Japan

• Shift Inc (3697 JP) runs a software quality assurance testing business. 400% revenue growth in 5 years, but this year to Aug25 is “only” 17.5% according to Q3 results guidance.
• It was a “growth stock” for a long while, and large long-only growth investors flocked to the name. In the past several months many have exited. 
• The stock will be included in the Nikkei 225 Average next Tuesday. The supply/demand dynamics here to there are interesting. Afterwards they may be more interesting.

• Today after the close, the Soft99 Corp (4464 JP) Board of Directors came out AGAINST the Effissimo ¥4,100/share counterbid to the original ¥2,465/share MBO.
• “The Special Committee advised that the Tender Offer would not contribute to the enhancement of the Company Group’s corporate value, nor would it be fair to the Company’s general shareholders.”
• ¥2,465 is fair. ¥4,100 is not fair. Absolute hogwash. Unmitigated blatherskite. Pure trumpery. Codswallop, buncombe, taradiddle, balderdash, and nincompoopery too. I expound below.

• On 10 September, CVC announced a family-led MBO of well-known Japanese hair-care/cosmetics firm Mandom Corp (4917 JP). Agreed, supported, recommended, for a start date end-September. It was also too light.
• I suggested the open-ish register could trigger activists. The stock opened just above terms post-announcement and then traded higher. Shares fell today but it is still 15% through terms. 
• Hibiki Path Advisors wrote a strong letter. Murakami announced a 6.67% stake yesterday, 8.39% today. But that’s 5 days old. Today, the company announced the TOB starts tomorrow. Still fun. 

• The Soft99 Corp (4464 JP) Board has, unsurprisingly, opposed the Effissimo offer for several reasons. Notably, they do address the huge price disparity between the two offers. 
• While most of the reasons to justify the opposition are weak, the Board unexpectedly notes that as of 24 September, the MBO retained acceptances to satisfy its minimum tendering condition. 
• Despite the significant premium of the Effissimo offer, this development suggests that the current acceptances for the MBO are sticky, thereby increasing the likelihood that Effissimo’s offer will fail. 

• Tekscend Photomask (429A JP) (TP), a manufacturer and distributor of semiconductor photomasks, aims to raise around US$830m in its Japan IPO.
• TP is a global provider of photomasks and related support services. It has been the leader in the merchant photomask market in terms of sales since 2016.
• In this note, we talk about the not-so-positive aspects of the deal.

• Tekscend Photomask (429A JP) is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$832 million). Pricing is on 30 September.
• In Tekscend Photomask (429A JP) IPO: The Bull Case, I highlighted the key elements of the bull case. In this note, I outline the bear case.
• The bear case rests on its worrisome revenue growth trends, weakening lead revenue indicators, cash burn, and large post-IPO share overhang. 

• Sony Group Corporation (6758) is planning to spin off 80% of its stake in Sony Financial Group Inc. (8729) on September 29, 2025.
• Sony Financial Group Inc. is the financial services arm of Sony, comprised of three main businesses
• The spin-off will generate ~ ¥100BN in the current fiscal year and pay a ¥50BN annual dividend.

• Earnings Growth: Non-resource engines (Food, FamilyMart, ICT, Textiles) compounding at double-digit rates; mid- to high-single-digit EPS growth outlook.
• Valuation: Trades at ~13× FY2026E P/E, in line with peers, offering steady TSR without a valuation premium.
• Capital Returns: ¥200/share dividend + ¥150 bn buybacks underpin 40–50% payout; EPS uplift from share reduction.

• Companies that responded that they disclosed their annual securities reports prior to the AGM in response to investor needs are considering postponing the timing of their shareholders’ meetings.
• Annual securities reports are legal documents, and false statements are punishable by law, so the level of authenticity differs from other documents. It takes time to read them for AGM.
• There needs to be an increase in the number of investors who carefully read annual securities reports and use them to make investment decisions.

• As can be seen from the graph below, the major JPY 12.6bn capex initiative to secure production capacity to enable consolidated net sales to increase by 1.5x (announced in May-2022) peaked in FY24/3 and depreciation peaked in FY25/3.
• With confirmation of the upturn in the silicon cycle, earnings have entered a full-fledged recovery, with Q1 OP posting a high 41% progress ratio relative to the 4-year historical average of 27%. The key takeaway from the graph below is the strong recovery in EBITDA.
• The current high P/E is a common feature at the start of cyclical recoveries, while EV/EBITDA has only just returned to its long-term historical average (see P21). 

• In a fairly common pattern, the founding family (38% ownership) of Paramount Bed Holdings Co Lt (7817 JP) have launched an MBO. 
• It is too cheap at 4.2x adjusted EV/EBITDA (one could argue it is 5.0x but they also have net receivables) for such a ubiquitous brand and growth. 
• Soft99 Corp (4464 JP) may have been a one-off. Maybe not. People may look at this situation through that lens. It deserves that look. 

• Paramount Bed Holdings Co Lt (7817 JP) has recommended an MBO at JPY3,530, a 32.2% premium to the last close price. The offer represents a ten-year high. 
• The offer is below the midpoint of the special committee IFA’s DCF valuation range and its requested price. Hibiki has previously suggested an intrinsic value of JPY4,929.  
• The setup shares several traits with the Mandom MBO, and has the potential for a bump, particularly if an activist emerges as a substantial shareholder or agitates for better terms.   

• Tekscend Photomask (429A JP) is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$832 million). Pricing is on 30 September.   
• Tekscend, which was carved out of Toppan Printing (7911 JP) in 2022, is owned by Toppan (with a 50.1% stake) and Integral (5842 JP) (with a 49.9% stake).   
• The bull case rests on its leading market position, attractive market opportunity, stable underlying margins, net cash position, and attractive dividend policy. 

• Murakami reported a 7.14% ownership ratio in Mandom Corp (4917 JP). The average buy-in price of JPY2,070.73 per share is 5.6% above the JPY1,960 CVC-sponsored MBO.
• Murakami undoubtedly shares Hibiki’s concerns. On 15 September, Hibiki issued an open letter questioning the rationale behind the Board’s recommendation of a CVC-sponsored preconditional MBO. 
• With the emergence of Murakami, CVC and the founding family’s options narrow. The need for satisfaction of the precondition buys time, but a bump seems inevitable. 

• Copper earnings leverage: Equity-method stakes in Collahuasi and Anglo Sur mean every +10% copper move adds ~¥25–30 bn net income (~3% EPS), giving Mitsui underappreciated upside torque.
• LNG stability & cash flows: Long-term contracts in Mozambique, Cameron, Qatar, and Sakhalin underpin resilient earnings and support ¥400 bn annual buybacks (~5% equity).
• Valuation: P/B discount vs Itochu has closed (~1.1× each), but Berkshire’s ≥10% stake enforces capital discipline; TSR outlook is 6–9% CAGR through FY28, with copper strength providing double-digit upside.

• Tekscend Photomask (429A JP) (TP), a manufacturer and distributor of semiconductor photomasks, aims to raise around US$830m in its Japan IPO.
• TP is a global provider of photomasks and related support services. It has been the leader in the merchant photomask market in terms of sales since 2016.
• In this note, we talk about the positive aspects of the deal.

• Shiga Bank is well-leveraged to Japan’s rate hike cycle and regional revitalization strategy, with higher market-rate loan exposure than peers, enabling stronger earnings sensitivity to rising rates.
• Core profitability is improving, driven by double-digit NII growth and rising NIMs. A CET1 ratio of 14.0% supports capital returns, selective M&A, and ¥700bn in planned loan growth through 2029.
• Despite a +63% YTD rally, shares remain undervalued at 0.7x P/B. Our target of ¥7,850/share implies ~+20% upside, supported by improving RoE, operational efficiencies, and capital deployment.

• Cycle turning: Q1 FY25 marked the trough; Q2 guidance implies +30% revenue and +46% OP rebound, with Q3 set to extend the recovery.
• Enterprise SSDs anchor profits: ~70–75% of EBITDA tied to AI/cloud workloads, cushioning volatility in PCs and smartphones.
• Even after a ~50% rally since September, Kioxia trades at ~5–6× EV/EBITDA vs. peers at 9–12×; sponsor selldowns and NAND ASP volatility could test the rally.

• POSCO Holdings (005490 KS) is looking to raise up to US$169m via selling some of its stake in Nippon Steel Corporation (5401 JP).
• This deal represents 1.5 days of ADV representing around 0.7% of shares outstanding.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Context: The Toyota Motor (7203 JP) vs. Suzuki Motor (7269 JP) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
• Highlights: Going long Suzuki and short Toyota targets a 9% return.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Leading Market Position with Diversified Operations: Kajima is one of Japan’s ‘Big Five’ general contractors, possessing a dominant position in the domestic construction market. The company is well-diversified across civil engineering, building construction, and a growing real estate development business, which provides a buffer against the cyclicality of the construction sector.
• Favorable Industry Tailwinds: The Japanese construction market is supported by robust public and private investment. Key drivers include large-scale urban redevelopment projects, government spending on national resilience and infrastructure renewal, and growing demand for advanced facilities like data centers and logistics centers.
• Shareholder-Focused Capital Allocation: Kajima has demonstrated a strong commitment to shareholder returns, evidenced by a 3-year dividend CAGR of over 21%. This is supported by a strategy to enhance profitability by focusing on high-margin projects and improving investment efficiency in its real estate development arm.

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• SBI Holdings is a major Japanese financial services conglomerate with a diversified business portfolio spanning Financial Services, Asset Management, Private Equity Investment, Crypto-assets, and Next Generation Business. The company is aggressively pursuing a growth strategy centered on digital transformation, strategic acquisitions, and expansion into new technological frontiers like Web3, AI, and semiconductors.
• The company has demonstrated strong top-line growth, with revenue surpassing ¥1 trillion for the first time in fiscal year 2023. Profitability is also on an upward trend, driven by its core financial services segment, particularly SBI Shinsei Bank, and a significant turnaround in its private equity investment business.
• SBI’s forward-looking strategy involves significant investments in high-growth areas, both domestically and internationally, with a particular focus on Southeast Asia and the Middle East. The company aims to generate 20-30% of its consolidated profit from overseas businesses in the medium term.

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• Privatization Marks New Chapter: After 74 years as a publicly traded entity, Toshiba was delisted in December 2023 following a successful $13.5 billion buyout by a consortium led by Japan Industrial Partners (JIP). This move ends a tumultuous period marked by accounting scandals, corporate governance crises, and battles with activist investors, allowing management to focus on a long-term revitalization strategy away from public market pressures.
• Strategic Refocus on Core Operations: Having divested numerous non-core businesses such as laptops, medical equipment, and home appliances, the new strategy centers on higher-margin and critical technology sectors. Key focus areas include energy systems, infrastructure, power semiconductors, and data-driven digital solutions, aiming to leverage the company’s technological strengths in areas critical to national security and global trends like decarbonization and digitalization.
• Path to Recovery Fraught with Challenges: Despite the potential benefits of privatization, Toshiba faces significant hurdles. The company is still recovering from a legacy of financial mismanagement and reputational damage. It operates in highly competitive global markets and must execute a complex turnaround plan to streamline operations, manage its debt, and regain its position as an innovative leader.

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• Technopro Holdings is the subject of a tender offer from private equity firm Blackstone at ¥4,870/share, which represents a significant premium but is considered potentially undervalued by some market observers.
• As a leading technology-focused staffing firm in Japan, the company is well-positioned to benefit from the country’s structural shortage of skilled engineers and increasing demand for digital transformation.
• Significant uncertainty surrounds the success of the Blackstone acquisition due to a high tender threshold of 66.67% and a large passive shareholder base, creating a key risk for investors at the current price.

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• ASIRO is a high-growth player in the burgeoning Japanese legal tech market, primarily operating online media platforms that connect consumers with legal professionals. The company is capitalizing on the digitization of Japan’s legal industry.
• The company has demonstrated impressive revenue growth, with a 3-year CAGR of 45.66%. However, this top-line growth has been accompanied by significant earnings volatility, including a net loss in the fiscal year ending January 2023, and a sharp decline in net income and EPS over the past 3 and 5 years.
• While the company’s growth and momentum scores are high, its value and profitability metrics warrant caution. The business model is sensitive to changes in online marketing costs and competition, which represents a key risk for investors.

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• Rakuten is at a strategic inflection point, with its established and profitable FinTech and E-commerce segments providing a stable foundation while the high-investment Mobile segment continues its protracted journey toward profitability. The core “Rakuten Ecosystem”strategy, which fosters user loyalty and cross-selling, remains a key competitive advantage.
• The Mobile segment’s persistent losses are the primary drag on group profitability and the main source of investor concern. However, the segment has shown signs of improvement, reaching monthly EBITDA profitability for the first time in December 2024 and targeting full-year EBITDA profitability in 2025.
• Future growth hinges on three key factors: (1) achieving sustained profitability in the Mobile segment to alleviate financial pressure on the group, (2) continued strong growth and margin expansion in the high-margin FinTech division, and (3) maintaining market leadership in the domestic e-commerce space against formidable competitors like Amazon.

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• Dominant Market Position with Strong Cloud Growth: Oracle Corp Japan is a leading player in the Japanese enterprise software market, particularly in database management systems where it holds a significant market share. The company is successfully leveraging its large installed base to drive strong growth in its cloud services, including Oracle Cloud Infrastructure (OCI) and Fusion Cloud applications, which are key drivers of future revenue.
• Robust Financials and Shareholder Returns: The company exhibits a strong financial profile with consistent revenue growth, high profitability margins, and a debt-free balance sheet. This financial strength allows for stable dividend payments and positions the company to invest in future growth opportunities, such as AI and multi-cloud strategies.
• Intensifying Competition and Slower Overall Growth: While cloud revenue is growing, the overall revenue growth rate lags the broader software industry. The company faces intense competition from hyperscale cloud providers like AWS, Microsoft Azure, and Google Cloud in the Japanese market. A deceleration in the cloud services growth rate has been noted as a potential risk to its competitive momentum.

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• Ibiden stands as a dominant force in the high-performance IC substrate market, strategically positioned to capitalize on the secular growth in AI and data centers through its key relationship with Nvidia.
• Recent financial performance has been robust, with Q1 FY25 results showing significant year-over-year growth, prompting management to upgrade the earnings outlook for FY25-27.
• Despite strong growth prospects and a leading market position, the company trades at a valuation discount to high-growth AI peers, presenting a compelling Growth at a Reasonable Price (GARP) opportunity, albeit with risks related to customer concentration and competitive pressures.

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• Profitability Surge Driven by Nuclear Restarts: Kansai Electric Power (KEPCO) has seen a dramatic recovery in profitability over the past two fiscal years, primarily due to the progressive restart of its nuclear power plants. This has significantly reduced its reliance on expensive imported fossil fuels, leading to substantial margin improvement and record net income.
• Strategic Focus on Decarbonization and Growth: Management is pursuing a dual-pronged strategy of ensuring a stable energy supply through its nuclear assets while aggressively expanding its renewable energy portfolio. The company has laid out a “Zero Carbon Vision 2050″and plans significant investments in offshore wind and other renewables to drive future growth.
• Persistent Corporate Governance and Regulatory Risks: Despite efforts to reform, KEPCO has a history of significant corporate governance and compliance issues, which remain a key concern for investors. The company operates in a highly regulated industry, making its earnings susceptible to changes in government energy policy, tariff structures, and stringent safety standards for its nuclear operations.

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• Diversified Business Model Mitigates Cyclicality: Daiwa House Industry‘s strength lies in its multifaceted business portfolio, spanning single-family houses, rental housing, condominiums, commercial and business facilities, and environmental energy. This diversification helps to cushion the company against downturns in any single segment of the construction and real estate market.
• Strong Foothold in a Mature Market with Pockets of Growth: While Japan’s overall population is declining, Daiwa House is well-positioned to capitalize on key growth areas. These include the rising demand for logistics facilities driven by e-commerce, the need for modern healthcare and nursing facilities for an aging population, and urban redevelopment projects. The company is also expanding its overseas operations to tap into global growth.
• Commitment to Sustainability and Innovation: Daiwa House has placed a strong emphasis on environmental initiatives, such as developing zero-energy consumption housing and investing in renewable energy. This focus on sustainability not only addresses societal needs but also enhances the company’s brand image and long-term competitiveness. Their use of precast concrete technology also allows for reduced construction times and costs.

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• In Friday’s Monetary Policy Statement, the BOJ announced it would start selling down its holdings in ETFs and J-REITs at the pace of ¥620bn and ¥5.5bn/year, respectively. BIG NEWS!
• That is US$17mm of ETFs and US$150k of J-REITs per day. The BOJ suggests it is 0.05% of volume per day. That’s close. SMALL EFFECT. 
• Given ¥15trln of buybacks and ¥5trln+ of dividend reinvestment + NISA account buys, plus ¥trlns of cross-holding selldowns/year, this is a total nothingburger, even if they up the pace.

• Effissimo has steadily increased its Pacific Industrial (7250 JP) stake to 7.0 million shares or a 12.17% ownership ratio. The most recent purchases were at an average price of JPY2,616.08. 
• Effissimo is taking contrasting approaches to low-ball MBOs. For Soft99 Corp (4464 JP), Effissimo has launched a hostile offer, while for Pacific, Effissimo has chosen to agitate for better terms.
• The offer closes on 24 September. While a bump is the most likely scenario, the share price is 30% higher than the offer price, suggesting limited upside. Take profits. 

• Softbank Group (9984 JP) performed a strong 1-week rally 2 weeks ago, then went marginally higher. The stock is OVERBOUGHT according to our models, but the pattern is bullish. 
• We see two possible scenarios: a) the stock stalls and pulls back this week or b) it keeps rallying towards 20850.
• The current pattern had rallies lasting up to 5 weeks in the past, so Softbank Group (9984 JP) could rally 2 more weeks, and get closer to 20850.

• Aeon, Japan’s largest retail group, is accelerating business reforms across supermarkets, drugstores, private brands, apparel, e-commerce, and mall facilities.
• It is also investing heavily in customer experience and operational efficiency.
• All of which is in contrast to the beleaguered rival, Seven & I, which has fought off a bid but at the expense of significant market share.

• The ex-date for Sony Financial Group (8729 JP)‘s spinoff from Sony Corp (6758 JP) is 29 September. There will be passive flows at the close on the day.
• There will be no selling from the TOPIX Index and Fglobal trackers. There will be selling from Nikkei 225 (NKY INDEX) trackers and potentially from Mglobal trackers.
• Sony Financial Group (8729 JP) has announced a buyback of up to 1bn shares (13.99% of shares out) over the next year and that will support the stock.

• 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), Smart Share Global (EM US), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Oneconnect Financial Technology (6638 HK), Joy City Property (207 HK).
• Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), PointsBet Holdings (PBH AU), Mandom Corp (4917 JP), Humm Group (HUM AU), Fuji Oil Co Ltd (5017 JP).

• Ibiden is transitioning from a cyclical electronics supplier to a core AI infrastructure enabler, with Nvidia-linked package substrates at the heart of its growth strategy.
• Management expects AI substrate demand to nearly double in FY25 and is targeting a 150% production increase by 2027, underpinned by the Ono plant ramp from next month.
• Despite ~18–19% EPS/EBITDA CAGR through FY27 and margins comparable to high-premium peers, Ibiden still trades at mid-tier multiples (21× forward P/E, ~6× EV/EBITDA), leaving scope for re-rating.

• Hamee reported earnings on September 12, and the stock traded down ~6%.
• The headline earnings looked awful but they included many one time and/or non cash expenses.
• To me, the underlying business looks strong. The spin-off is on track for early November, and I expect it to serve as a hard catalyst to drive shares higher.

• SanBio Co Ltd (4592 JP) incurred ¥1.3B R&D expenses (+31% YoY) in H1FY26 related to receiving approval of partial changes to the items approved for manufacture and marketing for Akuugo.
• Operating loss went up to ¥1.9B in H1FY26 from ¥1.6B in H1FY25. SanBio revised FY26 guidance of operating loss to ¥3.9B (vs ¥3.5B) and net loss to ¥4.0B (vs ¥3.6B).
• Partial change application already filed and the approval is expected in H2FY26. Plans to negotiate with regulatory authorities in Japan and US toward new clinical trials for chronic ischemic stroke.

• Every year it’s the same trade. But sometimes it is not. This year it is Friday and Monday. Or not. Historically, the day before ex-date and ex-date see outright performance.
• The month-end and quarter-end bring big flows, or not, depending on how things have gone. This year they have gone well for equities, so odds are flows are smaller.
• Over the past 10 years or so, the two-day return on the March trade is pretty good. The September trade appears to be more mixed. 

• I tally 37 – mostly firm, mostly Asia-Pac – arb transactions currently being discussed and analysed on Smartkarma.
• No new deals were discussed on Smartkarma this week. Although ANE Cayman Inc (9956 HK) and Emeco Holdings (EHL AU) appear to be in the crosshairs. 
• Key updates/news took place on SmartPay Holdings (SMP AU), Humm Group (HUM AU), Jinke Smart Services (9666 HK), Shibaura Electronics (6957 JP), Soft99 (4464 JP), and Ci Medical (3540 JP).

• It’s true that measures to raise P/B that focus on strengthening shareholder returns are unpopular with investors, while excess cash on hand should be returned to shareholders under stagnated ROE.
• Both bond and equity investors are focused on the future cash flow a company will generate, and increasing cash flow is consistent with the goals of a public company.
• If a company can’t use cash reserves to increase corporate value, it should either return excess cash to shareholders or change to a manager that can use cash for growth.

• Like all the big apparel firms, TSI sees diversification as one of the few ways to find growth in a contracting market. 
• It has the cash to do this and has just bought Daytona, the respected operator of the Freak’s store chain.
• It will use its access to capital to accelerate expansion for new fashion chains.

• On August 7, YUKIGUNI FACTORY CO., LTD. (hereinafter, the Company) announced its consolidated financial results for Q1 FY2026/3 (April–June).
• Revenue decreased 1.8% YoY to JPY 7,284 mn, while core EBITDA fell 15.5% YoY to JPY 575 mn and core operating profit dropped 78.6% YoY to JPY 22 mn.
• Due to seasonality, Q1 and Q2 are non-demanding periods for mushrooms, and significant earnings progress is difficult to expect.

• Kokusai Electric (6525 JP) was IPOed too cheap in 2023 after a couple of years in the wilderness and an aborted private sale effort, blocked on antitrust grounds. 
• It nearly tripled, there was an offering announced at ¥5,000+ priced ¥4,500+. Shares fell back to IPO price, then bounced, and we got a July follow-on offering at ¥3,000+.
• I suggested here the back end could be squeezy. It was for a hot minute, then it wasn’t. Now the stock is up 50% in 2 weeks. Watch out!

• Yesterday, Soft99 Corp (4464 JP) announced a slight change in its “Target Opinion Document” after the MBO Bidco extended its TOB by 8 days the day before. 
• The detail was not in the MBO Bidco extension. It was just revealed in an added note on p3 of the Target Opinion. 
• That details matters A LOT to people looking at the Effissimo Overbid. The company’s Board has some serious work ahead. 

Key points (machine generated)

• Integral is a leading Japanese private equity firm with JPY400 billion in assets, focusing on mid-cap investments of $100-$150 million.
• The firm has a strong track record with 27% gross IRR and 2.8x gross MOIC since 2010, and its latest Fund IV was oversubscribed at JPY250 billion.
• Following a public offering in September 2023, Integral’s shares are trading at JPY2700, appearing undervalued with a P/E of 5.5x and expected solid performance in 2025.

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• Completion of China DIA-BURS recall removes major earnings overhang, with ¥1.2bn FY25 profit impact now fully reflected
• US growth accelerating through MST partnership targeting 10–30% share in ophthalmic knives
• Strong balance sheet with ¥17bn cash offers capacity for strategic investment & cash allocation under new Medium-Term Plan

• Engineer dispatching company aiming to become a technician support platform company COPRO-HOLDINGS. Co., Ltd. (hereafter, the Company) has achieved sales growth for the past 19 years since its establishment, with its construction and plant technician dispatching business accounting for 89.1% of total sales.
• It has been growing its business by supporting diverse work styles and career development for engineers.
• The Company focuses on highly efficient technician hiring by operating its own recruiting websites and implementing a rigorous hiring process. 

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Softbank Group
• UST yields rose 5-7 bps yesterday, unwinding earlier declines in the aftermath of the Fed’s widely expected 25 bps rate cut. This was as Chairman Jerome Powell struck a cautious tone during the press conference and signalled less support for larger rate decreases.
• The yield on the 2Y UST was up 5 bps at 3.55%, while the yield on the 10Y UST climbed 6 bps to 4.09%. Equities retreated slightly, with the S&P 500 and Nasdaq declining 0.1% and 0.3%, respectively.

• Takamiya (hereafter, the Company) reported net sales of JPY 9,904 mn (+1.6% YoY), operating profit of JPY 204 mn (-22.2% YoY), ordinary profit of JPY 101 mn (-70.5% YoY), and profit attributable to owners of parent (hereafter, net profit) of JPY 4 mn (-97.8% YoY).
• Gross profit rose to JPY 3,259 mn (+6.3% YoY), and the gross profit margin improved from 31.4% in the same period last year to 32.9%.
• On the other hand, investments in human capital and capital expenditures led to a rise in SG&A expenses, resulting in a decline in the operating profit margin from 2.6% to 2.0% YoY. 

• On 15 September, Hibiki Path Advisors issued an open letter questioning the rationale for the Mandom Corp (4917 JP) Board to recommend a CVC-sponsored preconditional MBO at JPY1,960 per share. 
• Hibiki opines that the MBO is being done at the wrong price (Hibiki’s value is JPY3,050). Some of Hibiki’s criticisms are valid, while others are not.
• CVC’s initial approach will wait for precondition satisfaction and secure additional irrevocables. However, this is a stopgap measure, and a bump is likely to occur.

• The Nikkei 225 (NKY INDEX) reached 44790 on Wednesday, this is the 3rd week up in a row for the index, this market is OVERBOUGHT.
• The outlook remains bullish, the forecast is for a pullback, followed by another leg up.
• This insight’s goal is to help you figure out where to cover your LONG Nikkei 225 positions, and where to add more LONG positions during the pullback.

• With Minebea out, Yageo’s ¥7,130/share bid (55% premium, ~18× FY25E P/E) is the sole path forward; board support makes completion highly probable.
• Japanese takeover rules ensure eventual squeeze-out (>90%) or illiquidity (50–90%); past bumps without rivals have been modest (+1–5%).
• Clear Timeline: Tender closes mid-Oct 2025, results late Oct, squeeze-out Nov–Dec, delisting by Jan 2026 — shareholders should tender to lock in value.

• Corporate Governance Code, which makes the appointment of outside directors mandatory, was introduced in the hope of restructuring corporate governance and restoring profitability.
• We must explore why, as the role of outside directors expands and dependence on them grows, the challenges of profitability and rising stock prices remain far from being resolved.
• It’s a good idea to have half of directors be independent outside directors. Companies with fewer than that should improve the skills of the entire BOD to increase their effectiveness.

• Japan’s leading on-site urethane foam insulation installer with strong growth Nippon Aqua Co., Ltd. (hereinafter, “the Company”) is a high-growth enterprise listed on the Prime Market of the Tokyo Stock Exchange.
• Guided by its management philosophy— “Contribution to society through the creation of living environments that are friendly to people and the earth”—the Company leverages insulation and waterproofing technologies to drive energy efficiency and support a sustainable society.
• It holds the leading domestic share in on-site urethane foam insulation installation and operates its business through three key divisions: Single-family homes , Buildings, and Waterproofing.

• Sojitz is a mid-tier sōgō shōsha with, shifting its earnings base from coal and resources toward Chemicals, Energy Solutions, and Healthcare.
• FY25 profit is guided flat at ¥115bn, with Metals weakness offset by non-resource growth; by FY27, ~80% of profits are expected from non-resource segments.
• Shares trade at 7.8x P/E (30–40% discount to peers) with a 4.2% yield, but cash flow volatility, coal exposure, and smaller scale remain key overhangs.

• In the past 24 months, J-REIT sponsors have bought units in their REITs at sharp discounts to PNAV to raise PNAV and reduce overhang pressure. 
• The goal is, basically transparently, to get PNAV to a level at which the REIT can buy more properties from the sponsor, who carries them at a much higher WACC.
• Mori Building has announced a 4.99% buy on Mori Hills REIT Investment Corporation (3234 JP) which is a Very Big portion of Max Real World Float. This should influence price.

• Effissimo has formally launched its hostile tender offer for Soft99 Corp (4464 JP) at JPY4,100, which is 66.3% higher than the MBO price of JPY2,465. 
• The Board stonewalled Effissimo’s attempts to negotiate a friendly offer. The huge premium of Effissimo’s offer relies on lower WACC assumptions compared to the target/special committee IFA.
• Management’s initial approach will be to rely on the Board to oppose the Effissimo offer. There is a good chance that Soft99 will remain listed with two large shareholders. 

• Toto stock price -16% over past year vs index +24% as China growth story collapses. Restructuring China ops; targeting breakeven FY3/27
• New growth drivers: US capacity buildout underpins Americas sales growth, while electrostatic chucks beneficiary of SPE spend
• Stock trading at 30% discount to historical average and deep discount to global peers

• Q4 FY2025/5 Results | On July 10, 2025, OHBA (hereinafter, “the Company”) announced its Q4 FY2025/5 results. The full year figures saw an increase in both sales and profits.
• In the three-month period of Q4, orders recovered mainly in the design field, with a steady accumulation of orders in the core construction consulting business.
• Although the Company projects lower sales in FY2026/5 due to the absence of one-off projects from a year earlier, it plans to report its 15th consecutive year of operating profit growth, underpinned by improved profitability.

• FY01/26 revenue reached 91.3% of forecast, with losses at all profit levels due to Media Contents withdrawal.
• Revised FY01/26 forecast predicts JPY49.7bn revenue, JPY1.1bn operating profit, and JPY316mn net income.
• Domestic Solutions revenue rose 5.0% YoY; Overseas Solutions increased 8.0% YoY; Media Contents declined 31.9% YoY.

• As can be seen from the exhibit below, as of May 31, 2025, TOREX had 1 unmet criterion out of the criteria required to maintain listing on the TSE prime market.
• Market capitalization of tradable shares of JPY 8.12bn was below the requirement of JPY 10.0bn or more. The number of tradable shares subtracts: 1) the number of shares held by major shareholders who individually own 10% or more of the number of listed shares (however the number of shares held by investment trusts or pension trusts are included), 2) the number of shares held by officers, etc., 3) the number of treasury shares, and 4) the number of shares held by common banks, insurance companies and business corporations in Japan.
• The tradable shares ratio is the number of tradable shares ÷ the number of listed shares. Tradable market capitalization is the tradable shares ratio × market capitalization.