Japan

In today’s briefing:

T&D Holdings (8795) – A Really Good Look (Divs Up, Big Buyback, Good Historical Stats)
Oisix ra daichi (3182 JP): Q3 FY03/25 flash update

T&D Holdings (8795) – A Really Good Look (Divs Up, Big Buyback, Good Historical Stats)

Yesterday, post-close, T&D Holdings (8795 JP) announced ¥40 for 31-Mar-25 FY-end dividend (¥80/yr) and ¥120/share/year in the year to March 2026 on a higher planned payout ratio.
The company also announced guidance for Adjusted Profit for 2025 at ¥130bn (up), and guidance for March 2026 at ¥140bn (lower growth than this past year).
They announced the current ¥50bn buyback was 87.5% complete (they have until 13 May to complete) and a new buyback starting 19 May to spend up to ¥100bn over 10.5mos.

Oisix ra daichi (3182 JP): Q3 FY03/25 flash update

By Shared Research

In January 2024, SHiDAX Corporation was consolidated as a subsidiary, boosting sales and EBITDA in Q4 FY03/24.
Cumulative Q3 FY03/25 progress rates: 75.9% sales, 93.7% EBITDA, 84.4% operating profit, 110.5% net income.
B2C Subscription sales decreased YoY, but segment profit increased due to higher ARPU and cost-efficient acquisitions.

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Apr 01

Daily Brief Japan: Fast Retailing, Toyota Motor, Mixi Inc, Topcon Corp, Asahi Intecc and more

In today’s briefing:

Fast Retailing (9983) | Buying Opportunity Ahead of Q2 Results
The Toyota Way Is Not to Rush, but to Gain a Foothold and Proceed with Caution
MIXI Inc. (2121 JP) – A Potentially Game-Changing Deal
(Mostly) Asia M&A, Mar 2025 Wrap: ENN Energy, Gold Road, Spartan, Aeon Delight, Sinarmas, Topcon
Asahi Intecc (7747 JP): Softer H2 Expected; Positive Long-Term Outlook Amid Tariff Noises

Fast Retailing (9983) | Buying Opportunity Ahead of Q2 Results

By Mark Chadwick

Fast Retailing (9983 JP) is set to report its second-quarter results on April 10, and we see an opportunity to buy ahead of a strong earnings release
We expect Fast Retailing to post Q2 sales of ¥905bn (+15% YoY), above consensus estimates of ¥881bn. EBIT projected at ¥133bn (+21% YoY), ahead of street expectations of ¥125bn.
Domestic Uniqlo monthly sales and quarterly results from global peers suggest strong sales momentum.

The Toyota Way Is Not to Rush, but to Gain a Foothold and Proceed with Caution

It’s unlikely that the transition to ‘company with audit committee’ will enhance the supervisory function, but it’s likely to speed up the decision-making process by delegating authority to executive directors.
Instead of achieving 30% female board member and moving to Company with US-type 3 Committees at once, Toyota will implement Toyota’s way firmly with BOD that is half independent directors.
The only way for Toyota, which faces several governance challenges, to uphold tradition of Toyoda family being at the top of management is to make the returns expected by investors.

MIXI Inc. (2121 JP) – A Potentially Game-Changing Deal

By Astris Advisory Japan

MIXI has announced an all-cash deal worth ¥35.2bn for PointsBet Holdings (PBH), an Australian sports and racing online betting company operating in Australia and Canada.
The deal is due to close in mid-June 2025. We view this transaction as aligned with MIXI’s strategies of business diversification and overseas expansion, leveraging the expertise gained from TIPSTAR in Japan’s keirin and auto-race betting businesses to enter the Australian market, thereby accelerating the growth of both TIPSTAR and PointsBet.
MIXI is demonstrating a positive and active allocation of its capital, with a high intent to accelerate the development of its Sports business and make it a key earnings pillar.

(Mostly) Asia M&A, Mar 2025 Wrap: ENN Energy, Gold Road, Spartan, Aeon Delight, Sinarmas, Topcon

For the month of March 2025, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$14bn.
The average premium for the new transactions announced (or first discussed) in March was ~53%, with a year-to-date average also of 55%.
The average premiums for transactions in 2024 (129 transactions), (2023 (117), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) were 43%, 39%, 41%, 33%, 31%, and 31% .

Asahi Intecc (7747 JP): Softer H2 Expected; Positive Long-Term Outlook Amid Tariff Noises

By Tina Banerjee

Asahi Intecc (7747 JP) announced double-digit growth across all the key parameters in H1FY25. Market share expansion of medical division and favorable Fx drove growth.
Reiteration of FY25 guidance implies a softer H2 performance. In H2FY25, revenue is expected to increase 4% YoY, while both operating and net profit are likely to decline.
The U.S. contributes ~20% of medical division’s revenue of Asahi Intecc, which is lower than other large Japanese medtech companies. This should limit tariff exposure.

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Mar 31

Daily Brief Japan: Topcon Corp, BayCurrent Consulting , Seven & I Holdings, Nikkei 225, J Front Retailing and more

In today’s briefing:

[Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share
Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows
Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road
Nikkei Index Options Weekly (Mar 24 – 28): Weak Finish Despite USD/JPY Strength
J Front Diversifies to Generate More Income

[Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share

The difference between an LBO (Leveraged Buy Out) and an MBO (Management Buy Out) is that an MBO is usually just an LBO where the buyers don’t replace the CEO.
After 4+mos of speculation/noise since a Bloomberg article said Topcon was weighing takeover bids, we have a deal. KKR and JIC will buy out Topcon in an “MBO” at ¥3,300/share.
Unusually, the lower limit is 50.1%. This is an OK exit for the “Bad Cops” but not a great one. It should be higher. Start delayed for 4 months.

Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows

The Nikkei 225 March 2025 rebalance is today. The ADD is big, with more to buy later. The SELL is a really big sell in terms of float.
The Sell, Mitsubishi Logistics (9301 JP), means Max Real World Float doubles. It’s like a huge offering, with warning.
There’s a big cap trade on Fast Retailing (9983 JP) where timing is not on its side, leaving US$2bn to buy in funding. 25 names at 0.4x ADV to buy.

Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road

By Arun George

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: DN Solutions (298440 KS) seeks to raise US$1.1 billion in a KRX IPO.
Event-Driven developments: Seven & I Holdings (3382 JP), Topcon Corp (7732 JP), ENN Energy (2688 HK), Jinke Smart Services (9666 HK), Sinarmas Land (SML SP), Gold Road Resources (GOR AU).

Nikkei Index Options Weekly (Mar 24 – 28): Weak Finish Despite USD/JPY Strength

By John Ley

A weekly recap of volatility and price metrics, covering option volumes, volatility trends, the spot/implied relationship, and open interest statistics.
USD/JPY and Nikkei moved in opposite directions, with the index underperforming its historical relationship to FX.
Options volume increased throughout the week, peaking on Friday’s move lower.

J Front Diversifies to Generate More Income

By Michael Causton

J Front has been pushing ahead with new ways to get younger (and richer) customers into its stores.
It recently opened a high end art floor at Matsuzakaya Nagoya, continues to expand its fashion subscription business, and will shortly open the first joint store with Komehyo.
It is also investing heavily in real estate in key cities as a third major platform to its business.

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Mar 30

Daily Brief Japan: Topcon Corp, Shinko Electric Industries, Seven & I Holdings, Kawasaki Heavy Industries, TSE Tokyo Price Index TOPIX and more

In today’s briefing:

Topcon (7732 JP): KKR/JICC-Sponsored Preconditional MBO, with Caveats
(Mostly) Asia-Pac M&A: Gold Fields, Sinarmas Land, Shinko Electric, Domain, Japfa, Tsuruha/Welcia
Last Week in Event SPACE: Seven & I, ENN Energy, Sun Corp, Great Eastern Holdings
Quiddity JPX-Nikkei 400 Rebal 2025: End-Mar 2025 Ranks
Aiming for REITs with Lower Downside Risk and Expectations of Higher Shareholder Returns?

Topcon (7732 JP): KKR/JICC-Sponsored Preconditional MBO, with Caveats

By Arun George

Topcon Corp (7732 JP) recommended a KKR/JICC-sponsored preconditional MBO at JPY3,300, representing an 87.9% premium to the undisturbed price and a 5.4% premium to the last close.
The offer is preconditional on regulatory approvals and is scheduled to start at the end of July. The offer is attractive and represents an all-time high.
The offer comes with caveats: the Board recommendation is not unanimous, the lower limit is set below the two-thirds threshold, and KKR offered a higher price during the discussions.

(Mostly) Asia-Pac M&A: Gold Fields, Sinarmas Land, Shinko Electric, Domain, Japfa, Tsuruha/Welcia

I tally 55 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma.
Three news new deals discussed this week: Gold Road Resources (GOR AU),ENN Energy (2688 HK), and Sinarmas Land (SML SP).
Key updates/news took place on: Shinko Electric Industries (6967 JP), Domain Holdings (DHG AU),Japfa Ltd (JAP SP), Paragon REIT (PGNREIT SP), and Tsuruha Holdings (3391 JP)/Welcia Holdings (3141 JP).

Last Week in Event SPACE: Seven & I, ENN Energy, Sun Corp, Great Eastern Holdings

If you don’t think Seven & I (3382 JP)‘s Standalone Plan has legs to go north of here, or ACT gets its act together, then you should sell into strength.
ENN Energy (2688 HK)‘s cash and scrip (into a unlisted H-share-equivalent entity) Offer was not what the doctor ordered.
Sun Corp (6736 JP) is cheap to its holding in Cellebrite DI (CLBT US). How cheap depends on the form and structure of its eventual exit.

Quiddity JPX-Nikkei 400 Rebal 2025: End-Mar 2025 Ranks

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-March 2025.

Aiming for REITs with Lower Downside Risk and Expectations of Higher Shareholder Returns?

REITs, whose main players are regional banks that invest as a bond alternative, tend to stop their market decline when the spread with JGB yields approaches 400 basis points.
While there is certainly room for REITs to strengthen shareholder returns, the possibility that domestic investors may want stable dividends cannot be denied.
Other activist investors are watching with interest to see if the shareholder activism approach works in REITs as well, but the main battleground is still listed equities.

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Mar 29

Daily Brief Japan: Daihatsu Diesel Mfg, Cyberdyne Inc, Pia Corp and more

In today’s briefing:

Daihatsu Diesel (6023) – Is Not Directly Auto-Tariff-Related
Cyberdyne (7779 JP) – Renewed Efforts to Drive Profitability
Pia Corp (4337 JP): Coverage Initiation

Daihatsu Diesel (6023) – Is Not Directly Auto-Tariff-Related

Daihatsu Diesel Mfg (6023 JP) is down sharply today – much more than indices – as autos/tech fall on US auto tariffs. There may be some GPIF unwinds as well.
A reminder: Despite the name, Daihatsu Diesel is not an auto name, is growing, has a big order book, and minimal direct exposure to the US.
The Tender settles today. The 8% overhang from Tendered-But-Unsold Shares is an opportunity, not a burden, at 7.2x ex-cash PER.

Cyberdyne (7779 JP) – Renewed Efforts to Drive Profitability

By Astris Advisory Japan

Cost-saving initiatives and divestment – Q1-3 FY3/25 results indicated continued traction for Treatment service in the Americas with 8.6% sales growth, but Product rental sales grew 0.6% YoY (-2.4% YoY under constant currency).
Operating losses are narrowing YoY, with the positive impact from cost reduction initiatives at Head Office costs as well as R&D.
We view the announcement to divest the 63.6%-owned subsidiary LeyLine GmbH as a positive surprise, as this will assist in narrowing operating losses further YoY into FY3/26.

Pia Corp (4337 JP): Coverage Initiation

By Shared Research

In FY03/24, revenue was JPY39.6bn (+20.8% YoY), operating profit JPY1.2bn (+47.4% YoY), recurring profit JPY922mn (+53.7% YoY), and net income attributable to owners of the parent JPY1.1bn (-21.0% YoY).
The Japanese leisure and audience entertainment market recovered, including in the live entertainment market.
In addition, major IT service providers such as LINE Ticket exited the market during the COVID-19 pandemic, reducing competitive pressure and providing a tailwind for the company.

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Mar 28

Daily Brief Japan: Cookpad Inc, TSE Tokyo Price Index TOPIX, Tsubakimoto Kogyo and more

In today’s briefing:

Tinycap Cash-Rich Cookpad (2193) With HUGE Buyback. AGAIN
What It Takes to Bring Back Overseas Investors once They Have Left ….
Tsubakimoto Kogyo (8052 Jp) – Q3 Follow-Up

Tinycap Cash-Rich Cookpad (2193) With HUGE Buyback. AGAIN

Hugely cash-rich Cookpad Inc (2193 JP) wouldn’t hit my radar except for two things. 1) it was the target of Melco Holdings (6676 JP) chairman Maki-san a few years ago…
And 2) they did a huge buyback last year which pumped up the stock very bigly.
Maki-San appears long gone from the shares, but now they are doing another big buyback. Just as bigly. But there are new nuances this year.

What It Takes to Bring Back Overseas Investors once They Have Left ….

Since the ROE of Japanese companies is lower than that of U.S. and European companies, few companies become the companies of choice for long-term investors to invest in.
Overseas investors bought significant overbought of Japanese equities in previous year, in the hope that the shift to inflation would trigger an improving ROE as they used their cash reserves.
Simply using cash on hand for shareholder returns doesn’t create value. To bring investors back, the key is to let them know that it won’t take much to see results.

Tsubakimoto Kogyo (8052 Jp) – Q3 Follow-Up

By Sessa Investment Research

Tsubakimoto Kogyo Co., Ltd., (hereafter, the Company) announced its Q3(9M) FY2025/3 results on January 31, 2025.
Net sales and profit were higher than in Q3 FY2024/3 due to the substantial order backlog.
Growth in Q3 FY2025/3 orders was lackluster due to a falloff from large Q3 FY2024/3 orders from China, but if one excludes those particularly large orders, net sales grew year on year.

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Mar 27

Daily Brief Japan: Shinko Electric Industries, Itochu Corp and more

In today’s briefing:

Shinko Electric (6967) – Chicken and Logistics
Itochu the Fashion Giant Doubles Down on Brand Business

Shinko Electric (6967) – Chicken and Logistics

The Tender Offer closed end of last week. The bidder JICC-04 got 59.281mm shares. Most of what was left over – perhaps even more than 100%, was passive-owned.
More than 100%? How does that work? It works because of how the logistics goes.
And right now, the reason why the stock is trading well through terms is a matter of Chicken and Logistics.

Itochu the Fashion Giant Doubles Down on Brand Business

By Michael Causton

Warren Buffett is investing more in Japan’s trading companies for a variety of reasons but Itochu stands alone in its dominance of Japan’s fashion sector.
Itochu continues to emphasise investment in consumer brands, particularly fashion and sports, but will now adjust its decades-old playbook, introducing more direct oversight of subsidiaries and affiliates.
This will include a big new push to turn Vivienne Westwood into a luxury brand, upgrading Paul Smith and bringing Descente Ltd (8114 JP) in-house

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Mar 26

Daily Brief Japan: Seven & I Holdings, BayCurrent Consulting , Fuji Soft Inc, TSE Tokyo Price Index TOPIX, Golf Digest Online and more

In today’s briefing:

Seven & I Holdings (3382 JP): Uncomfortable Truths
Nikkei 225 Index Rebalance: Positioning With a Few Days to Implementation
7&I (3382) – Clarifications of Clarifications But Progress Is Apparent
Fuji Soft (9749 JP) – KKR Does Deal With the Family To Squeeze Out Minorities – You Can Join Too
This TOB Does Not Question the Fundamental Issue of REIT Governance, but Will the Tactic Succeed?
Golf Digest Online (3319 JP) – FY25/12 Key Initiatives for Japan and Overseas

Seven & I Holdings (3382 JP): Uncomfortable Truths

By Arun George

Seven & I Holdings (3382 JP) has published two documents to respond to misinformation and detail its “constructive engagement” with Alimentation Couche-Tard (ATD CN).
The statements underscore the Board’s serious doubts about securing US antitrust approval. The significant discrepancies in the engagement timeline point to two parties at loggerheads.
While the Board claims it is pursuing a dual-track process to create value, the reality is that the process is designed to hinder Couche-Tard’s offer to facilitate the restructuring plan.

Nikkei 225 Index Rebalance: Positioning With a Few Days to Implementation

By Brian Freitas

BayCurrent Consulting (6532 JP) replaces Mitsubishi Logistics (9301 JP) in the Nikkei 225 (NKY INDEX) at the close of trading on 31 March.
Since announcement, BayCurrent Consulting (6532 JP) stock is up with cumulative excess volume increasing, while Mitsubishi Logistics (9301 JP) is lower on a much bigger increase in cumulative excess volume.
Some of the forecast adds and deletes have moved as one would expect, but positioning for the September rebalance could lead to reversals over the next few weeks and months.

7&I (3382) – Clarifications of Clarifications But Progress Is Apparent

On 10 March, Seven & I Holdings (3382 JP) released a statement about its interactions with Alimentation Couche-Tard (ATD CN). The next day, ATD released its own. They didn’t match.
The 7&i spokesperson admitted one technical point, but investors seemed to believe ATD over 7&i. On 13 March, ATD held a presentation in Tokyo. Materials? Unchanged. Earnings comments? Unchanged.
This morning, 7&i released a document which “corrects the record regarding critical false and misleading claims about 7&i’s engagement with Alimentation Couche-Tard (ACT).” OUCH. The stock fell.

Fuji Soft (9749 JP) – KKR Does Deal With the Family To Squeeze Out Minorities – You Can Join Too

KKR’s Second Tender Offer for Fuji Soft Inc (9749 JP) ended 19 February 2025 and KKR got a whopping 57.9% after Bain bowed out. It was close.
The Nozawa founder said it would not tender. Others family members may have, but now KKR has signed a deal with Nozawa family company YK NFC, to support the squeezeout.
Assuming, Nozawa Hiroshi’s stake and the NFC stake remain unchanged, that cements the result of the 25 April AGM. But there may be games to play.

This TOB Does Not Question the Fundamental Issue of REIT Governance, but Will the Tactic Succeed?

Since important decisions on REIT management are made by the sponsor companies, governance isn’t functioning. That’s why REITs have been very careful to strengthen their compliance systems and information disclosure.
For REITs that rely heavily on properties contributed by their sponsors, it is unlikely that other investors would support an activist fund’s advocacy for a change of asset manager.
The most annoying thing for the sponsor is the change of asset manager. The tactic of this TOB is to extract shareholder returns by addressing what the sponsor company dislike.

Golf Digest Online (3319 JP) – FY25/12 Key Initiatives for Japan and Overseas

By Sessa Investment Research

While FY24/12 consolidated financial results paint a challenging environment, the solid achievements in GDO’s mainstay Golf Merchandise Sales business, which accounts for 34% of total consolidated net sales, should not be overlooked.
The graph below comparing golf gear sales for one of the largest brick-and-mortar retailers ‘Co. A’ with the largest online retailer GDO highlights the success of GDO’s initiatives, GDO turning in +7.3% YoY growth versus Co. A -0.6% YoY. Co.
A noted in its 1H FY25/6 briefing that for its Golf business (34.8% of consolidated net sales), existing store sales declined YoY, citing weak performance of golf clubs due to differences in new product launches and price reductions.

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Mar 25

Daily Brief Japan: Tokyu Reit Inc, Sun Corp, Torikizoku, Nitto Kogyo and more

In today’s briefing:

Tokyu Corp (9005) To Lift Stake in Tokyu REIT (8957) Again – Bigger Than You Think It Is
StubWorld: Sun Corp (6736 JP) Is Still Inexpensive To Its Cellebrite Stake
Torikizoku (3193 JP): Coverage Initiation,1H FY07/25 flash update
Nitto Kogyo Corporation (6651 JP) – Q3 Follow-Up

Tokyu Corp (9005) To Lift Stake in Tokyu REIT (8957) Again – Bigger Than You Think It Is

Today, Tokyu Corp (9005 JP) announced it would increase its stake its family REIT, buying up to 48,880 units or 5.0% of units out over the next six months.
This comes a couple of days after Hankyu Hanshin announced the same for its REIT, discussed here. Others have done so before. Tokyu has. Others will do so going forward.
The main reason? Squeeze the ‘share’ price higher. Get the REIT to 1.0x PNAV then stuff it with sponsor-held properties. That’s not bad. The goal is a higher price.

StubWorld: Sun Corp (6736 JP) Is Still Inexpensive To Its Cellebrite Stake

Sun Corp (6736 JP) has declined ~6% in the past month. Its 44.3% stake in Cellebrite DI (CLBT US) is worth ~186% of its market cap.
Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Torikizoku (3193 JP): Coverage Initiation,1H FY07/25 flash update

By Shared Research

Revenue increased by 10.7% YoY to JPY22.2bn, driven by inbound tourism recovery and new restaurant openings.
Operating profit declined 20.5% YoY to JPY1.3bn due to higher SG&A expenses from overseas expansion and wage increases.
Gross profit margin decreased to 69.1%, while SG&A ratio rose to 63.1%, impacting operating profit margin.

Nitto Kogyo Corporation (6651 JP) – Q3 Follow-Up

By Sessa Investment Research

Q3 2025/3 Earnings Result Summary: Nitto Kogyo Corporation (hereafter, the Company) announced net sales of JPY 133,354 mn (+14.1% YoY), operating profit of JPY 9,298 mn (+3.3% YoY), ordinary profit of JPY 9,503 mn (-0.0% YoY), and profit attributable to owners of parent (hereafter, net profit) of JPY 9,014 mn (+36.3% YoY).
The double-digit increase in net profit was attributed to the recording of extraordinary gains on the acquisition of shares in a subsidiary.
FY2025/3 Earnings Forecast: The forecast calls for net sales of JPY178,000 mn (+10.8% YoY), operating profit of JPY12,000 mn (+0.3% YoY), ordinary profit of JPY12,000 mn (-4.5% YoY), and net profit of JPY10,000 mn (+14.7% YoY).

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Mar 24

Daily Brief Japan: Sun Corp, TSE Tokyo Price Index TOPIX, Nikkei 225, Workman Co Ltd, JX Advanced Metals and more

In today’s briefing:

Sun Corp (6736) – Still Cheap
TSE Growth Market Reforms Also Expected to Be Effective in “Request”
Nikkei Index Options Weekly (Mar 17 – 21): Muted Reaction to BOJ as Volatility Declines
Workman Fixes the Big Problem: Colors Replaces Workman Joshi
ECM Weekly (24th Mar 2025) -JX Advance, DN Solutions, Nanshan Aluminimum, Anthem, EAAA, Judo Capital

Sun Corp (6736) – Still Cheap

Eight months on from the Tender Offer which changed the shape of the shareholder register, Sun Corp (6736 JP) is as cheap to its main asset as it was before.
Sun Corp is cheap to its holding in Cellebrite DI (CLBT US). How cheap depends on the form and structure of its eventual exit.
Understanding what the options are (and the dynamics around hedging/exposure) is worthwhile.

TSE Growth Market Reforms Also Expected to Be Effective in “Request”