In today’s briefing:
- [Japan M&A] Toyoda Gosei Buys Out Affiliate Ashimori Industry at 1.000x Mar25 Book
- NIFTY MIDCAP150 Index Rebalance Preview: 11 Potential Changes in September
- Kolon Mobility (450140 KS)’s Delisting Offer
- HK Connect SOUTHBOUND Flows (To 8 Aug 2025); Big Swing Out of ETFs into TECH
- Bluestone Jewellery IPO – Moving from Online to Offline. Thoughts on Valuation
- Yomeishu Seizo (2540 JP): Evaluating a Potential Privatisation
- Closure of Short Call on Tata Motors
- Kalyan Jewellers (KALYANKJ IN) | The Capital Sinkhole
- CyberAgent: Newly Released Games Drive Growth with an Upward Revision to Guidance
- To Companies that Adopt DOE: It’s Good to Consider ROE, but Are They Falling into Short-Termism?
[Japan M&A] Toyoda Gosei Buys Out Affiliate Ashimori Industry at 1.000x Mar25 Book
- Toyota Motor (7203 JP) subsidiary Toyoda Gosei (7282 JP) is buying out its own equity affiliate Ashimori Industry (3526 JP) at a near-all-time high price of ¥4,140/share.
- It’s not a great price, but it is just over 1x book after writedowns this past quarter. It basically requires cross-holders and half a retail to tender.
- But this autoparts business is a strong grower, and has no EV risk. And its non-autoparts business is more interesting. The “fair” multiples are low. But it’ll get done.
NIFTY MIDCAP150 Index Rebalance Preview: 11 Potential Changes in September
- With the review period now complete, there could be 11 changes for the NIFTY Midcap 150 Index at the September rebalance.
- Estimated one-way turnover is 7.7% resulting in a round-trip trade of INR 17.6bn (US$201m). With over US$43bn tracking the index actively, the impact on the stocks will be much larger.
- The outright forecast adds have outperformed the forecast deletes over the last 4 months and there has been a jump in the last week.
Kolon Mobility (450140 KS)’s Delisting Offer
- Kolon Corp (002020 KS)(KC) is seeking to delist 75.23%-held Kolon Mobility Group (450140 KS) (KM), an auto importer.
- Via a dual approach, KC is offering ₩4,000 per KM common share and ₩5,950 per KM preferred share. Any untendered shares will be swapped into KC shares.
- The tender offer period is from 8th August to 8th September, with payment on the 10th September. There is no minimum acceptance condition.
HK Connect SOUTHBOUND Flows (To 8 Aug 2025); Big Swing Out of ETFs into TECH
- Gross SOUTHBOUND volumes just over US$16+bn a day this past 5-day week. A comedown from the previous week. Net buying OK at just over +US$550mm/day. One-third of the previous week.
- Last week’s reco was Great Wall Motor (2333 HK) up 9.8% on the week, and H/A spread contracted 6.2%.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
Bluestone Jewellery IPO – Moving from Online to Offline. Thoughts on Valuation
- Bluestone Jewellery and Lifestyle (BJL) is planning to raise about US$176m in its upcoming India IPO.
- BJL offers contemporary lifestyle diamond, gold, platinum, and studded jewellery under its flagship brand. It is a digital-first direct-to-consumer (DTC) brand.
- We have looked at the past performance in our previous note. In this note, we talk about the IPO pricing.
Yomeishu Seizo (2540 JP): Evaluating a Potential Privatisation
- On 7 August, Bloomberg reported that Yomeishu Seizo (2540 JP) is considering going private and has received acquisition proposals from several investment funds.
- Privatisation is a neat solution for the Board to get rid of a potentially problematic activist shareholder, Yukihiro Nomura, the son-in-law of Yoshiaki Murakami.
- PE interest is underpinned by Yomeishu’s net cash and significant real estate assets. However, the shares are up 63% YTD, which leaves little room for additional upside. Take profits.
Closure of Short Call on Tata Motors
- Post Q4FY25 results,we had presented our case for shorting Tata Motors in May 2025, anticipating a challenging quarter ahead.We now recommend closing the short position,with reasons explained in this insight
- The company reported a very challenging Q1FY26, with JLR EBIT crashing to 4.0% (vs 8.9% YoY). The India passenger car business also faced similar pressure.
- The only segment to deliver stable performance was the commercial vehicle division.
Kalyan Jewellers (KALYANKJ IN) | The Capital Sinkhole
- Kalyan Jewellers (KALYANKJ IN) Management paused INR 350-400 crore debt reduction after 90 days, now planning INR 2,700 crore capital consumption without clear justification.
- Candere losses increased 5X while management admits e-commerce isn’t their strength, yet continues expanding with new regional brand initiatives.
- Stock trades at 44x P/E NTM above 3-year average despite questionable capital allocation and non-quantifiable efficiency claims from management.
CyberAgent: Newly Released Games Drive Growth with an Upward Revision to Guidance
- CyberAgent Inc (4751 JP) reported 3QFY09/2025 results on Friday aftermarket. Both revenue and OP beat consensus estimates with an upward revision to full-year guidance.
- Gaming segment has begun to see recovery driven by the strong performance of newly released game titles which have become a hit. There are several new titles up for release.
- Though CA’s share price has moved up with recovery in games and improved profitability of AbemaTV, we think there is further upside.
To Companies that Adopt DOE: It’s Good to Consider ROE, but Are They Falling into Short-Termism?
- With many companies unable to increase their ROE, the company also intends to demonstrate its commitment to improving ROE by strengthening shareholder returns through the adoption of DOE.
- The increase in the number of companies adopting DOE may be a reflection of the fact that many companies are forecasting lower profits this fiscal year.
- Of course, returning excess cash on hand while considering ROE isn’t a bad thing, but it’s also a concern that few companies are taking steps to ensure medium-to-long-term growth.
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