Japan

In today’s briefing:

Marui Group Placement: Clean up by Toho; Improving Fundamentals
FAST RETAILING (9983 JP) | Q3 Preview: Upside Risk into Print, But Tariff Narrative Still Overhangs
Toyo Engineering (6330 JP): Coverage Initiation
United Arrows Finds New Growth Path Through Korean Brand

Marui Group Placement: Clean up by Toho; Improving Fundamentals

By Nicholas Tan

A group of shareholders are looking to raise US$184m from selling their respective stakes in Marui Group (8252 JP) .
While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
In this note, we will talk about the placement and run the deal through our ECM framework.

FAST RETAILING (9983 JP) | Q3 Preview: Upside Risk into Print, But Tariff Narrative Still Overhangs

By Mark Chadwick

Q3 earnings risk skewed to upside: we forecast sales/OP of ¥857b/¥171b vs. Street’s ¥826b/¥152b.
Domestic Uniqlo trends strong; international segment likely resilient despite Inditex’s headline miss.
Tariff impact likely reiterated but remains a FY26 issue, not a near-term earnings swing factor.

Toyo Engineering (6330 JP): Coverage Initiation

In FY03/25, orders stood at JPY244.2bn (-47.2% YoY), including those received by equity-method affiliates.
Revenue from completed construction contracts was JPY278.1bn (+6.6% YoY), operating profit JPY2.6bn (-61.4% YoY), recurring profit JPY6.5bn (-7.7% YoY), and net income attributable to owners of the parent JPY2.0bn (-79.4% YoY). Major contracts won during the year included a domestic plant for lithium-ion battery electrolyte production, several geothermal power plants in Indonesia, and an LNG-related facility in India. Despite higher revenue from completed construction contracts, operating profit declined YoY due to a drop in GPM caused by project delays. The company booked JPY4.1bn in equity in earnings of affiliates, narrowing the YoY decline in recurring profit relative to operating profit. Extraordinary losses included JPY1.4bn in impairment losses on fixed assets and roughly JPY3.0bn in tax-related expenses at subsidiaries.
As a result, net income attributable to owners of the parent dropped 79.4% YoY.

United Arrows Finds New Growth Path Through Korean Brand

By Michael Causton

United Arrows is best known for building its own chains but has had a choppy few years spent fixing merchandising, supply chains and a poor e-commerce unit.
It now believes it can take a leaf from the playbook of Mash Holdings by signing promising overseas brands as a way to accelerate growth.
The first of these is the Korean brand, Nice Weather, a sort of lifestyle convenience store beloved by Gen Z.

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Jul 07

Daily Brief Japan: Seven & I Holdings, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Merger Arb Mondays (07 Jul) – Seven & I, Shibaura, Insignia, New World, ENN Energy, HKBN, Fengxiang
Higher Foreign Shareholdings, Which Led to Fewer Takeover Defense, Push Companies To Further Reforms

Merger Arb Mondays (07 Jul) – Seven & I, Shibaura, Insignia, New World, ENN Energy, HKBN, Fengxiang

By Arun George

I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads:Mayne Pharma (MYX AU), Yichang HEC Changjiang Pharma (1558 HK), Insignia Financial (IFL AU), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Santos Ltd (STO AU).
Lowest spreads: Bright Smart Securities And (1428 HK), Hainan Meilan International Airport (357 HK), New World Resources (NWC AU), Humm Group (HUM AU), Avjennings Ltd (AVJ AU).

Higher Foreign Shareholdings, Which Led to Fewer Takeover Defense, Push Companies To Further Reforms

Takeover defenses peaked in 2008 and have been gradually declining. The direct cause of the difficulty in maintaining advance warning-type takeover defenses is the increase in the foreign shareholding ratio.
Even companies that don’t have preemptive anti-takeover may take countermeasures when the risk of takeover increases, but with the publication of “Guidelines on Takeover Defense Measures,” transparent practices are expected.
Not only parent-subsidiary listings, but companies that cannot transform management to generate more cash from holding cash on hand and assets will be unable to continue in their current situation.

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Jul 06

Daily Brief Japan: Kawasaki Heavy Industries, Nissin Corp, Shibaura Electronics, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Kawasaki Heavy Industries (7012 JP): Sell into Strength
(Mostly) Asia-Pac M&A: Talkmed, Jilin Jiutai Bank, Insignia, Silk Logistics, Fengxiang, Nissin, VIOL
Last Week In Event SPACE: Shibaura, HKBN, NWD, Yichang HEC
Will Management that Incorporates Cost of Capital Be Fully Implemented 7 Years from Now, in 2028?

Kawasaki Heavy Industries (7012 JP): Sell into Strength

By Scott Foster

KHI has retreated 12% from its June 30 high, but is still 69% above its April low, despite guiding for a decline in orders and weak profits in FY Mar-26.
Orders from Japan’s Ministry of Defense are forecast to drop from ¥772.3 billion to ¥400 billion this fiscal year, while the overall profit of the Aerospace division drops 14%.
The potential impact of U.S. tariffs on Power Sports & Engines is not factored into guidance, offsetting what otherwise seem to be conservative assumptions.

(Mostly) Asia-Pac M&A: Talkmed, Jilin Jiutai Bank, Insignia, Silk Logistics, Fengxiang, Nissin, VIOL

By David Blennerhassett

I tally 43 – mostly firm, mostly Asia-Pac – arb transactions currently being discussed and analysed on Smartkarma.
Two new deal were discussed on Smartkarma this week: Talkmed (TKMED SP)‘s Scheme and Jilin Jiutai Rural Comm Bank (6122 HK)‘s Hobson’s Choice
Key updates/news took place on New World Resources (NWC AU), Insignia (IFL AU), Silk Logistics (SLH AU), Fengxiang (9977 HK),Domain (DHG AU), Nissin (9066 JP) and VIOL (335890 KS).

Last Week In Event SPACE: Shibaura, HKBN, NWD, Yichang HEC

By David Blennerhassett

Given the METI extension on FEFTA review on Shibaura (6957 JP), risks are slightly higher. <¥5,900 was a good buy on an incremental basis. ¥5,970 is OK but not spectacular.
As expected (at least by me) – I Squared has withdrawn its Offer for HKBN Ltd (1310 HK).
Re: New World Development (17 HK), this “rescue package” announcement – ~HK$88.2bn – should come as no surprise, as the alternative situation (liquidation/bankruptcy) and the ensuing optics were not great.

Will Management that Incorporates Cost of Capital Be Fully Implemented 7 Years from Now, in 2028?

Considering that it took seven years to finally begin reducing policy-held shares, it seems reasonable to assume that many companies will begin seriously incorporating capital costs into management in 2028.
TSE states that while Prime Market has most companies whose initiatives are out of step with investors’ perspectives, companies whose initiatives are highly regarded by investors show superior stock performance.
TSE appears to be placing its hopes on efficient market hypothesis. However, investors need to see increase in capital profitability that will convince them of the path to value creation.

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Jul 05

Daily Brief Japan: Yukiguni Maitake, Bike O & Co Ltd, SGX Rubber Future TSR20 and more

In today’s briefing:

Yukiguni Factory (1375 JP) – Preview Report
Bike O & Co Ltd (3377 JP): 1H FY11/25 flash update
Tire Giants Redraw India Playbooks; Indian Firms Rework Overseas

Yukiguni Factory (1375 JP) – Preview Report

By Sessa Investment Research

YUKIGUNI FACTORY CO., LTD. (hereinafter, “the Company”) produces, processes, and sells Maitake, which was the first in the world to be successfully mass- produced (with approximately 52% of the domestic production share), as well as a range of mushrooms (Eryngii, Buna-shimeji, Button Mushrooms, etc.).
In recent years, the Company has also pursued the development of mushroom-based alternative meats as part of its efforts to create new value from mushrooms.
1) Through a vertically integrated value chain covering production, processing, and sales of mushrooms, the Company ensures strict quality control and stable year-round supply.

Bike O & Co Ltd (3377 JP): 1H FY11/25 flash update

In 1H FY11/25, revenue was JPY18.7bn (+13.2% YoY), with operating profit of JPY321mn and net income of JPY186mn.
Wholesale unit sales increased, retail unit sales declined, but higher average unit prices boosted revenue and gross profit.
SG&A expenses decreased by 3.3% YoY, contributing to improved profitability, with a workforce of 1,037 employees.

Tire Giants Redraw India Playbooks; Indian Firms Rework Overseas

By Vinod Nedumudy

Continental, Michelin, Bridgestone pivot to premium with local focus
MRF expands in EV, defence, and export markets amid capacity growth
Apollo restructures in Europe, bolstering premium bicycle

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Jul 04

Daily Brief Japan: Shibaura Electronics, Mitsui & Co Ltd, Nikkei 225, Softbank Group, Onward Holdings and more

In today’s briefing:

[Japan M&A] YAGEO Extends Shibaura TOB Limbo at FSA/METI/BOJ Request on FEFTA
Mitsui & Co. (8031.T): Strong Cash Flows, Weak Growth Despite Portfolio Shift
Nikkei: Failed Breakout and Summer Seasonals Signal Opportunity
Lucror Analytics – Morning Views Asia
Onward Holdings (8016 JP): Q1 FY02/26 flash update

[Japan M&A] YAGEO Extends Shibaura TOB Limbo at FSA/METI/BOJ Request on FEFTA

By Travis Lundy

YAGEO’s deal for Shibaura Electronics (6957 JP) had been extended a couple of times – once for Shibaura’s yuho, and once for Taiwan Investment Commission Approval.
YAGEO had re-filed its notification for FEFTA on 2 June, and the “normal” 30 day waiting period expired 1 July. YAGEO extended by 4 business days to 15 July.
The TRS amendment was less informative than the TDNET release today. That’s worth reading. More waiting ahead. But the timing may be politically strategic.

Mitsui & Co. (8031.T): Strong Cash Flows, Weak Growth Despite Portfolio Shift

By Rahul Jain

Mitsui & Co. has delivered robust earnings and cash flows, fueled by commodity tailwinds and disciplined capital returns over the last 5 years.
Looking ahead, the company plans to rebalance its portfolio through increased exposure to LNG and energy transition assets
However, muted near-term growth and persistently low ROCE—driven by scattered, low-control holdings—suggest limited upside until newer investments begin contributing meaningfully to the bottom line.

Nikkei: Failed Breakout and Summer Seasonals Signal Opportunity

By John Ley

Seasonal weakness and failure at highs support a tactical short.
July has historically been weak for the Nikkei in both price and realized vol; Trump-era data showed summer vol was suppressed.
We propose a tactical trade that aligns with the current setup and supportive price and volatility seasonals.

Lucror Analytics – Morning Views Asia

By Trung Nguyen

In today’s Morning Views publication we comment on developments of the following high yield issuers: Softbank Group
The UST curve bear-steepened yesterday, alongside a selloff in long-dated UK gilts. The yield on the 2Y UST rose 1 bp to 3.79%, while that on the 10Y UST climbed 4 bps to 4.28%.
Equities advanced after US President Donald Trump announced that he had reached a trade deal with Vietnam. The S&P 500 was up 0.5% to a fresh record of 6,227, while the Nasdaq rose 0.9% to 20,393.

Onward Holdings (8016 JP): Q1 FY02/26 flash update

Sales increased 17.1% YoY to JPY60.2bn, driven by Domestic Business growth and strategic brand strengthening.
Operating profit rose 5.5% YoY to JPY5.4bn, with improved profitability and higher gross profit margin despite increased SG&A expenses.
Overseas Business sales fell 14.0% YoY to JPY3.5bn, but operating loss narrowed due to improved profitability in Asia and the US.

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Jul 03

Daily Brief Japan: Nh Foods Ltd, Softbank Group, Daiseki Co Ltd, SGX Rubber Future TSR20, Tsubakimoto Kogyo and more

In today’s briefing:

NH Foods Placement: Clean up by Norinchukin Bank; Unrelated Buyback May Buffer Deal
SoftBank (9984 JP): Challenged by Portfolio Concentration and JPY Strength
Daiseki Co Ltd (9793 JP): Q1 FY02/26 flash update
Chinese Tire Giants Accelerate Global Expansion Amid Trade Barriers
Q4 Follow-Up – Tsubakimoto Kogyo (8052 JP)

NH Foods Placement: Clean up by Norinchukin Bank; Unrelated Buyback May Buffer Deal

By Nicholas Tan

A group of shareholders are looking to raise US$333m from selling their respective stakes in Nh Foods Ltd (2282 JP) .
While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
In this note, we will talk about the placement and run the deal through our ECM framework.

SoftBank (9984 JP): Challenged by Portfolio Concentration and JPY Strength

By Victor Galliano

SoftBank group (SBG) relies increasingly on Arm’s premium valuation for NAV growth, with SBG shares having benefited from their high correlation to those of Arm Holdings
JPY-USD FX strengthened recently, with the potential for BoJ monetary tightening and Fed easing set to accentuate this trend; SBG is USD asset heavy, and JPY heavy in its liabilities
The Vision Funds are slowly seeing IPO exits for private companies; in essence, we see that SBG shares are challenged by (geo)political, concentration, currency and market risks

Daiseki Co Ltd (9793 JP): Q1 FY02/26 flash update

Daiseki’s Q1 FY02/26 sales rose 7.2% YoY to JPY17.9bn, with operating profit declining 1.9% YoY to JPY3.8bn.
Daiseki Co.’s FY02/25 sales reached JPY38.5bn, driven by increased recycled fuel shipments, despite flat wastewater intake.
DES’s FY02/25 sales declined 17.4% YoY to JPY19.9bn, with operating profit down 19.3% YoY to JPY2.3bn.

Chinese Tire Giants Accelerate Global Expansion Amid Trade Barriers

By Vinod Nedumudy

Linglong Tire’s new plants in Brazil, Kenya and Anhui in China
Yongsheng Rubber to take advantage of Morocco’s FTA with West
CNTR’s car tire facility to come up at Alexandria in Egypt

Q4 Follow-Up – Tsubakimoto Kogyo (8052 JP)

By Sessa Investment Research

Tsubakimoto Kogyo Co., Ltd., (hereafter, the Company) announced its Full-year FY2025/3 results on May 8, 2025.
The Company achieved record-high orders, sales, and profits across the board, along with a record order backlog.
Both net sales and all levels of profit exceeded initial forecasts. This is due to conservative assumptions about the pace of reducing its large order backlog.

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Jul 02

Daily Brief Japan: Nissin Corp, MS&AD Insurance, Okamura Corp, Oug Holdings, Softbank Group (ADR), Takashimaya, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

[Japan M&A] Bain Plays Announcement Games with Nissin (9066) MBO TOB – Noise A Possibility
[Japan CorpGov] TSE “Mgmt Conscious” Reports (Jul25), Minor Updates
Okamura (7994): Why Management Incentives Are So Important
OUG Holdings (TYO 8041) – A 0.5x P/TBV Vertically Integrated Seafood Wholesaler in Osaka…
Lucror Analytics – Morning Views Asia
Takashimaya (8233 JP): Q1 FY02/26 flash update
Now Is Time to Increase the Number of Female Directors so that They Can Contribute to Value Creation

[Japan M&A] Bain Plays Announcement Games with Nissin (9066) MBO TOB – Noise A Possibility

By Travis Lundy

On 12 May 2025, Bain Capital announced a deal to buy Nissin Corp (9066 JP). The tender was VERY light in price (Bain’s borrowing more than adjusted EV at TOB Price)
And it was very long at 41 days. As of Day 1, they announced a long list of “irrevocables” – 16 holders with 5.75% – who had agreed to tender.
Since then Bain have made 7 separate amendment filings detailing additional irrevocables and one possible additional tender agreement to get to 11.30%. Now it’s extended.

[Japan CorpGov] TSE “Mgmt Conscious” Reports (Jul25), Minor Updates

By Travis Lundy

TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
1,389 new CGRs filed since 1 June 25. Our tools show every report, links to every document, and a diff-file tool. Input a name, see the changes in the reports.
The JPX Council of Experts met on 22 April. Next meeting is in a week. Parent-sub follow-ups in Fall/Winter 2025. Slow.

Okamura (7994): Why Management Incentives Are So Important

By Michael Allen

Okamura trades at a PBR of 1.0 and a PER of 8.6 despite earning more than 12% return on equity.
Okamura’s new AI-driven warehouse automation system is a potential game-changer as it reduces costs and improves decision making for mid-sized enterprises.
Management’s incentives are still poorly aligned with the interests of shareholders, and their performance is well below potential.

OUG Holdings (TYO 8041) – A 0.5x P/TBV Vertically Integrated Seafood Wholesaler in Osaka…

By Altay Capital

OUG Holdings (TYO 8041) is a vertically integrated seafood group that auctions fresh fish at major markets, runs a nationwide cold-chain for trading, processing, and delivering seafood to stores and restaurants, and farms premium buri and bluefin tuna.
Because it controls aquaculture, logistics hubs, and its own truck fleet, it moves product from port to plate faster and fresher than rivals that outsource storage and transport.
They currently have dominant market share in Osaka and are slowly expanding to Tokyo.

Lucror Analytics – Morning Views Asia

By Trung Nguyen

In today’s Morning Views publication we comment on developments of the following high yield issuers: Softbank Group, New World Development
US Treasury yields fell yesterday. The UST curve bull flattened, with the yield on the 2Y UST declining 3 bps to 3.72%, while that on the 10Y UST was down 5 bps at 4.23%. Equities climbed to new record highs.
The S&P 500 rose 0.5% to 6,205, while the Nasdaq advanced 0.5% to 20,370. Contracted sales for China’s Top 100 developers in June declined 23% y-o-y but were up 15% m-o-m at CNY 339 bn, according to CRIC.

Takashimaya (8233 JP): Q1 FY02/26 flash update

Total operating revenue decreased by 5.7% YoY, with operating profit and recurring profit declining by 26.9% and 35.5% respectively.
Domestic department store sales fell due to reduced inbound demand, impacting operating revenue and profit despite solid domestic sales.
Takashimaya revised FY02/26 forecasts downward for revenue and profit metrics, but raised net income projections due to asset sale.

Now Is Time to Increase the Number of Female Directors so that They Can Contribute to Value Creation

Since % of women among internal directors is low, many companies try to increase external directors, which leads to an issue of directors serving on the boards of multiple companies.
Investors expect gender diversity to have long-term impact on business performance. However, due to the low percentage of female board members, no clear correlation with value creation has been demonstrated.
In evaluations of board effectiveness, it’s clear that few companies share issues within boards and engage in sufficient discussion. There appears to be a lack of sufficient discussion on issues.

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Jul 01

Daily Brief Japan: BayCurrent Consulting , Nippon Concept, Ana Holdings, Sanyo Shokai and more

In today’s briefing:

Nikkei 225 Index Rebalance Preview (Sep 2025): Potential Adds, Deletes, PAF, Capping & Other Changes
Nippon Concept (9386 JP): J-STAR-Sponsored MBO a Done Deal
Quiddity JPX-Nikkei 400 Rebal 2025: End-June 2025 Ranks (FINAL EXPECTATIONS)
Sanyo Shokai (8011 JP): Q1 FY02/26 flash update

Nikkei 225 Index Rebalance Preview (Sep 2025): Potential Adds, Deletes, PAF, Capping & Other Changes

By Brian Freitas

The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in 4 weeks. There could be one outright change and one or two others driven by sector balance.
There will be passive buying in BayCurrent Consulting as the PAF moves from 0.5 to 1. Fast Retailing (9983 JP)‘s index weight is below the 10% cap for now.
ROHM Co Ltd (6963 JP) replaces NTT Data Corp (9613 JP) later this week and there will be a lot of focus on those names.

Nippon Concept (9386 JP): J-STAR-Sponsored MBO a Done Deal

By Arun George

Nippon Concept (9386 JP) has recommended a J-STAR-sponsored MBO at JPY3,060, a 37.2% premium to the last close price.
The offer is attractive as it represents an all-time high and is above the midpoint of the IFA DCF valuation range.
An attractive offer and irrevocables pave the way for deal completion. The tender runs from July 1 to August 13, with payment due on August 20.

Quiddity JPX-Nikkei 400 Rebal 2025: End-June 2025 Ranks (FINAL EXPECTATIONS)

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted capped index composed of 400 constituents.
The annual index review takes place in August every year. We look at the latest rankings of potential ADDs/DELs every month.
Below is a look at the rankings of potential ADDs/DELs for the JPX-Nikkei 400 August 2025 rebalance based on trading data as of end-June 2025.

Sanyo Shokai (8011 JP): Q1 FY02/26 flash update

Revenue decreased by 5.7% YoY to JPY14.5bn, with operating profit declining by 95.2% YoY to JPY36m.
Net income attributable to owners fell 93.9% YoY to JPY36m, with recurring profit down 96.6% YoY to JPY25m.
Despite reducing SG&A expenses by JPY400m, cost-control efforts failed to offset gross profit decline from lower revenue.

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Jun 30

Daily Brief Japan: Toyota Industries, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Merger Arb Mondays (30 June) – Toyota Industries, Santos, Pointsbet, Dickson, HKBN, OneConnect
Disclosure of Individual Board Directors’ Remuneration Has Not Progressed

Merger Arb Mondays (30 June) – Toyota Industries, Santos, Pointsbet, Dickson, HKBN, OneConnect

By Arun George

I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Mayne Pharma (MYX AU), Insignia Financial (IFL AU), ENN Energy (2688 HK), Santos Ltd (STO AU), Seven & I Holdings (3382 JP), Ainsworth Game Technology (AGI AU).
Lowest spreads: Bright Smart Securities And (1428 HK), New World Resources (NWC AU), Avjennings Ltd (AVJ AU), Hainan Meilan International Airport (357 HK), Toyota Industries (6201 JP).

Disclosure of Individual Board Directors’ Remuneration Has Not Progressed

It’s unclear whether voluntary compensation committee can make proactive recommendations, or whether it simply follows the proposals of CEO/BOD, and how much the decisions of the voluntary committee are influential.
Only 0.1% of listed companies are disclosing the individual compensation of all board directors, as investors have long requested, and there has been no progress in disclosing individual compensation.
Performance-Based compensation is implemented by 72.7% of companies listed on the Prime Market. Recently, there has been an increase in the introduction of restricted stock in place of stock options.

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Jun 28

Daily Brief Japan: Nitto Kogyo, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Q4 Follow-Up – NITTO KOGYO CORPORATION (6651 JP)
Companies Formalized Independence of Voluntary Nomination Committees, but No Signs of Improvements

Q4 Follow-Up – NITTO KOGYO CORPORATION (6651 JP)

By Sessa Investment Research

Nitto Kogyo Corporation (hereafter, the Company) announced full-year earnings results for FY2025/3 after market close on May 15, 2025.
The Company reported net sales of JPY 184,683 mn (+14.9% YoY), operating profit of JPY 13,432 mn (+12.2% YoY), ordinary profit of JPY 13,516 mn (+7.6% YoY), and profit attributable to owners of parent (hereafter, net profit) of JPY 12,097 mn (+38.8% YoY).
Price revisions and improvements in transaction prices substantially boosted profits. Net profit rose substantially as it recorded a gain on bargain purchases of JPY 2,395 mn under extraordinary income, in line with the acquisition of consolidated subsidiary Tempearl Industry in April 2024.

Companies Formalized Independence of Voluntary Nomination Committees, but No Signs of Improvements