Daily Briefs

• At ¥17,340/share, Toyota Industries (6201 JP) is cheap. Corporate governance supporting this deal is shocking. In Travis Lundy‘s words: “Stay long. Buy more. And make some noise.”
• Preceding my comments on Toyota 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%.

• Tohokushinsha Film is a diversified media and entertainment company in Japan with a long history, operating across content production, advertising, media broadcasting, and property/rights management.
• The company is positioned to benefit from the growth of the Japanese content market, particularly the increasing global demand for anime and the shift towards digital and streaming platforms.
• However, the company faces challenges from a declining legacy advertising market, intense competition, and potential reputational damage from a past corporate governance scandal involving the Ministry of Internal Affairs and Communications.

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• Turnaround Strategy Focused on Digital Transformation and Cost Optimization: GameStop is undergoing a significant strategic shift, moving away from its traditional brick-and-mortar model to an e-commerce and digital-first approach. This includes enhancing its online presence, developing a new mobile app, and exploring opportunities in blockchain and NFTs. Concurrently, the company is aggressively cutting costs by closing underperforming stores and reducing SG&A expenses.
• Diversification into New Revenue Streams: To mitigate the decline in physical software sales, GameStop is expanding its product offerings to include high-margin categories like PC gaming peripherals and collectibles. The company is also leveraging its brand recognition to potentially introduce private label products.
• Strengthened Leadership and Balance Sheet: The appointment of Ryan Cohen as CEO and Chairman, along with other experienced e-commerce executives, signals a clear focus on digital transformation. The company has also fortified its balance sheet through strategic capital raises, providing the financial flexibility to execute its turnaround plan.

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• Dominant Regional Player with Diversified Revenue Streams: KSE Ltd. is a leading manufacturer of compound cattle feed in Southern India, with a growing presence in the dairy and coconut oil processing segments. This diversification provides a natural hedge against volatility in any single business line.
• Strong Financial Performance and Attractive Valuation: The company has demonstrated robust profit growth and maintains a healthy balance sheet with minimal debt. Trading at a significant discount to its peers, the stock presents a compelling value proposition for long-term investors.
• Favorable Industry Tailwinds: The Indian animal feed market is poised for significant growth, driven by rising demand for protein-rich diets, increasing livestock population, and a shift towards organized farming practices. KSE is well-positioned to capitalize on these trends.

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Key points (machine generated)

• Japan BS Broadcasting operates the free digital high-definition service ‘BS11’ and collaborates with various TV stations and production companies.
• For the fiscal year ending August 2025, the company reported a sales figure of 11,039 million yen, a 2.8% decrease from the previous year.
• Operating profit fell by 3.4% to 1,988 million yen, with ordinary and net profits also declining, highlighting income generation challenges.

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• Despite some one-off inbound travel disruption during June to August 2025, Q1-2 FY3/26 results demonstrated strong and sustained YoY growth.
• We interpret this as Polaris’s earnings stream becoming more resilient and predictable, with improved quality of earnings.
• FY3/26 guidance has been upwardly revised, indicating robust earnings visibility for Q3-4 FY3/26, and the company has increased DPS to ¥4.0 from ¥3.0, with capital allocation demonstrating a well-structured balance between active growth investments and improving shareholder returns. 

• Sakata Seed is a global leader in the vegetable and ornamental seed industry, with a strong focus on research and development to produce high-quality, value-added varieties.
• The company is strategically expanding its presence in emerging markets, particularly in Asia and Africa, while also focusing on the growing Controlled Environment Agriculture (CEA) sector.
• Financial performance has been robust, with consistent revenue growth driven by strong demand for its vegetable seeds. The company maintains a healthy financial position with a strong balance sheet.

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• Showa Sangyo is a major Japanese food company with a diversified business portfolio centered on grain processing, including flour milling, edible oils, starches, and sweeteners. This diversification provides a degree of stability against fluctuations in any single market segment.
• The company is strategically focused on strengthening its core businesses and expanding into new areas, including overseas markets and the growing frozen foods sector. This is outlined in their long-term vision, “SHOWA Next Stage for 2025”.
• Financial performance has shown strong net income and earnings per share growth over the past three years, alongside a consistent increase in dividend payouts, indicating a commitment to shareholder returns.

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• Sukhjit Starch & Chemicals is a well-established player in the Indian starch industry with over seven decades of experience, making it one of the oldest and largest producers in the country. The company has a strong foothold in the maize-based starch and derivatives market, with a diverse product portfolio catering to various industries including food and beverage, pharmaceuticals, paper, and textiles.
• The company is strategically expanding its manufacturing capacities to meet the growing demand for starch and its derivatives. This expansion, coupled with a focus on high-value products and deeper penetration into Tier 2 and 3 cities, positions the company for future growth. The favorable global environment for the starch industry, due to higher corn costs in other major producing countries, presents an additional tailwind.
• Key risks for the company include the volatility of raw material prices, particularly maize, which constitutes a significant portion of its operating income. The company’s operating margins are susceptible to fluctuations in maize prices and changes in government regulations, such as the implementation of minimum support prices.

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• Ambika Cotton Mills (ACML) is a specialized manufacturer of premium compact and Elitwist cotton yarn, catering to high-end apparel makers globally, which affords it a niche position and pricing power compared to commodity yarn producers.
• The company demonstrates strong financial resilience with a historically conservative, low-debt approach, funding capacity expansions primarily through internal accruals and maintaining healthy profitability margins.
• Key risks include volatility in raw cotton prices, high dependence on a few large clients, and cyclical demand from the global textile industry, which has impacted recent financial performance.

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