Japan

• On 14-Aug, Minebea Mitsumi (6479 JP) upped their TOB on Shibaura Electronics (6957 JP) from ¥5,500 to ¥6,200, but set the close before rival bidder YAGEO’s likely FEFTA approval date.
• On 21-Aug, YAGEO responded by upping the bid 7% to ¥6,635. Minebea responded by saying no raise, no extension. Minebea was playing chicken. Shares fell Friday.
• Very early Saturday, the Nikkei reported YAGEO would raise to the “¥7,100 range.” Reuters later reported YAGEO had raised to ¥7,130. Exactly 15% above Minebea. On YAGEO’s website.

• On 21 August, Yageo Corporation (2327 TT) increased its Shibaura Electronics (6957 JP) offer by 7.0% to JPY6,635. On 23 August, Yageo further increased its offer by 7.5% to JPY7,130.  
• The offer is partially in reaction to Minebea’s recent comments around Yageo securing FEFTA approval. Crucially, Yageo finally provided an update suggesting that only a few issues remained.
• Yageo’s JPY7,130 offer is not over-the-top, as Minebea’s 10x EV/EBIT pricing guideline outlined on 18 August potentially justified a JPY7,300 offer. The likelihood of Minebea walking has increased.

• 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 was a lack of fireworks from last week’s listing. This week might have some better luck.
• On the placements front, there was no dearth of deals with raisings across the region.

• MinebeaMitsumi is focused on expanding semiconductor backend capacity with the Cebu Mitsumi facility, ramping aerospace machining in India, and scaling AI/data center cooling bearings through FY27–28.
• In Q1 FY26, MinebeaMitsumi posted record revenues of ¥366.9bn (+3.2% YoY), though operating income declined 7.8% YoY to ¥17.4bn due to yen appreciation and rare-earth supply disruptions.
• Trading at a reasonable 8.1× EV/EBITDA and 20.9× P/E (TTM), the stock offers a mid-range multiple relative to peers like Nidec and NSK, reflecting a stable but cyclical industrial franchise.

• Focus on RoE Maximization : Denso Corp (6902 JP) targets FY2026 ROE of 10.7%, leveraging disciplined capital allocation, cost efficiency, and improved profit recovery to exceed cost of capital.
• Tariff Cost Mitigation: Company absorbed ¥12.5bn tariff hit in Q1, with full-year ¥130bn impact offset through US localization and pricing negotiations from Q2 onward.
• .Cross-Holding Reduction: Accelerated divestment of Toyota Industries (6201 JP) and Renesas Electronics (6723 JP) , coupled with ~¥610bn buybacks, underscores commitment to resolve cross-holding overhang and boost shareholder returns.

• Sony Financial Group (perhaps 8729 JP) will be spun off from SONY on 29 September 2025. The nominal share price will be “low” – likely 4-6% of Sony’s price.
• Index treatment is largely known with the exception of a market cap trigger to stay in or get the boot from one major global index provider’s set of large-midcap indices.
• There is a buyback to come which will offset global active manager “I don’t want this” overhang. There are technical trades to do here too but overall I am positive.

• Honda Motor Company Limited’s recent financial results for the first fiscal quarter of 2025 and forecasts for the entire year reveal various factors influencing the company’s performance.
• The operating profit for Q1 was JPY 244.1 billion, a significant decline compared to the same period last year, impacted by several nonrecurring expenses related to electric vehicles (EVs) and tariffs.
• Despite challenges, notably in the automobile segment with operating losses, the company revised its full-year forecast upward, anticipating an operating profit of JPY 700 billion — a JPY 200 billion increase from previous projections.

• P/B was highly correlated with P/E, so it’ll be effective for individual companies to announce/implement measures to increase EPS or profits in order to attract the attention of overseas investors.
• From April 2022 to June 2025, overseas investors have been focusing on companies with significant potential for shareholder returns, as the TOPIX has the highest correlation with BPS.
• The recent rise in stock prices may be due to expectations for increased shareholder returns rather than growth expectations, as EPS and BPS have risen while P/B and P/E haven’t.

• Minebea Mitsumi (6479 JP) has bid ¥6,200/share for Shibaura Electronics (6957 JP). The tender ends 28 August. YAGEO has over bid now to ¥6,635/share.  
• YAGEO’s regulatory clearance decision may not arrive before 1 September, after the Minebea tender closes. Minebea now says they will neither bump nor extend. 
• Minebea is hoping people will throw in the towel and tender because if their tender ends and Yageo’s fails, it might a long way down. There are possibilities but… scary.

• The Deal: KKR and JIC are taking Topcon (7732 JP) private via a ¥3,300/share tender offer (~100% premium), with CEO Eto and ValueAct reinvesting.
• Likely Outcome: The offer is highly likely to succeed, with minimal regulatory risk and low probability of a price bump.
• Investor Action: Shareholders should tender into the offer to lock in value, as risk‑reward does not justify holding out.

• Q1 FY26: Sales up +6% YoY but profits softer on transport and hotel margins.
• Guidance Raised: FY26 OP lifted +20% on fare hikes, ridership recovery, and real estate monetization.
• Valuation: At ¥5,268, shares trade at a 47% discount to SoTP (¥9,916) 

• We incorporate our scorecard into this report covering ten Japanese midcap banks and we also introduce trailing twelve month return trends for the midcaps
• Iyogin Holdings remains a buy, which tops pre-provision returns and has large strategic cross-holdings; Hokuhoku Financial and Hachijuni Bank are also buys with these occupying the top three scorecard rankings
• We add Hirogin Holdings to the buy list; it is deep value among the peer group, with its premium earnings and dividend yield and its attractive ROE to PBV ratio

• On 26 August at the close, 2 names will get added to and 5 names deleted from a global index provider’s major Japan/global “standard” index.
• 6 of 7 changes were in the Quiddity Index predictions as of end Jun-2025. One dropped, then two got added. Our final predictions had all seven plus one more DEL.
• These changes were well-flagged so well pre-positioned. This insight looks at shareholder structure, historical fundamental ratios, and performance vs Peers. Watch the direct peers.

• On 26 August at the close, 2 names will get added to and 5 names deleted from a global index provider’s major Japan/global “standard” index.
• 6 of 7 changes were in the Quiddity Index predictions as of end Jun-2025. One dropped, then two got added. Our final predictions had all seven plus one more DEL.
• They were well-flagged so well pre-positioned. This insight looks at shareholder structure, historical fundamental ratios, and performance vs Peers. This sets up a possible trade before or into the event.

• In response to Minebea Mitsumi (6479 JP) matching its Shibaura Electronics (6957 JP) offer on 14 August, Yageo Corporation (2327 TT) increased its offer by 7.0% from JPY6,200 to JPY6,635.  
• To remain in the game, Yageo had to bump. The latest bump underscores Yageo’s confidence in securing regulatory approvals. 
• The Minebea CEO suggested that its JPY6,200 offer would be the final one. If Yageo secures regulatory approval (likely), Minebea will walk rather than match Yageo’s latest offer. 

• Freee KK (4478 JP)  reported 4Q and full-year FY06/2025 results last week which disappointed the market leading to a sell-off.
• After reporting 3-consecutive quarters of Adj. OP, profitability dipped in 4Q due to higher advertising and D&A costs. However, freee expects to return to profits in the current fiscal year. 
• Following 4Q results, premium over Money Forward has disappeared and Freee is currently trading at a huge discount to MF which seems unwarranted

Dentsu’s Q225 performance was a little below management expectations, with conditions remaining challenging outside Japan. Group operating margins were controlled for H125 at 12.0%. With a further goodwill write-down of ¥86.0bn, Dentsu reported a statutory loss for H125 and is not now paying an interim dividend. A decision on the full year will be made later, and our model assumes dividends resume for FY26. Our FY25 forecasts have been realigned to match revised guidance, with a slightly more cautious stance on growth for FY26. Management’s target for operating margins of 16–17% by FY27 remains in place, predicated on the targeted cost reductions in the mid-term management plan.

• Q1 FY2025 was weak with Steel swinging to losses (–¥2,300/t) on spreads, FX, and inventory drag, leaving recovery hinging on H2.
• We retain our FY25–28 earnings estimates, assuming stable ~15–16% EBITDA margins and volume growth to 31.6 Mt by FY28.
• At ~US$525/t EV/t (adj.), JFE trades at a deep discount to Nippon Steel, but upside depends on spreads stabilizing and tariff risks not worsening.

• More companies are mentioning share buybacks, reducing cross-shareholdings, capital allocation policies, and capital costs. However, the ROE of most companies has not improved significantly.
• “TSE’s request” is at critical juncture addressing whether it’ll lead to formal improvements such as the introduction of corporate governance code, or whether it’ll enable sustainable growth in corporate value.
• Looking at recent market trends, investors are increasingly expecting activist investors to directly demand management reforms from companies, in anticipation that it’ll take time to realize results of internal reforms.

• A group of shareholders are looking to raise up to US$1.2bn via selling most of their stake in Daiichi Sankyo (4568 JP) .
• While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind,  the last deal in the stock didn’t do well.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Results: Q1 revenue ¥51.8B (–21% YoY) and OP ¥10.9B (–44%) came in weak, with DRAM softness offset partly by NAND strength.
• Guidance: FY26/3 outlook (¥244B revenue, ¥55.2B OP) reiterated, implying a sharp 2H acceleration in shipments and margin recovery.
• Valuation: Shares trade at ~11× EV/EBITDA, a discount to peers, but execution risk keeps the multiple constrained.

• As predicted in our July 15th insight, the Nikkei 225 (NKY INDEX) rallied past 41k (reached near 44k) and now, as predicted by our latest WEEKLY HEAT MAP, went down.
• The index reached a low of 42724 this week, it is only mildly oversold so far, probability of reversal is around 52% at the moment.
• Key support levels to watch are 42577 (Q2) and 41606 (Q3). A file with all our PRICE/TIME model dataset for the Nikkei 225 is attached at the end, for your reference. 

• Advancing from Breakdown to Breakthrough:ROHM Co Ltd (6963 JP) returned to profitability in Q1FY25 on improved demand and cost controls with strong outlook for Q2.
• Rohm is actively implementing structural reforms, with a priority on ensuring profitability in any market environment.  It is also drafting its second Medium-Term Management Plan for FY26 to FY28.
• It continues to be available at significantly cheaper valuation versus peers of just 0.8x price to book. Also, it has been added to the Nikkei 225 Index recently.

• Results: Q1 FY26 came in solid, with strength in Electronic Materials offsetting weakness in Insulation.
• Guidance/Estimates: FY26 guidance was reiterated, and we retain our estimates, with 2H execution key.
• Valuation: At ~9.5x EV/EBITDA FY26E, Nittobo looks inexpensive, with its monopoly T-glass exposure offering direct leverage to NVIDIA-driven AI/data center demand.

• Standard Market is home to companies that face challenges that fail to meet tradable shares ratio, can’t grow market capitalization, or feel it burdensome to meet governance and disclosure requirements.
• TSE is likely to request companies listed on the Standard Market to disclose improvement measures in response to TSE’s requests, rather than raising the listing maintenance criteria.
• 262 Standard Market companies are listed subsidiaries. It’s considered that the quickest way to improve the quality of the Standard Market is to delist these companies by eliminating parent-subsidiary listings.

• Q1 FY2026 results showed weak earnings (net profit –38% YoY) but a strong +29% YoY orderbook driven by Aero & Carbon Solutions.
• Management retained FY2026 guidance, banking on aero aftermarket growth and disposal gains to drive a backloaded recovery.
• Valuations (~14× EV/EBITDA, 24× P/E) look reasonable versus peers, but execution risks remain if disposals or aero demand underdeliver.

• MORITO (hereafter, the Company) posted consolidated net sales of JPY 25,805 mn (+8.7% YoY), operating profit of JPY 1,570 mn (+5.9% YoY), ordinary profit of JPY 1,713 mn (+9.4% YoY), Profit attributable to owners of parent (hereafter, net profit) of JPY 2,359 mn (+69.3% YoY), which showed both an increase in revenue and profit.
• The Company achieved record high H1 net sales, operating profit, and ordinary profit. The main drivers underpinning the strong earnings are the inclusion of Ms.ID in the scope of consolidation, higher revenue from existing businesses, and improvement in gross profit margin.

• For FY2025/11, the Company forecasts net sales of JPY 56,000 mn (+15.4% YoY), operating profit of JPY 3,200 mn (+11.5% YoY), ordinary profit of JPY 3,300 mn (+9.9% YoY), and net profit of JPY 2,800 mn (+8.9% YoY). 

• Q1 revenue +10% YoY, with business profit up ~21% YoY on strength in Rolling Stock and ES&M, but headline net profit –72% YoY on FX headwinds and higher NCI drag.
• Guidance / Revisions: FY26/3 guidance left unchanged, but steep H2 ask implies ~12% revenue and ~29% profit growth vs last year.
• Outlook & Valuation: Near-term pressured by FX/tariffs, but aero/energy support medium-term growth; trades at ~14x NTM P/E, ~7.6x EV/EBITDA, a discount to peers.

• In FY06/25, sales increased 7.2% YoY, operating profit grew 15.8% YoY, driven by effective business initiatives.
• Discount Store business achieved non-consolidated operating profit over JPY100.0bn, OPM improved to 7.2%, strong duty-free sales.
• Company plans to open 25 new stores in Japan, seven overseas, targeting JPY190.0bn duty-free sales annually.

• Sales increased by JPY16.4bn due to Iwatsu Electric’s acquisition, while operating profit declined by JPY964mn.
• Achievement toward full-year forecast reached 97.3% for sales, 84.7% for operating profit, and 79.6% for recurring profit.
• Sales and profit in the Security Equipment segment increased YoY, driven by large orders and strong replacement contracts.

• The Ministry of Finance has published an updated “FEFTA List” of classifications of listed companies as of July 15, 2025. 
• 50 names lowered their ranks from the most “core” Type 3 to Type 2(20), or Type 1(30). 104 names raised from Type 1(51) or Type 2(53) to Type 3.
• Smartkarma readers may want to peruse the lists and details to see if they think companies are trying to protect themselves (from threats as yet not known by the public).

• Japan Business Systems (5036 JP) today announced a couple of interesting things. First, admission to TOPIX (contingent on a successful secondary offering of shares, also announced today). 
• Then a ¥5/share special commemorative dividend (0.4%) and a “gift” of 4% of the company to a J-ESOP Trust for employees, where the company gifts the shares.
• The latter looks aggressive/generous, but the modalities here are interesting. 

• I’m fascinated by the market for second-hand goods.

• eBay has existed for many decades, but it was only with the smartphone that the market took off.

• With a smartphone, you could snap a photo of your item and post it online within minutes. 

• Metaplanet’s equity halved since June, slowing its bitcoin accumulation flywheel as mNAV collapsed from 8x to 2.1x, straining progress toward the 30,000 BTC target.
• Despite headwinds, ¥154b raised via SAR and new perpetual preferred shares expand funding capacity, though near-term headroom of ¥80b remains modest relative to ambitions.
• September’s EGM may prove pivotal; beyond share amendments, a potential U.S. listing via Metaplanet Treasury Corp could signal intent to access deeper capital markets.

• SUMCO reported Q225 revenues of ¥102.9 billion, flat sequentially and roughly 3% higher than guidance.
• Operating profit of ¥1.5 billion was also slightly better than the forecasted breakeven, but dramatically down from its peak of ¥30.2 billion in Q322.
• A projected further increase in depreciation charges for the current quarter is forecasted to drive operating profit to negative ¥3.5 billion. Yikes!

• The changes to the Nikkei 225 (NKY INDEX) as part of the September rebalance should be announced in just over 2 weeks. We expect 2 changes at the review.
• BayCurrent Consulting‘s PAF will double, Fast Retailing‘s CPAF will stay the same, and Sony Financial Group will be deleted from the index following its spinoff from Sony Corp (6758 JP). 
• Sanrio (8136 JP)‘s improved liquidity increases the probability of index inclusion, and the stock could be added to the index at the next rebalance if it misses in September.

• Results: Q1 FY25 sales grew +10.5% YoY with OP surging +56%, led by AI/data-center substrate demand and margin gains.
• Earnings Upgrade & Outlook: FY25–27 EPS/EBITDA raised 9–12% on stronger substrates and resilient ceramics, implying ~18–19% CAGR ahead.
• Valuations: Trading at 21× FY25E P/E and 5.9× EV/EBITDA, Ibiden offers structural growth at compressed multiples versus AI peers.

• Results: Q1 FY25 revenue rose 12% YoY to ¥191.3bn with operating profit up 22% and net profit up 33%, driven by robust semiconductor and ICT materials growth.
• Guidance & Revisions: FY25 guidance lifted to ¥760bn revenue/¥110bn OP; dividend ¥18. Our forecasts rise to PAT ¥70bn (+35%) in FY25, with 30–40% upgrades through FY26–28.
• Valuations: At ~13x P/E and ~12x EV/EBITDA, JX trades above domestic miners but below semiconductor materials peers, leaving room for rerating if the advanced materials mix deepens.

• Companies with market capitalization of under 10 billion yen will be given long grace period. Considering inflation and long grace period, this seems not such a difficult hurdle to overcome.
• If it becomes easy to meet the new standards, the growth market may not change much from the current situation, where many companies with limited growth potential remain.
• Even though there’re measures to enable companies to move to standard market if things don’t work out, it’s questionable how many companies will seriously pursue measures to increase market capitalization.

• On 16 June 2025, NTT (Nippon Telegraph & Telephone) (9432 JP) sub NTT Docomo and Dentsu Inc (4324 JP) announced Docomo would buy out minorities in Dentsu sub Carta Holdings.
• The price for minorities is OK, not great. The Board talks up synergies not included in fair value considerations, and Dentsu+Docomo are actually buying it 15% cheaper. 
• That comes out to a net price below the bottom end of the DCF range. Aaargh. But Dentsu+irrevocables+ large individuals likely gets this over the line cleanly. 

• Sun Corp (6736 JP) is a clear value play. But it’s not as cheap to Cellebrite (CLBT US) as it was  last month. The trade is a net long position
• As Swire Pacific (A) (19 HK) plumbs new 12-month lows for its NAV discount and implied stub, Swire’s B shares have significantly outperformed the As over the past month.
• Shandong Hi-Speed (412 HK) is a bubble. High shareholder concentration is still likely present, and the stock is getting squeezed. SHP is a short. Once it starts to turn.

• I tally 41 – mostly firm, mostly Asia-Pac – arb transactions currently being discussed and analysed on Smartkarma.
• Four new deal was discussed on Smartkarma this week: Hangzhou Kangji Medical Instrument Co., Ltd. (9997 HK), Ashimori Industry (3526 JP), Rezil (176A JP), and Carenet Inc (2150 JP).
• Key updates/news took place on HKBN Ltd (1310 HK), Toyo Construction (1890 JP), Shibaura Electronics (6957 JP), and Kolon Mobility Group (450140 KS).

• At June AGMs held by over 1,700 companies, out of 114 companies that received shareholder proposals, 7 were approved. The fact is that proposals aren’t approved without high foreign ownerships.
• At the end of March 2024, institutional investors’ shareholding surpassed the combined shareholding of corporate and financial institutions. Companies are expected to listen to the opinions of their shareholders.
• Although technical guidance from FSA and TSE is unlikely to directly lead to management improvements, it’s expected to serve as a basis for supporting dialogue between overseas investors and companies.

• Revenue reached JPY4.9bn (+15.9% YoY), with JPY2.9bn from directly operated clubs and JPY1.8bn from franchise revenue.
• Operating profit increased 40.8% YoY to JPY877mn, driven by higher revenue and offsetting increased SG&A expenses.
• Gross profit was JPY2.2bn (+18.9% YoY) with a GPM of 44.8%, and SG&A expenses totaled JPY1.3bn (+7.7% YoY).

• Sales reached JPY28.6bn, a 3.7% YoY increase, with power supplies and I/O devices showing growth.
• Operating profit increased by 18.8% YoY to JPY3.0bn, driven by higher gross profit despite rising SG&A expenses.
• B2C sales were JPY19.4bn (+3.2% YoY), while B2B sales amounted to JPY9.2bn (+5.0% YoY).

• Full-year FY06/25 revenue declined 3.3% YoY due to decreased construction volume and exclusion of a subsidiary.
• FY06/26 forecast: Revenue JPY20.5bn (+1.3% YoY), Operating profit JPY1.8bn (+9.3% YoY), Net income JPY1.3bn (-2.8% YoY).
• Dai-Ichi Cutter’s profit projections are conservative; profitability depends on project difficulty, scale, and demand response investment.

• Q1 FY03/26 sales increased by 12.7% YoY to JPY68.9bn, while operating profit decreased by 4.9% YoY to JPY6.7bn.
• Semiconductor Equipment-related segment sales rose 3.6% YoY, but segment profit declined 31.5% YoY due to lower quartz crucible sales.
• Automotive-related segment sales grew 53.5% YoY to JPY9.0bn, with segment operating profit increasing 79.2% YoY to JPY1.3bn.

• Revenue increased by 2.8% YoY to JPY9.9bn, driven by higher sales of optical products for laptops and tablets.
• Operating profit rose 8.9% YoY to JPY2.2bn, aided by improved profitability and segment repositioning efforts.
• Recurring profit decreased 23.6% YoY to JPY2.0bn, while net income attributable to owners dropped 56.0% YoY to JPY694mn.

• Revenue reached JPY24.8bn (+30.3% YoY), with significant growth in Second-hand Online and Mobile & Telecommunications segments.
• Operating profit increased to JPY626mn (+109.4% YoY), driven by a 0.9pp rise in the operating profit margin.
• The company forecasts JPY30.0bn revenue (+21.1% YoY) and JPY1.1bn operating profit (+75.8% YoY) for FY06/25.

• In Q1 FY12/23, revenue was JPY2.3bn (+4.8% YoY), operating profit JPY132mn (+37.6% YoY), pre-tax profit JPY128mn (+47.0% YoY).
• 1H revenue reached 51.7% of FY12/25 forecast, with operating profit at 88.0% and recurring profit at 85.0%.
• Revenue from Medical Personnel Placement Services was JPY1.7bn (+2.2% YoY), Other Services revenue totaled JPY646mn (+12.3% YoY).

• Revenue reached JPY8.3bn, a 40.6% YoY increase, with 50% progress against the revised FY12/25 forecast.
• Operating profit was JPY39mn, surpassing the initial forecast, with recurring profit and net income revised upward.
• FY12/25 revenue forecast increased to JPY16.7bn; recurring profit and net income forecasts revised upward by 30.1%.

• Operating revenue increased to JPY1.5bn (+8.9% YoY), with a net loss of JPY355mn and R&D expenses at JPY782mn.
• Royalty income from four launched products, including tegoprazan, totaled JPY1.1bn (+7.5% YoY), contributing to operating revenue.
• HK inno.N’s tegoprazan sales in South Korea reached KRW104.7bn (+14.3% YoY), with global expansion in 54 countries.

• FY06/23 revenue was JPY46.6bn (+20.5% YoY); EBITDA was JPY4.4bn (+17.6% YoY); operating profit was JPY3.2bn (+15.1% YoY).
• FY06/25 revenue forecast is JPY57.3bn (+22.9% YoY); operating profit forecast is JPY3.8bn (+18.8% YoY).
• Rezil Inc. supports Bain Capital’s tender offer; shares are scheduled for delisting; dividend forecast undecided.