Japan

• JIC gave an official statement yesteday about the expected start of its Shinko Electric Industries (6967 JP) Tender Offer. A later-than-expected start has people asking questions.
• It has traded tighter since the SAMR approval news (I warned on 16 Dec it was coming and the next day it closed 6.6% gross).
• Below I discuss the language of the Conditions Precedent which would allow a MAC. 

• Softbank Group (9984 JP) went up >10% on Wednesday 22nd of January, after announcing a 500B USD venture with OpenAI and Oracle to build US AI infrastructure
• Based on our model reading, the stock is now overbought, but it could go higher rallying on the current frenzy
• Check the QUANTCHART below to find out how high the stock could go before stalling or pulling back.

• Sun Corp (6736 JP) has retraced ~15% in the past month. Its 43.8% stake in Cellebrite (CLBT US) is worth ~186% of its market cap, an all-time high. 
• 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%.

• TSE is likely to raise the current Growth Market listing criteria of at least 500 million yen in tradable equity market capitalization, probably starting in April 2026.
• Since listing examinations are already being conducted with the new criteria in mind, IPO reserves are being prepared with a larger market capitalization than before.
• It is unclear how much will be raised, but companies will prepare for listing by increasing its market capitalization through the use of the secondary market and M&A.

• Q1-2 FY3/25 results were ahead of guidance in our view, with underlying earnings growth stemming from improved profitability in the Digital Entertainment segment and robust sales growth in both the Sports and Lifestyle segments.
• The governance issue disclosed in December 2024 involving improper transactions at subsidiary Chariloto appears to have been fully resolved with no contingent issues to resolve.
• The company has maintained FY3/25 guidance, and we view the earnings outlook for H2 FY3/25 to be positive due to a combination of stabilizing performance with sustained successful collaborative activity with Monster Strike and seasonal uplift in the Sports segment.

• The lock-up on KKR HKE ends next week, Kokusai Electric (6525 JP) should be deleted from a global index end-February and could be added to the NKY INDEX in March.
• There has been a buildup of shorts in Kokusai Electric (6525 JP) as the stock has underperformed the Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) by a lot.
• The global index deletion in February could provide an entry point into a long position ahead of the announcement of the Nikkei 225 (NKY INDEX) changes in March.

• Shinko Electric Industries (6967 JP)’s tender offer from a JIC alliance is at JPY5,920. Today’s update notes that JIC has satisfied the regulatory precondition. 
• The tender offer is expected to commence in mid-February. The Board will continue to recommend it because it remains attractive. 
• Deal fatigue (announced in December 2023) and Ibiden’s derating will nudge shareholders to accept. At the last close and for an end-of-March payment, the gross/annualised spread was 0.7%/3.9%.

• Sumitomo Mitsui Financial Group (SMFG) presented a mixed set of results for the fiscal year ended in March 2017, with several positives but also notable challenges.
• The company’s profit attributable to owners of the parent came in at JPY 706.5 billion, an increase of JPY 59.8 billion from the previous year, partly due to the tax effects associated with adopting a consolidated corporate tax system.
• This tax benefit, however, will not recur, impacting future profitability metrics.

• Timee Inc (215A JP) listed in Japan on 26th July 2024 after raising US$300m. Its six-month lockup will expire on 21st Jan 2025.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Discussion on potential tariffs and their impact on global markets, with a focus on Canada, China, and Mexico
• Analysis of the upcoming BOJ meeting and its potential impact on the Japanese yen
• Update on UK’s economic challenges, including concerns about fiscal math and potential trade war implications

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Sysmex America, Inc., a subsidiary of Sysmex Corp, recently announced plans to build a new reagent manufacturing, distribution, and service center in Brazil.
• In FY24, sales in the Americas region for Sysmex increased 12% YoY to ¥118.7B. Reagents drove the revenue growing 16%.
• Operating margins in the Americas have largely trodden on a volatile trajectory over the last few years hovering in the range of 4-6%, lowest among all the geographies.

• Finley translates unstructured credit agreements into code to streamline credit management processes
• Borrowers like RAMP and ANOVA rely on Finley for tracking and automation of reporting requirements
• Lenders like Trinity Capital Valley bank use Finley as a command center for debt capital data and analysis across transactions.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Japan System Techniques (hereafter, the Company) announced its H1 Key consolidated figures net sales of JPY 13,260 mn (+9.3% YoY), operating profit of JPY 1,045 mn (+4.2% YoY), ordinary profit of JPY 1,077 mn (+6.8% YoY), and profit attributable to owners o  parent (hereafter, net profit) of JPY 671 mn (+3.2% YoY).
• Higher sales and profits in the DX&SI business and Package business contributed in H1 earnings growth.
• For FY2025/3, the Company forecasts: net sales of JPY 28,570 mn (+9.1% YoY), operating profit of JPY 3,150 mn (+12.9% YoY), ordinary profit of JPY 3,200 mn (+11.8% YoY), and net profit of JPY 2,300 mn (+10.2%).

• LIFULL Co., Ltd. (hereafter, the Company) operates one of Japan’s largest real estate and housing information sites, LIFULL HOME’S, which works with real estate companies across Japan to provide listings for rental and for-sale properties.
• Emphasizing a user-first approach, it not only offers property information but also supports users’ decision making through features such as information on living conditions by area, user reviews, and AI-driven recommendations.
• Beyond real estate, the Company has expanded into new businesses, including LIFULL Kaigo, a matching platform for senior living facilities, and LIFULL Regional Revitalization, to meet a broad range of user needs.

• Nikkei has spent 55 trading days with 1M historic vol less than 1M implied vol, averaging about 4 points less.
• The trading range since October looks similar to the trading range the market went through from May to July with similar volatility characteristics. 
• Big move on Monday didn’t spark volatility with market settling into a very narrow range to finish the week down 1.89%.

• Daiichi Sankyo (4568 JP) has received FDA approval for Datroway for the second-line treatment of unresectable or metastatic hormone receptor (HR) positive, HER2 negative breast cancer.
• Last month, Datroway got approval in Japan. Regulatory submissions for the drug are under review in the EU, China, and other regions. The drug is undergoing trial for other indications.
• AstraZeneca’s proven commercialization capability for Enhertu enhances conviction on the commercialization prospect of Datroway too. AstraZeneca pegged peak year revenue of Datroway at more than $5B (similar level to Enhertu).

• Mitsubishi UFJ Financial Group, MUFG, reported a record-high net profit of JPY 1,258.1 billion for the first half of FY 2024, marking a 46% increase compared to the previous year.
• This achievement represents an 83% progression towards its FY 2024 profit target of JPY 1.5 trillion.
• The positive financial results were largely attributable to increased profitability in customer segments and substantial net gains from the sale of equity holdings.

• Paycloud Holdings Inc. (hereafter, “the Company”) primarily serves major retail and restaurant chains, as well as consumer-related businesses, through its three main businesses: 1) cashless service, 2) digital signage-related, and 3) IT solutions.
• By integrating DX solutions across these three businesses, the Company pursues a retail marketing platform strategy focused on supporting to strengthen consumer touchpoints both inside and outside of retail stores.
• It is establishing itself as a leading domestic player with its Dokuji Pay (branded currency payment + marketing) service, where clients act as issuers, and delivering end-to-end digital signage-related solutions.

• On Friday 17 January, the closing date of the CVC Tender Offer for Macromill, Inc (3978 JP) at ¥1,150/share, the bidder announced an extension of the Tender Offer.
• They also announced a bump to ¥1,250/share, and that included a comment saying they resolved not to raise the price further. 
• This happened during market hours, and the price jumped to just below ¥1,250/share. But one should not consider this a done deal. For reasons…

• 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, Guming Holdings appears to be gearing up for a launch soon.
• On the placements front, while Wuxi XDC failed to perform, Murata Manufacturing (6981 JP) has been holding up so far.

• The previous share price of FUJISOFT did not reach the value it should have, and therefore, the company did not achieve its management goal of maximizing shareholder profit.
• The decision for shareholder return or investment in growth rests with management. Cash returned to shareholders is simply invested by investors to find investments where they can earn better investment.
• Rather than “shareholder pressure,” we should think this is the beginning of an effort to return to the basics of shareholder-oriented management, which is to expand shareholder interests.

• Nidec Corp (6594 JP) in late December proposed an unsolicited takeover of Makino Milling Machine Co (6135 JP), with a 3-month delay before launching a Tender Offer. 
• Makino has asked for an extension to the start. Nidec has said no. Makino is going about this the wrong way. Makino needs to assume Nidec thought this through.
• Makino needs to open up the process to other bidders, and investors can help. 

• There do not seem to be many companies that have executed large one-time dividends that have subsequently grown in corporate value.
• Now that the exit from deflationary economy is seen and profit margins have room to grow, the environment is conducive to investing in growth, and companies have opportunities to change.
• Limited profit growth is making it easier for market risk-taking investors to leave. Unless companies can grow profitably, Tokyo market will be full of private equity funds and activist investors.

• Macromill, Inc (3978 JP) disclosed a revised tender offer from CVC at JPY1,250, an 8.7% premium to the previous JPY1,150 offer. The offer has been declared final.
• The revised offer is reasonable compared to historical trading ranges. Since the announcement of the offer, the share price has never exceeded it.
• CVC seeks an irrevocable from Oasis, but Oasis has several reasons to ignore the overtures. Due to the high required acceptance rate, a gross spread of 0.2% is unattractive. 

• In light of recent performance trends, DWTI has revised its initial earnings forecasts announced on February 9, 2024.
• In addition, the Company is recording an extraordinary loss in its non-consolidated financial results for the fiscal year ending December 2024.
• Net sales are expected to increase due to strong royalty income from ophthalmic surgical aid “DW-1002” in Europe, the United States, etc.

• Takachiho Koheki (hereafter, the Company) is a trading company highly specialized in electronics technology that has identified the underlying needs of its customers to introduce the world’s cutting-edge electronics products to Japan ahead of competitors.
• With engineering employees accounting for over 40% of its workforce, the Company is a highly specialized technical organization with a total of about 25,000 customer accounts, and its solid customer base is one of its assets.

• In H1 FY2025/3, the Company surpassed initial estimates, reporting consolidated net sales of JPY13,314 mn (+4.6% YoY), operating profit of JPY936 mn (+31.2% YoY), ordinary profit of JPY811 mn (-23.2% YoY), and profit attributable to owners of parent (hereinafter, net profit) of JPY594 mn (-17.2% YoY).

• Toyota Motor Corporation, the world’s largest automaker by production volume, finds itself at a critical juncture in the global automotive industry.
• Despite a commendable first-half operating income of ¥2.464 trillion for fiscal 2025 and a full-year forecast of ¥4.3 trillion, the company’s electrification strategy—or lack thereof—remains a contentious issue.
• While Toyota has mastered the art of hybrid and internal combustion engine (ICE) vehicles, it continues to lag significantly behind competitors like Tesla and BYD in the electric vehicle (EV) space.

• Because the majority of companies are still unable to change themselves, both the government and the TSE have taken measures to expect engagement from institutional investors, including activist investors.
• Japan has high barriers in areas that aren’t regulated by law. The existence of cross-shareholdings has allowed managers to continue to operate without respect for the interests of minority shareholders.
• It is premature to raise the requirements for shareholder proposals and requests to call special meetings to the level of other countries when many companies are still protected by cross-shareholdings.

• H1 FY2025/3 results review: In H1 FY2025/3, Stella Chemifa (hereafter, the Company) reported strong results, with net sales up 25.3% YoY to JPY 18,160 mn and operating profit up 94.3% YoY to JPY 2,180 mn.
• The boost in sales was driven by an increase in shipments in the semiconductor category, mainly for memory devices thanks to a recovery in market conditions, and an increase in shipments of enriched boron (energy category) for new nuclear facilities overseas.
• Operating profit rose substantially, as growth in shipments in the high purity chemicals business and an increase in volume in the transportation business offset the JPY 210 mn drag on profits stemming from the Company’s inability to fully reflect cost increases from higher anhydrous hydrofluoric acid prices, a key raw material, and the yen’s depreciation, onto its prices. 

• A group of 7 shareholders are looking to sell 61.3m shares in Murata Manufacturing (6981 JP) to raise JPY 143.8bn (US$916m). That is 3.3% of shares outstanding.
• The shares are being offered at a price range of JPY 2296-2345.5/share, a discount of 5-7% to the last close of the stock.
• With the offering less than 5% of shares outstanding and less than US$1bn in size, there is no immediate passive buying and there could be further weakness in the stock.

• Today after the close, Murata Manufacturing (6981 JP) announced an equity offering worth roughly US$870mm if the stock prices 10% below last. 
• Unlike “regular” secondary offerings, this is available only to overseas investors, and bookbuilding is very quick. This “increases the size” relative to its headline (no retail uptake).
• At 11 days of ADV and 3.3% of shares out, it has a certain size, but the stock is well-owned by foreigners, and not terribly volatile vs Peers.

• A group of shareholders aim to raise around US$900m via selling around 3% of Murata Manufacturing (6981 JP), in another cross-shareholding selldown.
• The company’s shares haven’t done much over the past few years and recent share price performance as well hasn’t been the best
• In this note, we will talk about the placement and run the deal through our ECM framework.

• I wrote about this stock in May 2024. At the time, Japan activist Murakami-san had gone from 5% to 20% in a hurry. Shortly after, he was at 29%. 
• Then he fiddled/sold/bought/waited/sold. The stock fell in late 2024 as a quant fund sold. Murakami-san started buying again. In 3 weeks to 7 January bought from 27.02% to 34.51%.
• By my calculation, as of last week he has 38.4% of votes. This is worth a closer look again. It’s a discount to BVPS but ask yourself why this big.

• Shift Inc (3697 JP) ’s share price went up by about 13% today following the release of its 1QFY08/2025 results yesterday. Share price is up 19% YTD.
• • Shift’s aggressive investment on HR and system reinforcement had resulted in a decline in the company’s margins since 1QFY08/2024, this drove share prices down.
• Shift has once again proved that its business model is resilient and we expect the company’s earnings to continue to see strong growth going forward.

• Revenue decreased by 2.2% YoY to JPY42.5bn, while operating profit increased by 14.6% YoY to JPY4.0bn.
• PR and Advertising segment saw a 55.2% YoY increase in operating profit due to high-margin projects and cost reversals.
• Direct Marketing revenue fell 0.5% YoY, with Vitabrid’s Terminaria First sales growing 21.2% YoY in Q3.

• FY11/24 revenue was JPY35.6bn (+16.6% YoY), operating profit JPY5.3bn (-4.0% YoY), with EPS at JPY169.85.
• FY11/25 forecasts JPY40.2bn revenue (+13.0% YoY), JPY6.1bn operating profit (+15.0% YoY), and JPY175.89 EPS.
• Company plans growth investments, 700 new hires, and aims for 100,000 policy transfers in FY11/25.

• In Q1 FY08/25, the company reported revenue of JPY21.4bn, with a significant YoY increase of 20.3%.
• Operating profit decreased by 93.9% YoY to JPY14mn, impacted by rising costs and increased SG&A expenses.
• The Non-Ferrous Metals segment experienced an operating loss of JPY7mn, despite a 20.4% YoY revenue increase to JPY21.2bn.

• Revenue increased by 28.5% YoY to JPY5.4bn, while operating profit decreased by 50.0% YoY to JPY18mn.
• The company transferred AIGATE career Co., Ltd., resulting in an extraordinary gain of JPY5.7mn from the sale.
• Healthcare Marketing business revenue declined YoY due to a large advertising order impact in Q1 FY05/23.

• In cumulative Q3 FY02/25, sales increased by JPY72.8bn (23.7% YoY), driven by large store operations and retail sales.
• Operating profit rose by JPY4.2bn (+39.1% YoY), with gross profit per retail unit increasing to JPY440,000 (+40,000 YoY).
• SG&A expenses rose due to personnel costs and rent from large store openings, impacting operating profit downward by JPY4.7bn.

• Bain is buying out JAMCO (a long time ago called Itochu Aircraft Maintenance) from Itochu, ANA, Bain’s own portfolio company, and the public. It’s an expected deal. A done deal.
• It is being done too cheaply. The price is 6x next year’s expected EBIT. This year expected ROE is 22%. Next year could be double that.
• And the company has more in non-operating financial assets than its net equity. And a lot of really old land assets are not marked up. Just a shame.

• Tokyo Metro (9023 JP) listed on 23 October and was added to the TSE Tokyo Price Index TOPIX (TPX INDEX) at the close on 28 November.
• Tokyo Metro (9023 JP) was not expected to be added to one global index (it was not added), while it was expected to be added to the other (and missed).
• The stock could be added to one global index in February (its close!) and to the other in June (pretty much a sure thing).

• Jamco Corp (7408 JP) announced a preconditional tender offer from Bain Capital at JPY1,800 per share, a 27.8% premium to the last close.
• The offer, which is preconditional on regulatory approvals and will open in mid-February, is attractive compared to historical trading ranges.
• On the other hand, the offer is light as it is below the midpoint of the IFA DCF valuation range. However, the modest required acceptance rate suggests a done deal. 

• Shift reported a 95% increase in OP, to ¥3.2bn, compared to consensus estimate of ¥2.6bn on January 14 after the close.
• Just under 5 months ago, we suggested the stock was about 45% undervalued. It is up 40%.
• We still expect 20% annual growth through 2030. This is no longer a turnaround stock, but now one of the most solid growth stocks in the market.

• Money Forward, Japan’s leading SaaS provider, reported strong results for its fiscal year ending November 2024: Sales +33% YoY to ¥40.4 billion
• FY11/25 EBITDA guidance of ¥3.5 billion significantly lags consensus expectations of ¥6 billion. 
• The disappointing EBITDA guidance may trigger further selling, but there is no material change to the company’s long-term fundamentals. Time to be bullish

• Mani Inc (7730 JP) Q1FY25 revenue rose 8% YoY, mainly driven by surgical and eyeless needles segments, and favorable foreign exchange. However, profitability declined year-over-year.
• Despite the underperformance of dental segment, management reiterated FY25 guidance. Dental segment contributes more than 30% of total revenue.
• Mani shares plunged 20% since it published its Q1 results. Investors should avoid Mani due to its uncertain revenue outlook and deteriorating profitability in short-term.

• After 17 years of failure to change, Sapporo’s policy change was triggered by the fact that sales in beer business were beginning to recover after the long tunnel of deflation.
• Regulators, weighed down by the growing number of companies with low profitability and declining competitiveness, want to change the situation, even if it means leveraging the power of activist investors.
• Many companies bottomed out due to exiting the deflationary economy, and TSE requests prohibit companies from ignoring investors’ proposals, which makes it easier for companies to change.

• Revenue for cumulative Q3 FY02/25 was JPY21.6bn, operating profit JPY6.5bn, net income JPY4.7bn, EBITDA JPY7.6bn.
• BDS sales revenue rose 12.7% YoY to JPY14.2bn, with cloud services growing 17.3% YoY, invoiceAgent JPY1.7bn.
• Full-year FY02/25 forecast revised to revenue JPY28.5bn, operating profit JPY8.1bn, EBITDA JPY9.6bn, profit JPY5.9bn.

• Operating profit is highest in Q4 due to subsidies in Child-Rearing Support Service and lowest in Q2.
• Revenue increased in Child-Rearing Support and Nursing Care-Related Services, but declined in Comprehensive Human Resources Service.
• LIKE opened two new facilities in FY05/25, with total childcare facilities reaching 415 as of October 2024.

• Cumulative Q3 FY02/25 results: Revenue JPY36.8bn (+9.1% YoY), Gross profit JPY6.6bn (+28.1% YoY), Operating profit JPY2.4bn (+47.9% YoY).
• Full-year FY02/25 forecast revised: Revenue JPY48.0bn (+8.2% YoY), Operating profit JPY2.8bn (+53.2% YoY), Net income JPY1.9bn (+79.7% YoY).
• Dividend forecast increased: Annual dividend JPY66.0 per share, payout ratio 31.0%, maintaining dividend for eight consecutive fiscal years.

• Kokusai Electric (6525 JP) was IPOed in September 2023. The stock was cheap. It rose sharply, tripling in 9 months. At the ATH, the pre-IPO owners launched a HUGE secondary.
• It was like a second IPO. The stock dipped, rallied, plummeted into pricing. Stayed there for two days, and in 6 months, the shares have halved. 
• Lockup expiry is next week, and there is a likely large index event in ~10 weeks.

• Shift Inc (3697 JP) is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them. 
• Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.
• There is an event coming up shortly which could trigger an imminent index inclusion. It’s worth a look.

• The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.
• Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
• The recent drop in Fast Retailing (9983 JP)‘s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.

• BayCurrent Consulting (6532 JP) is a high-growth consulting company. This year sees 22% annual revenue growth and 25% OP growth to Feb 2025. Q3 results come out tomorrow.
• The stock has a fairly large and concentrated active institutional holder base, though interestingly, the foreign active insto base is very long-tailed. LOTS of investors hold this.
• The company is likely to see an index inclusion imminently which will over time mean a buy of more than a third of Maximum Real World Float. 

• Ryohin Keikaku made a big splash in 2021 when it announced a sales target of ¥3 trillion by 2030, more than a six-fold increase. 
• Following a reshuffling of management, targets have been slashed but growth rates still remain impressive with a near doubling of sales by 2030.
• At home, the push into food is working and at last, overseas markets are getting the attention they deserve. The next Uniqlo?

• In this note, we will take a look at the Asia Pacific IPO pipeline for 2025, with a look at Japan & Korea after having looked at HK & India.
• This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
• The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

• BASE Inc (4477 JP — US$234 million) is an e-commerce technology company based in Tokyo, Japan.

• The software helps small merchants open stores online and manage their operations. BASE is often likened to “Shopify of Japan” due to similarities in their product offerings.

• However, investors have become skeptical about BASE, with the stock now trading at just 0.8x EV/Sales — a massive discount to Shopify’s 13.3x.

• FP10/24 results exceeded company guidance for net operating income (NOI) and dividend per unit (DPU).
• The notable improvement of NOI (+11.6% vs. FP10/23, +4.8% vs FP4/24) is attributable to a lower expense ratio than initial expectations (actual 32.5%, guidance 34.0%) due to lower rental business expenses and repair costs, higher variable rent on the back of a strong tailwind in the hotel sector (actual ¥173 million vs. guidance ¥149 million), and other one-off rental income.
• Other expenses such as outsourcing costs and utility bills were well controlled, reflecting MIRAI’s asset management ability.