1.5% gain last week lifted the benchmark to 38,403, its highest in four months; Semiconductor stocks surged
Japan’s 10-year government bond yield dipped to 1.39%, while the yen fell 1.1% to ¥145.32 against the dollar - its weakest in three weeks.
Sega Sammy surged 18% this week following a well-received management meeting that emphasized clear strategic direction and strong shareholder engagement.


Japan Strategy Weekly | The Nikkei Is Back in Fashion

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

<ul>
<li>Marvell the latest US tech major to raise its TAM for AI helping buoy related names.</li>
<li>Deal that sees Wolfspeed briefly dipping into chapter11 may bode well for Renesas.</li>
<li>Sega Sammy lays out plans to get its valuations up and inline with peers as games surge given their tariff resilience.</li>
</ul>


Marvell the latest US tech major to raise its TAM for AI helping buoy related names.
Deal that sees Wolfspeed briefly dipping into chapter11 may bode well for Renesas.
Sega Sammy lays out plans to get its valuations up and inline with peers as games surge given their tariff resilience.


Japan Morning Connection: Fears over Iran Continue to Diminish Despite the Spectre of US Involvement

<ul>
<li>Japan's markets displayed resilience this week, with the Nikkei 225 surging 4% and the Topix climbing 3.7%, buoyed by a weaker yen that bolstered exporter gains</li>
<li>Honda’s stock soared 25% this week, driven by the announcement of a massive share buyback of up to ¥1.1 trillion</li>
<li>Sega Sammy’s stock surged 18% this week, fueled by the stellar box office performance of the film Sonic × Shadow</li>
</ul>


Japan's markets displayed resilience this week, with the Nikkei 225 surging 4% and the Topix climbing 3.7%, buoyed by a weaker yen that bolstered exporter gains
Honda’s stock soared 25% this week, driven by the announcement of a massive share buyback of up to ¥1.1 trillion
Sega Sammy’s stock surged 18% this week, fueled by the stellar box office performance of the film Sonic × Shadow


Japan Weekly | Market Resilience - Honda, MMC, Sega

Japan

SEGA SAMMY HOLDINGS INC. is a holding company established through the merger of Sega and Sammy.  The Group mainly develops and manufactures commercial-use video game machine, home-use video game software, and pachinko pinball machine. Sega Sammy Holdings also operates amusement parks.

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Sega Sammy Holdings (6460 JP)

Sega Sammy (6460): Lessons Learned the Hard Way Are Often Learned the Best

Sega Sammy's poor execution and acquisitions have destroyed value, but with a freeze on M&A, a focus on its Tier-1 intellectual property, and a...

Michael Allen

Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding

Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding on $ACWI ($123-123.50), $EEM ($46)

Vermilion Research

Japan Strategy Weekly | The Nikkei Is Back in Fashion

Stock market benchmarks rise, semiconductor stocks surge; Japan's bond yield dips, yen weakens; Sega Sammy up 18% on strategic direction and...

Mark Chadwick

Japan Morning Connection: Fears over Iran Continue to Diminish Despite the Spectre of US Involvement

JP game companies Nintendo and Sega Sammy continue to rise. Battery names may start to suffer. Wolfspeed deal may positively impact Renesas.

Andrew Jackson

Japan Weekly | Market Resilience - Honda, MMC, Sega

Japanese markets showed strong resilience this week, with the Nikkei 225 and Topix both climbing significantly, boosted by a weaker yen benefiting...

Mark Chadwick

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Sega Sammy (6460): Lessons Learned the Hard Way Are Often Learned the Best

​Sega Sammy's poor execution and acquisitions have destroyed value, but with a freeze on M&A, a focus on its Tier-1 intellectual property, and a...

Michael Allen

Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding

Downgrading Germany and Ireland; Global Technology Still Leading; Crucial Base Supports Holding on $ACWI ($123-123.50), $EEM ($46)

Vermilion Research

Japan Strategy Weekly | The Nikkei Is Back in Fashion

​Stock market benchmarks rise, semiconductor stocks surge; Japan's bond yield dips, yen weakens; Sega Sammy up 18% on strategic direction and...

Mark Chadwick

Japan Morning Connection: Fears over Iran Continue to Diminish Despite the Spectre of US Involvement

JP game companies Nintendo and Sega Sammy continue to rise. Battery names may start to suffer. Wolfspeed deal may positively impact Renesas.

Andrew Jackson

Japan Weekly | Market Resilience - Honda, MMC, Sega

​Japanese markets showed strong resilience this week, with the Nikkei 225 and Topix both climbing significantly, boosted by a weaker yen benefiting...

Mark Chadwick

Sega Sammy's poor execution and acquisitions have destroyed value, but with a freeze on M&A, a focus on its Tier-1 intellectual property, and a...

Stock market benchmarks rise, semiconductor stocks surge; Japan's bond yield dips, yen weakens; Sega Sammy up 18% on strategic direction and...

Japanese markets showed strong resilience this week, with the Nikkei 225 and Topix both climbing significantly, boosted by a weaker yen benefiting...