Japan

• Nintendo missed Q1 with Operating income coming in at Y54.5b (-71% YoY) vs our estimate Y116b and the street at Y94b
• Switch 2 hardware and software units sold are now suffering from buyer fatigue as consumers await the next-gen console
• The stock will likely fall quite sharply over the next week. Looking for good buying opportunity in anticipation of the next console cycle

• Signs of change in companies that have improved their capital profitability and valuations can be seen in their policy shareholdings/total assets. 
• Companies with fewer policy shareholdings, as measured by (policy shareholdings + equity holdings)/total assets, tend to have the best values for valuation, ROE, and ROA, and vice versa.
• To measure the seriousness of reducing cross-shareholdings, as long as the company has the voting right of cross-shareholdings in retirement benefit trust, the deemed shares should be included in cross-shareholdings.

• Sales rose JPY1.8bn (8.3%) YoY, driven by higher sales in Domestic Rice Cracker, Overseas, and Food businesses.
• Operating profit increased JPY375mn (53.6%) YoY, with significant profit growth in Domestic Rice Cracker and Food businesses.
• Revised FY03/25 forecast projects sales of JPY102.0bn (+6.8% YoY) and net income of JPY3.8bn (+68.4% YoY).

• Orders were JPY4.7bn (-4.5% YoY) and revenue was JPY5.0bn (+7.2% YoY), reaching a record high.
• Operating profit was JPY1.2bn (+16.7% YoY) with an OPM increase of 1.9pp to 23.2%.
• mcframe license revenue was JPY1.3bn (+22.0% YoY), breaking the record high for the Products business.

• In Q1 FY03/25, consolidated sales were JPY1.6bn (+38.5% YoY), with an operating profit of JPY48mn (JPY182mn loss in Q1 FY03/24).
• Business Production segment reported sales of JPY1.1bn (+15.0% YoY) and an operating loss of JPY70mn (JPY107mn profit in Q1 FY03/24).
• Venture Capital segment reported sales of JPY520mn (+145.3% YoY) and an operating profit of JPY378mn (JPY17mn loss in Q1 FY03/24).

• Stella Chemifa Corporation (hereafter referred to as “the Company”) specializes in the manufacture and sale of hydrofluoric acid and fluorine- related compounds.
• Hydrofluoric acid is highly functional and used in a wide range of applications, as well as being extremely toxic and corrosive, making it extremely difficult to handle.
• In particular, ultra-high purity hydrofluoric acid is required for semiconductor manufacturing, and the Company, with its strong R&D and technological capabilities, has enjoyed great success in this area. 

• In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP). The market dropped. But that was an opportunity. 
• There was an announcement, a ToSTNeT-3 buyback, the offering, and more buyback to come. On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.”
• Exedy is up 21% since. On 17 June, activist Murakami-san’s group went over 5%. Then they bought more. Now they have 15%. Or more. Still cheap. Still vulnerable. 

• Murakami’s entity, City Index Eleventh, and daughter reported a 5.40% stake in Pacific Metals (5541 JP). The shares were purchased from 27 May to 25 July.
• Murakami’s average buy-in price is JPY1,259 per share, an 11.1% discount to the last close price. Murakami has been a substantial shareholder twice before.
• Murakami’s previous dealings in Pacific Metals were a pump-and-dump where he built up around 8% stake, only to sell into the share price pop subsequently. Expect more of the same.  

• Up to 12 stocks could be deleted from global passive portfolios in August. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
• There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
• The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names. 

• CyberAgent Inc (4751 JP)  reported 3QFY09/24 results yesterday. Both revenue and OP grew YoY, while revenue beat consensus marginally, OP beat consensus by a huge margin.
• All three business segments showed strong recovery with notable improvement in gaming business as newly released titles perform well including the newly released UMA MUSUME: Pretty Derby movie.
• Media business reported OP for the second consecutive quarter and the company has plans to further strengthen monetisation around AbemaTV.

• Sumitomo Pharma (4506 JP) reported double-digit revenue growth in Q1FY25, driven by North America. Operating loss narrowed. Net profit stood at ¥16B in Q1FY25 (Q1FY24 net loss: ¥39B).
• Robust performance of key products, gross margin expansion, achievement of sizable benefits from the North America business restructure, and streamlining R&D initiatives are the key positives in Q1FY25 result.
• Sumitomo is expected to revise FY25 guidance during H1FY25 result announcement. Better-than-expected performance from key drugs as well as favorable Fx should lead to upward revision of revenue guidance.

• In cumulative Q3 FY09/24, revenue was JPY13.3bn (+2.1% YoY), operating profit JPY1.1bn (-17.2% YoY), and net income JPY752mn (-16.8% YoY).
• Media Information business revenue was JPY4.5bn (+7.1% YoY), segment recurring profit JPY464mn (+39.0% YoY) in cumulative Q3 FY09/24.
• Revised full-year FY09/24 forecast: revenue JPY17.8bn (+2.3% YoY), operating profit JPY1.4bn (-9.9% YoY), net income JPY989mn (-15.0% YoY).

• Q1 FY03/25 sales were JPY24.2bn (+11.2% YoY), operating profit JPY2.7bn (+11.3% YoY), and net income JPY2.0bn (+10.9% YoY).
• Research and Industrial Instruments sales JPY19.7bn (+10.9% YoY), Scientific sales JPY14.6bn (+10.0% YoY), Industrial sales JPY5.1bn (+13.6% YoY).
• E-commerce sales JPY8.0bn (+23.3% YoY), overseas business sales JPY1.2bn (+4.6% YoY), China sales down 7.3% YoY.

• Orders: JPY45.4bn (+5.7% YoY), Revenue: JPY43.4bn (+26.1% YoY), Operating Profit: JPY2.1bn (+203.8% YoY), Net Income: JPY1.1bn (+144.9% YoY).
• Revenue rose due to increased sales of plant equipment, lithium-ion battery manufacturing equipment, and molding machines.
• Revenue declined YoY in electronic component manufacturing equipment, automotive industry equipment, and medical device manufacturing equipment.

• Net sales: JPY50.8bn (-15.9% YoY); Operating income: JPY2.6bn (-15.4% YoY); Ordinary income: JPY572mn; Profit: JPY429mn.
• Electronic Devices business: Net sales JPY40.6bn (-17.7% YoY); Operating income JPY2.7bn (-11.2% YoY); decreased semiconductor demand.
• Foreign exchange losses: JPY1.1bn due to yen depreciation; minor impact on consolidated earnings for FY03/25.

• Q1 FY03/25 sales were JPY1.5bn (-11.9% YoY) with an operating loss of JPY87mn and a net loss of JPY81mn.
• Sales of toiletries totaled JPY1.1bn (-13.7% YoY), hair styling products JPY302mn (-13.7% YoY), and hair coloring products JPY80mn (+53.8% YoY).
• The gross profit margin dropped 0.3pp YoY to 72.7%, and the SG&A ratio rose 11.5pp YoY to 78.6%.

• The Sep 2024 Nikkei 225 Review base date is here. As before, I see one ADD, one DELETE, one capping, and one Very Dark Horse.
• The rules are clear, but not. This causes confusion. There may be unwritten rules keeping the Very Dark Horse out til next time.
• The Nikkei Index Team announced Fast Retailing (9983 JP) would be capped. I didn’t expect that now. That means $2.2bn+ of selling 30Sep and a reverse funding trade.

• On 10 June, Sun Corp subsidiary Cellebrite DI (CLBT US)‘s SPAC sponsor True Wind Capital launched a Tender Offer for 19% of SunCorp at a premium but discount to NAV.
• The price was too low. CLBT shares rose. They lifted the TOB price by 8% to ¥4750. Still too low. It was trading there. Now they have lifted to ¥5500.
• Now a 49% premium to undisturbed, 29.4% premium to all-time high prior to the first tender. Changes in terms means this could get done. More bullish than it looks.

• The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.
• Fast Retailing (9983 JP)‘s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. 
• Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.

• True Wind has increased its partial offer for Sun Corp (6736 JP) to JPY5,500 and materially lowered the minimum number of shares to be purchased from 3.3m to 1.1m.  
• True Wind’s previous two offers were a non-starter due to an unattractive price and an onerous minimum acceptance threshold. The final offer addresses both these issues. 
• The offer will succeed due to the low minimum acceptance threshold and the 25% price uplift vs. the 19% value increase in the Cellebrite stake (since the offer announcement).

• The Bank of Japan has raised its short-term interest rate to 0.25% from 0.1% ahead of the core of consensus expectations, and BoJ plans to pare back purchases of JGBs
• We focus on those big-cap Japanese banks that are well geared into higher domestic rates through loan books and BoJ deposits, that also have lesser exposure to rising JGB yields
• We stay broadly positive on Japanese bank shares, despite their performance; we add Chiba to the buy list of Resona, Mizuho, SMFG and Concordia, whilst keeping Kyoto as a sell

• The issue of the discrepancy between disclosure documents in English highly remanded by overseas investors and actual disclosures in English by companies has not been resolved.
• Companies with the highest English language disclosure scores had superior ROE, valuation, market capitalization and foreign ownership, and corporate governance. Companies with the lowest English disclosure scores showed the opposite.
• Through overseas investor engagement, companies are likely to improve its corporate governance practices and has actually taken actions that have led to improved capital profitability.

• Daiichi Sankyo (4568 JP) announced better-than-expected Q1FY25 result, with all key parameters exceeding expectation. Q1 revenue increased 24% to ¥436B, mainly driven by 59% growth in Enhertu sales to ¥130B.
• For its approved indications, Enhertu maintained #1 market share for new patients in U.S. The drug is expected to have blockbuster status in both US and Europe this year.
• Despite a good progress in Q1FY25, especially on profitability front, Daiichi Sankyo has reaffirmed FY25 guidance. Better-than-anticipated Enhertu revenue and Fx should lead to guidance revision later this year.

• Sales reached JPY86.4bn (+5.6% YoY), operating loss was JPY236mn, recurring profit was JPY85mn, net loss was JPY140mn.
• Sales were JPY76.6bn (+6.0% YoY), operating profit was JPY1.7bn (-40.5% YoY), 7 new pharmacies opened, 2 closed.
• Sales were JPY9.9bn (-5.6% YoY), operating loss was JPY461mn, 492 products offered, 47.6% in-house manufactured products.

• Revenue: JPY12.9bn (+15.4% YoY), Gross profit: JPY4.4bn (+12.2% YoY), Operating profit: JPY2.5bn (+15.3% YoY).
• Self-Storage segment: Revenue JPY10.0bn (+17.2% YoY), Gross profit JPY3.7bn (+17.8% YoY), Operating profit JPY2.7bn (+17.5% YoY).
• Land Rights Consolidation: Revenue JPY2.1bn (+9.6% YoY), Gross profit JPY538mn (-18.1% YoY), Operating profit JPY340mn (-9.3% YoY).

• Revenue increased 45.3% YoY to JPY13.3bn, driven by a rise in deals closed and large-scale projects.
• Cost of revenue grew 51.1% YoY to JPY4.7bn, influenced by higher incentive salaries and personnel costs.
• SG&A expenses rose 16.6% YoY to JPY3.6bn due to increased rent expenses from headquarters expansion in March 2023.

• Shimano’s Q2 results exceeded expectations with revenue and operating profit significantly beating estimates despite a YoY decline.
• Full-Year revenue and operating profit guidance were revised upward, reflecting improved performance and aligning with analyst consensus.
• Our estimate for FY25 was significantly raised; despite full valuations, further recovery and potential shareholder returns offer continued bullish outlook.

• Inflation is encouraging customers to seek out discount chains, led by PPI’s Don Quijote. 
• Backed by expansion of private brand lines and more food lines, as well as higher sales to tourists, PPI has been posting record results.
• There continues to be high expectations for further growth at home and abroad.

• Historical analysis suggests that previous lows in yen or highs in dollar yen may be difficult to recapture after significant technical damage.
• The yen strength is influenced by wide US minus Japan real policy rate differentials, skewing historical results in a more yen bearish direction.
• Expectations for the upcoming BOJ meeting include a 15 basis point rate hike and a halving of bond purchases, leading to dispersion of views among investors on the timing of rate hikes.

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

• Net operating revenue: JPY9.4bn (+14.8% YoY; -5.0% QoQ), Operating profit: JPY4.2bn (+17.8% YoY; -2.8% QoQ).
• Total commissions: JPY5.2bn (+7.6% YoY; -16.7% QoQ), Brokerage commissions: JPY4.9bn (+7.2% YoY; -17.4% QoQ).
• SG&A expenses: JPY5.2bn (+12.4% YoY; -6.7% QoQ), Personnel expenses: JPY976mn (+12.2% YoY; +4.8% QoQ).

• Companies that have increased their valuations over the past year are those with higher valuations and have further increased their ROE and ROA, resulting in even higher valuations.
• The difference between the characteristics of companies whose valuations increased and those whose valuations did not change over the past year is the foreign ownership ratio.
• Companies with low foreign ownership have less access to overseas investors’ suggestions for solving individual company problems, which is why they are slow to act to improve capital profitability.

• Q1FY3/25 results indicated a slow start for earnings, despite a robust profile for sales growth at 16.5% YoY and both quarterly orders and backlog at record highs.
• The key takeaways are: 1) although reported OP fell 4.8% YoY, underlying OP growth was 4.6% YoY when restating for one-time expenses for a new office, 2) quality of earnings remains sound despite cases of project cost overruns, and 3) the sustained strong outlook for orders provides high earnings visibility.
• We believe that the direction of travel remains positive for earnings growth, given strong order visibility and as the company’s operations continue to scale.

• Adoption of new revenue recognition standards increased FY09/22 revenue by JPY2.6bn, operating profit by JPY1.0bn, and reduced order backlog by JPY11.2bn.
• FY09/23 revenue decreased by 6.8% YoY to JPY90.3bn, with operating profit down 15.8% YoY to JPY7.1bn.
• Revised FY09/24 forecast predicts revenue of JPY116.0bn (-5.0% YoY) and operating profit of JPY7.5bn (-13.7% YoY).

• Japan System Techniques Co., Ltd. (hereafter, the “Company”) posted an increase of sales and profits in all four business segments for FY2024/3.
• In particular, operating profit of the Medical Big Data business and the Global business in total, increased sharply by 49.5% YoY.
• Net sales saw an increase for 13 consecutive years, and ordinary profit for 9 consecutive years with a record high, leading to 17.8% of ROE. 

• Revenue increased 45.3% YoY to JPY13.3bn, driven by a rise in deals closed and large-scale projects.
• Cost of revenue grew 51.1% YoY to JPY4.7bn, influenced by higher incentive salaries and personnel costs.
• SG&A expenses rose 16.6% YoY to JPY3.6bn due to increased rent expenses from headquarters expansion in March 2023.

• Sales rose to JPY17.2bn (+6.1% YoY), driven by strong overseas subsidiaries and a weaker yen.
• Operating profit decreased to JPY1.9bn (-15.3% YoY) due to increased SG&A expenses and reduced high GPM LCL export cargo.
• Overseas segment sales grew to JPY6.0bn (+30.2% YoY), with solid warehouse operations in India and South Korea.

• The Kirin Holdings (2503 JP) Tender Offer to buy out minorities in Fancl Corp (4921 JP) closes today. Or at least the current one does. 
• The original deal announced was light, and the stock has traded above terms since the announcement, with one fund buying up to 7.94%.
• I expect Kirin to extend and bump next week, or bump/extend now, depending on their visibility on Fancl Q1. 

• Today after the close Stanley Electric (6923 JP) announced a salutary Q1 result which was “ahead of in-line” in most metrics towards unchanged H1 and FY guidance. 
• The company also announced a BIG on-market buyback at 8.1% of shares out, to be bought back with a delayed start over the 7.5mos starting 13 August.
• At last price, the buyback is ~10mm shares. The details are interesting and are worth a look. 

• Murakami’s entity, City Index Eleventh, and daughter reported a 5.05% position in Heiwa Real Estate (8803 JP). The shares were purchased from 24 May to 22 July.
• Murakami’s average buy-in price is JPY3,907.38, a 6.7% discount to the last close price. Recently, Simplex (the previous largest shareholder) sold its entire stake to Taisei Co Ltd (4649 JP).
• Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate the latter.

• Today, Nippon Electric Glass (5214 JP) announced an on-market buyback of up to 7.0mm shares (8.08%) spending up to ¥20bn from tomorrow through end-January 2025.
• An impressive headline, but fewer shares. Importantly, this follows a ¥20bn buyback from last November. They are moving through their MTMP more quickly than expected.
• This new buyback is worth about 25% of the inbound cross-holdings. And some of those holders plan to sell. This may be designed to let them sell in the market. 

• Fanuc reported slightly better-than-expected Q1 sales and OP forecasts, mainly due to a recovery in sales of FA equipment
• Fanuc’s results are consistent with a bottoming out of Japan’s machine tool orders in the first half of the year
• We turn bullish on the stock given the cyclical bottoming out of orders and margins. However, the stock is still not “cheap” and the company faces a number of challenges

• M3 Inc (2413 JP) reported 1QFY03/2025 results on Friday. Both revenue and OP for the quarter beat consensus estimates by 3.5% and 11.0% respectively despite earnings continue to decline.
• Medical Platform segment’s earnings have continued to decline as a result of pharma marketing whose revenues are impacted due to spending cuts by pharmaceutical companies.
• M3’s share price has declined by more than 35% YTD and we don’t see any tangible recovery in the company’s earnings as overseas and other businesses face challenges.

• Deli foods already account for 20% of all food sales in Japan but are growing fast as busier consumers demand more convenience. 
• Most food chains only offer generic items but, last month, Seven & I’s Ito-Yokado began sales of a branded range called York Deli, aiming to differentiate from competitors.
• Exclusive ranges will be a key factor as it shifts towards a focus on food but is unlikely to be enough.

• Consolidated net operating revenue: JPY17.0bn (-16.0% YoY; -2.7% QoQ), with commissions received at JPY8.7bn (-11.5% YoY; +10.0% QoQ).
• US segment: Net operating revenue USD74.1mn (+4.5% YoY; +0.7% QoQ), SG&A expenses USD59.4mn (-1.1% YoY; -4.5% QoQ).
• Crypto Asset segment: Net operating revenue JPY3.1bn (+164.3% YoY; -29.6% QoQ), SG&A expenses JPY2.5bn (+55.3% YoY; +22.4% QoQ).

• Revenue increased by JPY5.1bn (+2.9% YoY), driven by growth in the Furniture and Stationery Businesses.
• Operating profit declined by JPY97mn (-0.6% YoY) due to lower profit in the Interior Retail business and increased adjustments.
• Gross profit margin rose to 39.9%, while the SG&A expense ratio increased to 31.1% due to strategic spending.

• Revenue: JPY23.1bn (-4.8% YoY), Operating profit: JPY1.6bn (-51.1% YoY), Recurring profit: JPY2.1bn (-48.9% YoY).
• Domestic revenue: JPY20.9bn (-4.0% YoY), Overseas revenue: JPY2.2bn (-11.9% YoY), Medical care business revenue: JPY7.9bn (-13.6% YoY).
• Nursing care business revenue: JPY14.3bn (+2.5% YoY), Health promotion business revenue: JPY2.2bn (-12.2% YoY).

• Several weeks ago, ENEOS Holdings (5020 JP) launched its long-delayed Tender Offer for Tatsuta Electric Wire & Cable (5809 JP) with no bump despite the time value of money. 
• It said the price reflected Tatsuta’s value sufficiently. A week ago on the 19th, ENEOS extended the Tender Offer, likely because they didn’t have the shares. Price was still “sufficient.”
• I suggested it might not be; I didn’t expect a big bump, but caveated earnings. Friday produced great Q1 earnings, and a bump from ¥720/share to ¥780/share. 

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, the coming week will see Sanil Electric (062040 KS) list, while Akums Drugs and Pharmaceuticals books will open and Ola Electric too might be launched.
• On the placement front, the past week was relatively quiet after a few hectic weeks.

• It is very difficult to ensure the independence and transparency of a committee when the board of directors is staffed with people who are aligned with the president’s wishes.
• Companies with high ROE have superior corporate governance, due to effective overseas investor’s engagement, while companies with low ROE show unclear policies for improving ROE, despite having formalized board practice.
• To improve the effectiveness of the board, companies should appoint people to the board who will help expand the value of the company, and use engagement with overseas investors etc.

• Sales increased by JPY2.2bn YoY, driven by higher sales in Career and Elderly Care and Disability Welfare Operators segments.
• Operating profit declined by JPY729mn YoY due to higher advertising and other expenses exceeding sales increase.
• Kaipoke member locations increased to 29,900 (+10.5% YoY) and elderly care facilities to 51,950 (+12.2% YoY) as of July 1, 2024.

• On 24 July, 3D Investment Partners proposed to privatise Tohokushinsha Film (2329 JP) through a tender offer at JPY600-650 per share. A special committee will evaluate the proposal. 
• 3D’s privatisation plan, in its current terms, is a non-starter as the price is low, and its activism campaign has so far been met with the Board’s scepticism.
• The possible scenarios are that a white knight emerges to buy 3D’s stake/launch a counteroffer, 3D bumps the offer price, or the Board introduces a more ambitious MTM plan.

• If further restructuring can be avoided, profitability should return to an acceptable level while sales growth continues. 
• The decline of EV prices has probably run its course and global demand for factory automation continues to rise despite weakness in China.
• Projected valuations are at a 10-year low. Investor attention can now shift to economic and operating risks.

• 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: Sanil Electric (062040 KS) and Hyundai Motor India (1342Z IN) IPOs.
• Event-Driven developments: Fancl Corp (4921 JP), Furukawa Battery (6937 JP), Sun Corp (6736 JP), Canvest Environmental Protection Group (1381 HK), CPMC Holdings (906 HK), Greatview Aseptic Packaging (468 HK). 

• The high percentage of foreign ownership is a characteristic of companies that have improved capital profitability and increased valuations, which is effective for overseas investor engagement.
• If the system is revised to help collaborative engagement and the identification of substantial shareholders, some of the challenges will be eliminated for both investors and the company.
• To make the engagement more effective, investors should increase active funds and companies should decrease cross-shareholdings.

• ENEOS Holdings (5020 JP) has increased the Tatsuta Electric Wire & Cable (5809 JP) tender offer price by 8.3% to JPY780 and extended the offer period to 19 August.
• Eneos tried to get the required acceptances by refusing to bump and subsequently extending the offer period. The tactics failed as minorities required a bump due to the market re-rating. 
• While the revised offer remains light, the token bump and deal fatigue should suffice to nudge the marginal vote to accept. At the last close, the gross/annualised spread was 5.0%/85.8%.

• Revenue increased to JPY3.1bn (+8.3% YoY), with operating profit at JPY149mn (+173.2% YoY) and net income at JPY271mn (+127.3% YoY).
• Revenue from plating chemicals for PCBs and semiconductor substrates was JPY1.5bn (+75.1% YoY), with stable sales for generative AI.
• Revenue from plating chemicals for connectors was JPY444mn (-27.7% YoY), while revenue for lead frames was JPY1.1bn (-12.7% YoY).

• Since the release of 3Q24 (YE August) results on July 10, the share price of Saizeriya (7581 JP) is up nearly 10%, greatly outperforming Nikkei during the same time frame. 
• The 3Q24 results showed that Japan’s operating profit finally improved, while China remained solid. 
• The company is currently trading at 24x 2025E PE with strong earnings growth.

• Arco Graphics is a strategic reseller of industrial CAD and semiconductor fab ERP software in Japan, representing Dassault Systems and IBM
• Despite consistent EBIT growth over the past 7 years, the company’s valuation remains attractive for investors
• Expected to announce better-than-guided results for Fiscal 2023 in May, along with an improved shareholder returns strategy

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Dai Nippon Printing is a 150-year-old Japanese industrial conglomerate with a focus on niche growth businesses and a history of cross-shareholding sales and share repurchases
• The company has a dominant position in its highest earning segments and is undervalued at 5-6x forward P/E, potentially offering significant upside in the future
• Originally founded as Shueisha in 1876, DNP has evolved from a printing company to a diversified business with a strong emphasis on research and development.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We need to watch carefully to see whether cash flow will subsequently increase in the projects that the CB issuers have invested their proceeds in.
• Share prices of companies that announce equity financings, including CBs, usually decline. Besides the dilution, another aspect is the effect of the company’s announcement of the sale of its shares.
• In the case of CBs, the company should keep in mind that it sold the conversion rights of its shares for less than their actual call option value.

• 3D Investment Partners, known to be activist-ish-y, purchased 18% of Tohokushinsha Film (2329 JP) in the 12 months to March 2024. They started a public activism campaign in February.
• The company has started down a better governance track, but now 3D has made a takeover proposal to Tohokushinsha, which will consider it under Special Committee.
• There are a couple of possible outcomes here which are interesting to consider. There are no other spoilers possible except those friendly to founders and management.

• Timee Inc (215A JP) raised US$300m in its Japan IPO. The IPO had been a 100% secondary selldown by existing shareholders.
• Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
• We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.

• Revenue increased to JPY5.1bn (+7.3% YoY), with operating profit at JPY1.6bn (+171.7% YoY) and net income at JPY1.1bn (+32.6% YoY).
• Capital gains reached JPY2.5bn (+33.2% YoY), with JPY570mn from listed shares and JPY1.9bn from unlisted shares.
• Total investment in Q1 FY03/25 was JPY9.9bn, with JPY5.7bn for domestic VC investments and JPY4.2bn for the US.

• Orders for 1H FY12/24 totaled JPY7.1bn (+27.0% YoY), with Measuring Equipment at JPY2.3bn (+14.9% YoY) and Custom Order Test Equipment and Services at JPY4.8bn (+33.7% YoY).
• Operating loss expanded to JPY478mn, recurring loss to JPY457mn, and net profit attributable to owners of the parent was JPY884mn due to a JPY1.9bn gain from the sale of fixed assets.
• Full-year FY12/24 forecast: Sales JPY12.5bn (+8.3% YoY), Operating profit JPY300mn (+115.8% YoY), Recurring profit JPY330mn (+61.8% YoY), Net income JPY1.6bn (+253.9% YoY).

• Sales rose 5.3% YoY to JPY318.9bn, driven by strong SI and IT infrastructure services; operating profit fell 3.9% YoY.
• FY12/24 sales forecast revised to JPY650.0bn (+6.6% YoY) due to Primagest acquisition and strong IT solutions performance.
• Segment forecasts: Consumer sales flat, Enterprise sales JPY236.2bn (+7% YoY), Professional sales JPY44.0bn (+9% YoY).

• Proactiveanddiversifiedapproachtogrowth–SanyoTrading continues to execute its transformation strategy toward generating sustainable growth, underlined by its key principles in its latest long- term plan ‘SANYO VISION 2028’.
• While sales mix improvement remains a core theme to raise profitability, we believe the company is taking a multifaceted approach to generating growth through margin enhancement efforts, sales volume expansion, and earnings-accretive M&A.
• With this, management has access to different growth levers, as the business model is inevitably influenced by economic cycles.

• Q1 FY03/25 revenue was JPY3.9bn (+14.5% YoY), operating profit JPY700mn (+63.6% YoY), and net income JPY455mn (+71.1% YoY).
• Revenue by product category: conventional software JPY156mn (-55.3% YoY), cloud services JPY2.2bn (+36.4% YoY), maintenance services JPY957mn (+14.1% YoY).
• The company revised PCA software prices in July 2023 and will end packaged software sales by March 2024.

• Today after the close, Canon Marketing Japan (8060 JP) announced a large Tender Offer Buyback from its parent company Canon Inc (7751 JP). Canon will tender 20mm shares (15.42%). 
• This is a very capital efficient way to conduct a buyback from a parent, and an even better way for a parent to sell shares of a sub. 
• This corporate action will reduce equity by 20%, and partially clean up the messy inter-company transactions which should not exist.