Japan

In today’s briefing:

Kokusai Electric (6525 JP): Placement Price Could Be Determined Today; Index Impact Could Be Delayed
ENEOS Extends Tatsuta Electric (5809) Tender Offer Means They Don’t Have The Shares
ASICS Placement Updates – Share Pop Done, Now Needs to Correct
ECM Weekly (22nd July 2024) – Kokusai, Honda, ASICS, ZIP, Invincible, Hyundai, Premier, Timee, Sanil
The Goal of 30% Female Board Members Is Somewhat Hard to Achieve Given the Current Situation

Kokusai Electric (6525 JP): Placement Price Could Be Determined Today; Index Impact Could Be Delayed

By Brian Freitas

Kokusai Electric (6525 JP) could price their secondary offering after market close today. The stock is down 10.5% since the rumors of the placement began 7 trading sessions ago.
The Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) has been dropping over the last few days and is 8.6% lower over the last 8 trading days.
Kokusai Electric (6525 JP) has been trading higher on expectations of index inclusion in August, but that could move to November now.

ENEOS Extends Tatsuta Electric (5809) Tender Offer Means They Don’t Have The Shares

ENEOS Holdings (5020 JP) announced its deal for affiliate Tatsuta Electric Wire & Cable (5809 JP) 18-plus months ago. China approvals held it up more than a year.
Last month, they launched. The sector was up a lot. TOPIX was up a lot. The stock had recently been trading through terms. But ENEOS didn’t bump the price.
A month later, and the tender was supposed to have closed Friday 19 July. It didn’t. ENEOS extended, for no reason, which suggests they don’t have the shares.

ASICS Placement Updates – Share Pop Done, Now Needs to Correct

A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
In our earlier note, we talked about the placement and ran the deal through our ECM framework.
In this note, we talk about the updates and share price performance since then.

ECM Weekly (22nd July 2024) – Kokusai, Honda, ASICS, ZIP, Invincible, Hyundai, Premier, Timee, Sanil

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, the coming week to see two more listing, with both likely to do well.
On the placement front, Japan continued to dominate the ECM flows, with India, Taiwan and Australia joining in.

The Goal of 30% Female Board Members Is Somewhat Hard to Achieve Given the Current Situation

The fact that institutional investors consider whether a company has zero female board members when voting has led to decrease in the number of companies with zero female board members.
Since fewer companies have zero female board members but a minority of companies have at least two female board members, achieving 30% female board members seems somewhat of a hurdle.
While tenure and concurrent service of female board members are problematic, the starting point is to ensure that women have a 30% voice on the board and to promote diversity.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 21

Daily Brief Japan: Fancl Corp and more

In today’s briefing:

(Mostly) Asia-Pac M&A: AIS/Thaicom, Capitol Health, Alumina, Ansarada, TCM, CPMC, Fancl, Hollysys

(Mostly) Asia-Pac M&A: AIS/Thaicom, Capitol Health, Alumina, Ansarada, TCM, CPMC, Fancl, Hollysys

By David Blennerhassett

I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals discussed this week on Smartkarma: Samson Holding (531 HK)‘s Scheme, and VTOs for Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB).
Key updates took place on Capitol Health (CAJ AU), Alumina (AWC AU), Ansarada (AND AU), TCM (570 HK), CPMC (906 HK), Fancl (4921 JP),and Hollysys Automation Technologies (HOLI US).

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 20

Daily Brief Japan: Kokusai Electric , Sumitomo Mitsui Financial Group, Nikkei 225, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Kokusai Electric (6525 JP): The Current Playbook
Rotation Continues; Bullish Outlook Intact; Buys in Global Financials, Industrials, Discretionary
EQD | Where/When Will the Nikkei Index Reach a Bottom And Bounce?
In Addition to Efforts by Individual Companies Values Endorsing Gender Inequality Must Be Removed

Kokusai Electric (6525 JP): The Current Playbook

Since the US$2.0 billion secondary placement announcement, Kokusai Electric (6525 JP)’s shares are down 5.6% from the undisturbed price of JPY5,520 per share (8 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Kokusai’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 22 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Rotation Continues; Bullish Outlook Intact; Buys in Global Financials, Industrials, Discretionary

By Joe Jasper

Our bullish outlook (since early-November 2023) remains intact. Continue to ride this trend higher and buy dips as long as ACWI-US and EEM-US remain above supports at $110 and $41-$42.
In our previous Int’l Compass (June 27) we discussed the rotation that we believed was starting, whereby global Technology (IXN-US) would consolidate as investors rotate to laggard areas.
This rotation has continued while Technology goes through a healthy consolidation. Continue to focus on other more value-oriented Sectors while Technology/growth consolidates

EQD | Where/When Will the Nikkei Index Reach a Bottom And Bounce?

By Nico Rosti

The Nikkei 225 INDEX pulled back last week, and it may continue to fall for another 1-2 weeks.
Make sure you read the Market Reversal Matrix – Charts Analysis section below: we are introducing a possibile new Premium Service using our trend prediction models in algorithmic trading format.
The price support area to buy the Nikkei 225 would be between 39800 and 39300, this coming week (or the next).

In Addition to Efforts by Individual Companies Values Endorsing Gender Inequality Must Be Removed

High ratio of female non-regular workers and low ratio of women in management positions are factors behind the gender wage gap. Government expects to correct the gap in individual companies.
Companies should improve making it easier for employees returning jobs after temporary leave for childcare/childbirth, and treating them in the same position they were before leaving after temporary leave.
In order for women to have access to higher education and for women to work without leaving the workforce temporarily, the values that endorse gender inequality must be removed.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 19

Daily Brief Japan: Honda Motor, Invincible Investment, Kyoto Financial Group and more

In today’s briefing:

Big Honda (7267) Offering – Flow Timing Matters
Invincible Investment Corp Placement – Another Accretive Acquisition, past Deals Have Done Well
Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now

Big Honda (7267) Offering – Flow Timing Matters

The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share.
The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.

Invincible Investment Corp Placement – Another Accretive Acquisition, past Deals Have Done Well

By Clarence Chu

Invincible Investment (8963 JP) is looking to raise around US$375m in its primary follow-on offering. The proceeds will be used to partially acquire 12 assets from its Sponsor’s affiliates.
The REIT has been very active on the acquisition front, and has highlighted its ongoing discussions with its Sponsor for acquisitions. Thus, the current deal should be well flagged.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

Kyoto Financial Group (5844 JP) – Limited Shareholdings Unwind, for Now

By Victor Galliano

Kyoto Financial’s stakes in three key listed Japanese corporates are valued at over 85% of its market capitalization with its total equity holdings accounting for 130%+ of its market capitalization
Kyoto management intends to retain the bulk of the bank’s equity holdings, opposing the growing trend for Japanese listed companies to unwind crossholdings; management will review this policy in November
In the near term, we see no major catalyst for Kyoto to accelerate its equity holdings unwind and so, combined with its underwhelming fundamentals, we are negative on Kyoto Financial

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 18

Daily Brief Japan: Koito Manufacturing, Kokusai Electric , Isetan Mitsukoshi Holdings Ltd, TSE Tokyo Price Index TOPIX, Toyo Tanso and more

In today’s briefing:

Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.
Kokusai Electric Placement Updates – Misbehaving
Isetan-Mitsukoshi Bets on Flagships and Real Estate
Women’s Empowerment in Japan Will Still Take a Considerable Amount of Time
Toyo Tanso (5310 JP): Q1 FY12/24 report update

Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.

An interview in the Nikkei of Koito Manufacturing (7276 JP) CFO Takahito OTAKE offered the comment that Koito Mfg expected a shareholder return of 130% a year through March 2029.
The stock popped 19% after lunch on that comment, then fell back to end up 5.0%.
This is the same pop as we saw end-March. Then it was +24.6% and it stayed up the next day. Same reason for the pop. This was an echo.

Kokusai Electric Placement Updates – Misbehaving

KKR and KSP Kokusai Investments are looking to raise approximately US$1.7bn through an extended secondary follow-on offering, via selling approximately 22.3% of Kokusai Electric (6525 JP).
We have looked at the lockup expiry and deal dynamics in our earlier notes.
In this note, we talk about share price performance since then.

Isetan-Mitsukoshi Bets on Flagships and Real Estate

By Michael Causton

Isetan Shinjuku expects to post sales in excess of ¥400 billion this year, a record for a single retail store, although most of the growth is from inbound tourists.
But Isetan-Mitsukoshi is working to ensure longer term stability through more sophisticated databases and personalised marketing.
At the same time, it will make better use of real estate assets, investing ¥500 billion around Isetan Shinjuku alone.

Women’s Empowerment in Japan Will Still Take a Considerable Amount of Time

Since Japan’s gender gap index ranks 118th out of 146 countries, stagnating in the lower group, it will take a considerable amount of time to resolve the issue.
A shortcut to the improvement of women’s status is to greatly improve the gender ratio in the legislature in order to change the current framework for improving women’s status.
Behind the lagging 103rd place in the ratio of female managers is the lack of progress in higher education for women.

Toyo Tanso (5310 JP): Q1 FY12/24 report update

Q1 FY12/24 results: Revenue JPY12.6bn (+11.2% YoY), Operating profit JPY2.5bn (+19.1% YoY), Net income JPY2.4bn (+29.8% YoY).
Orders and backlog: Orders JPY12.0bn (+7.6% YoY), Order backlog JPY17.4bn (+9.1% YoY), driven by semiconductor-related applications.
FY12/24 forecast: Revenue JPY54.0bn (+9.6% YoY), Operating profit JPY10.9bn (+17.4% YoY), Capital investment JPY16.0bn (JPY5.7bn in FY12/23).

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 17

Daily Brief Japan: Honda Motor, Timee Inc, FP Partner, Tay Two Co Ltd and more

In today’s briefing:

The Honda (7267) Offering – Much Easier Than It Looks
Honda (7267 JP): The Current Playbook
Timee IPO: Forecasts and Valuation
FP Partner (7388 JP): 1H FY11/24 flash update
Tay Two Co Ltd (7610 JP): Q1 FY02/25 flash update

The Honda (7267) Offering – Much Easier Than It Looks

At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others.
We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist.
It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.

Honda (7267 JP): The Current Playbook

By Shifara Samsudeen, ACMA, CGMA

Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Timee IPO: Forecasts and Valuation

Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.

FP Partner (7388 JP): 1H FY11/24 flash update

Revenue was JPY17.1bn (+17.6% YoY), with life insurance commission revenue at JPY16.4bn (+18.2% YoY).
Operating profit was JPY2.7bn (-0.2% YoY), with an OPM decrease of 2.8pp YoY to 15.7%.
Acquisition of 333,000 treasury shares for JPY1.0bn, with cancellation scheduled for August 30, 2024.

Tay Two Co Ltd (7610 JP): Q1 FY02/25 flash update

Sales were JPY8.3bn (-0.7% YoY), with secondhand goods accounting for 53.5% of total sales (-0.4pp YoY).
Operating profit was JPY111mn (-76.3% YoY), with an operating profit margin of 1.3%, down 4.3pp YoY.
As of end-May 2024, Tay Two had 168 stores, opening five Furuichi stores and two franchise stores.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 16

Daily Brief Japan: ASICS Corp, TIS, Money Forward , Honda Motor, Vega Corp, TSE Tokyo Price Index TOPIX, Hisamitsu Pharmaceutical Co, Neos Corp and more

In today’s briefing:

Asics (7936 JP): Huge Forecast Revision to Offset Limited Passive Buying
Japan – Yet Another Big Round of Passive Selling Expected in August
Money Forward (3994) | Metronomic Growth
Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction
Vega’s Lowya Expanding Omnichannel to Grow Audience
Determine Whether Shareholder Return Is a Temporary Measure or a Shift to Value-Creating Management
Hisamitsu Pharmaceutical (4530 JP): Mixed Performance in Q1FY25; No Change in FY25 Guidance
Neos Corp (3627 JP): Q1 FY02/25 flash update

Asics (7936 JP): Huge Forecast Revision to Offset Limited Passive Buying

By Brian Freitas

15 shareholders are looking to sell between 73.9-85m shares (US$1.2bn-US$1.38bn) of ASICS Corp (7936 JP) in a secondary offering that will likely be priced on 23 July.
ASICS Corp (7936 JP) has also announced a huge upward revision to its sales and profit forecasts with EPS expected to increase 61% from earlier estimates.
Passive buying will be extremely limited in the short-term with the downward pressure offset to a large extent by the sales and earnings revisions.

Japan – Yet Another Big Round of Passive Selling Expected in August

By Brian Freitas

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in August.
The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

Money Forward (3994) | Metronomic Growth

By Mark Chadwick

Money Forward released Q2 results post market close on Friday. Revenue growth of +41% YoY beat our estimates by 7%.
We highlight continued solid financial metrics supported by growth in SaaS ARR and in particular mid-sized corporate growth.
No change to our bullish long-term view on the company. Stock has run up around 11% ahead of earnings but we see further 20%+ upside from here.

Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction

A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP).
The possibility of such a selldown was flagged by Reuters prior to the deal launch.
In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.

Vega’s Lowya Expanding Omnichannel to Grow Audience

By Michael Causton

Lowya began as an online furniture retailer and is still one of the largest in e-commerce, but limited brand awareness has held it back and sales fell last year.
Vega Corporation, Lowya’s parent, is now expanding physical stores and offering omnichannel solutions to fix the problem.
This makes sense in a market where stores remain preeminent and are likely to remain so.

Determine Whether Shareholder Return Is a Temporary Measure or a Shift to Value-Creating Management

The dissolution of cross-shareholdings and changing environment in which foreign ownership has risen to 30% have changed the view of activist investors. TSE is one such example of big change.
It’s convenient that activist investors can use “TSE requested” language that is both easily understood and undeniable by the company when communicating with the portfolio company to improve its issues.
We must determine whether this is a temporary return to shareholders until the activist investors are removed from the shareholder list, or a shift to value-creating management.

Hisamitsu Pharmaceutical (4530 JP): Mixed Performance in Q1FY25; No Change in FY25 Guidance

By Tina Banerjee

Hisamitsu Pharmaceutical Co (4530 JP) has reported double-digit growth in revenue and net profit in Q1FY25. However, operating profit decreased 5% YoY due to higher expenses.
Topline growth was mainly driven by Salonpas, which was named the world’s no. 1 OTC topical analgesic patch band for the eighth consecutive year.
The company reiterated FY25 guidance of 7% revenue growth and low double-digit operating and net profit growth, as an increase in operating profit is expected for the full-year as planned.

Neos Corp (3627 JP): Q1 FY02/25 flash update

In Q1 FY02/25, TECMIRA reported revenue of JPY2.8bn (+53.7% YoY), operating loss of JPY42mn, and net loss of JPY31mn.
Revenue growth was driven by strong sales of new Nintendo Switch software and first-time consolidation of Wellmira.
AI & Cloud segment saw significant revenue increase due to AI chatbot services, while IoT & Devices segment grew 2.6x YoY.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 15

Daily Brief Japan: ASICS Corp, Kokusai Electric , ZOZO Inc and more

In today’s briefing:

ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact
ECM Weekly (15th July 2024) – Kokusai, Wiwynn, Kelun-Biotech, Timee, Shift Up, Sanil, Avanse
Zozo Still Expecting New Highs

ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact

A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
For the two large banks, this will be a cleanup of their cross-shareholding.
In this note, we will talk about the placement and run the deal through our ECM framework.

ECM Weekly (15th July 2024) – Kokusai, Wiwynn, Kelun-Biotech, Timee, Shift Up, Sanil, Avanse

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, there were a number of listing in the past week, most of which performed as per our expectations.
On the placement front, Japan continued to dominate the ECM flows.

Zozo Still Expecting New Highs

By Michael Causton

Zozo continues to post solid gains in sales but a slight dip in new customers has led some to suggest that the online fashion mall is reaching its peak.
Meanwhile, The Japanese fashion retail sector has seen improved performance from retail stores at the expense of e-commerce, with stores actually outperforming online last year.
While further growth may be harder to achieve, Zozo has several strategies in place that should help it reach its target of ¥800 billion.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 14

Daily Brief Japan: Kokusai Electric , Timee Inc, TSE Tokyo Price Index TOPIX, Enjin and more

In today’s briefing:

Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric
Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex
Is It Difficult to Separate Business Relationships from Proxy Voting?
Enjin (7370 JP): Full-year FY05/24 flash update

Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric

By David Blennerhassett

The Toyota Group cross-holding ecosystem is in flux. They started with a small announcement by Aisin (7259 JP) but moves have come fast and furious.
Apparently minorities are grumbling to the SFC about the low-balled Offer for Asia Cement China (743 HK). And for good reason. The best course of action? Vote against the Scheme.
Hanwha Corporation (000880 KS) is trading at a steep NAV discount. And the controlling family is making a partial Offer to gain majority control.

Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: ASICS Corp (7936 JP), Honda Motor (7267 JP), Kokusai Electric (6525 JP) placements; Sanil Electric (062040 KS) and Timee Inc (215A JP) IPOs.
Event-Driven developments: Canvest Environmental Protection Group (1381 HK), Shanghai Henlius Biotech (2696 HK), Hong Kong Television Network (1137 HK), Rex Minerals (RXM AU), Second Chance Properties (SCE SP).

Is It Difficult to Separate Business Relationships from Proxy Voting?

Competition little work because the portfolio company had advantage over competitors in business. This distorted competitive environment may have prevented the beneficiaries from receiving the benefits they should have received.
If the business was advanced by competitive advantage through the ownership of shares in the portfolio company, the beneficiaries may not have received the benefits that they should have received.
The question is whether the life insurers are exercising their voting rights properly for the benefit of the beneficiaries in the shares of client companies they hold.

Enjin (7370 JP): Full-year FY05/24 flash update

FY05/24 revenue was JPY3.3bn, operating profit JPY1.0bn, recurring profit JPY1.1bn, and net income JPY749mn, all down YoY.
Enjin’s FY05/25 forecast: revenue JPY2.7bn, operating profit JPY548mn, recurring profit JPY548mn, and net income JPY380mn, all expected to decline YoY.
Enjin revised its medium-term business plan due to HR challenges and plans to release updated targets reflecting the current environment.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 13

Daily Brief Japan: Daidoh Ltd, ASICS Corp, Kobe Bussan, Softbank Group, Allegro MicroSystems , PR Times Inc, Shin Pro Maint and more

In today’s briefing:

JAPAN ACTIVISM: Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬
HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
Kobe Bussan (3038): The Final Cliff
ASICS (7936 JP): A US$1.4 Billion Secondary Offering
ASICS (7936) | Obadele Thompson or Usain Bolt?
Softbank (9984 JP): Arm Headwinds Building, but NAV Discount Is Attractive
Allegro MicroSystems Inc.: Electric Vehicle and Hybrid Market Growth in China As A Critical Growth Lever! – Major Drivers
PR Times Inc (3922 JP): Q1 FY02/25 flash update
Shin Pro Maint (6086 JP): Q1 FY02/25 flash update

JAPAN ACTIVISM: Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬

Daidoh Ltd (3205 JP) saw an activist “win” at its AGM, another activist bought, the stock popped. I wrote about it. 2hrs later, the Board set a new Div Policy.
¥100/Yr for 3 years in a row. That was 11% of then-current price. Big activist win for Strategic Capital which owned 25% and Murakami-san who had gone substantial 1wk earlier.
Today post-close, Strategic Capital reported it sold everything on 5 July, the next day. WOW. That was half of Maximum Real World Float. Oops. Murakami-san sold too.

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance.
As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big.
The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

Kobe Bussan (3038): The Final Cliff

By Michael Allen

Kobe Bussan continues to hit new lows relative to the median Japanese retailer, as cheaper alternatives continue to rebound.
Kobe was one of the greatest beneficiaries in Japan of the Pandemic, but it is stuck at 10% growth which is no longer unusual.
Kobe’s wholesale model makes it difficult to benefit from food price inflation like other food retailers. Kobe Bussan could drop another 50% before reaching fair value.

ASICS (7936 JP): A US$1.4 Billion Secondary Offering

ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).

ASICS (7936) | Obadele Thompson or Usain Bolt?

By Mark Chadwick

ASICS is revising up its full year forecasts, now expecting sales to reach a record ¥660 billion , up 15.7% year-over-year. There is a strong currency tail wind.
Still “you gotta be in it to win it..” ASICS is currently crushing it, while Nike flounders
A large secondary offering will likely hit the share price in the short term; there are two key risks…but it could be a good opportunity to buy.

Softbank (9984 JP): Arm Headwinds Building, but NAV Discount Is Attractive

By Victor Galliano

Since Elliott Management emerged as a shareholder in SoftBank group last month, the share price has rallied sharply, largely driven by the further appreciation of the Arm Holding share price
SoftBank management is currently focused on growing its Gen AI investment portfolio and appears to have shelved share buybacks for now, which is likely to disappoint minority shareholders
Despite the above challenges and the risk of de-rating at Arm, we remain positive on Softbank shares as they trade at a historically high 54%+ discount to the estimated NAV

Allegro MicroSystems Inc.: Electric Vehicle and Hybrid Market Growth in China As A Critical Growth Lever! – Major Drivers

By Baptista Research

Allegro MicroSystems has recently reported their fiscal fourth quarter and full year 2024 results, providing insights into their financial health and future expectations.
The company managed to surpass its fourth-quarter revenue and earnings per share (EPS) guidance despite facing a challenging macroeconomic environment, highlighting the dedication and efficiency of its team.
The fiscal year 2024 demonstrated a revenue growth of 8% and an EPS growth of 5%, with notable growth in e-Mobility at 38%, signifying strong market performance and strategic execution.

PR Times Inc (3922 JP): Q1 FY02/25 flash update

In Q1 FY02/25, revenue was JPY1.9bn (+19.6% YoY), operating profit JPY484mn (+41.0% YoY), net income JPY321mn (+38.9% YoY).
PR TIMES users totaled 97,948 (+17.2% YoY); Jooto paying users 1,801 (-3.2% YoY); Tayori paying accounts 1,177 (+28.1% YoY).
SG&A expenses in Q1 FY02/25 increased 5.6% YoY for Sales & Marketing, 13.4% for R&D, 7.6% for General & Administrative.

Shin Pro Maint (6086 JP): Q1 FY02/25 flash update