In today’s briefing:
- Workman Turnaround Gathers Pace
- Fuji Electric (6504): Electrification Re-Rating
- Japanese Mid-Cap Banks – Taking Profits on Iyogin and Nishi-Nippon; Hachijuni Is Our Buy
- Eisai Co Ltd (4523 JP): Driving Forces Behind Steady Rebound from Lows
- Without Fundamental Solutions, Tackling Issues by Comparing to Other Countries Is the Usual Pattern
Workman Turnaround Gathers Pace
- We continue to be bullish about Workman’s back-to-basics strategy which has delivered a second straight year of record sales and profit, with same-store sales up 9%.
- New president Koji Ouchi has just revamped the business under five core functional categories, as well as moving towards more mass-scale manufacturing and corporate franchising.
- The new strategy is part of a drive toward 1,300 stores by 2030.
Fuji Electric (6504): Electrification Re-Rating
- Earnings up, multiple down: FY26 guidance and Energy orders are rising while Fuji’s EV/EBIT has compressed to ~13x.
- Energy is mispriced: High-margin Energy has strong backlog and capacity expansion, yet trades below global electrification peers.
- Catalyst-Rich asymmetry: Results, backlog conversion and data-center growth could drive re-rating; High/Low valuation implies ~2.9x reward-to-risk.
Japanese Mid-Cap Banks – Taking Profits on Iyogin and Nishi-Nippon; Hachijuni Is Our Buy
- We review the mid-cap banks’ equity shareholdings at year-end March 2026 in greater detail, focusing on how realizable these equity holdings may be; we compare these holdings to market capitalization
- We find that Iyogin has a meaningful share of its total equity shareholdings in hard-to-realize holdings; we downgrade Iyogin, along with Nishi-Nippon, from buy to neutral
- Hachijuni, our sole buy, leads on easy-to-realize shareholdings to market capitalisation and will enhance its interest rate gearing given the high level of fixed rate credit maturing by March-end 2027
Eisai Co Ltd (4523 JP): Driving Forces Behind Steady Rebound from Lows
- Eisai Co Ltd (4523 JP) shares advanced ~30% from June lows. Stronger-than-expected Q1FY27 financial result and value maximization initiatives of Leqembi are mainly driving the shares.
- Eisai has reported better-than-anticipated Q1FY27 result, with revenue and operating profit reaching 27% and 35% of FY27 full-year forecast, driven by the strong performance 3L major products and favorable Fx.
- In near-term, Eisai’s growth will be Leqembi centered. For FY27, Eisai has guided for Leqembi revenue of ¥144B (up 64% YoY), supported by Leqembi Iqlik and blood-based biomarker (BBM).
Without Fundamental Solutions, Tackling Issues by Comparing to Other Countries Is the Usual Pattern
- Companies should consider that things may not go according to the assumption that showering individual shareholders with shareholder benefits will lead them to vote in favor of the company’s proposals.
- Discussions of trading one share at a time based on trading conditions in other countries or comparative competitiveness fail to address the fundamental issue of inequality in shareholder rights.
- Unless the fundamental issues are addressed, these measures will be ineffective, and—just as with TSE’s market reforms—it will take a long time to reach a fundamental solution.
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