In today’s briefing:
- [Japan Activism?] Toyota Group Equity Affiliate and Murakami Target Aichi Steel Does Large ToSTNeT-3
- Sumitomo Metal Mining (5713.T): Strategic Reset Amid Downstream Challenges and Valuation Discount
- Hakudo Co Ltd (7637 JP): Full-year FY03/25 flash update
- BHP: Last Strong Driver (Copper) Turns Volatile
- [ETP 2025/20] WTI Skittish on Trade Hopes and Oversupply Fears; Henry Hub Falls on Tepid Demand
- DOWA Holdings (5714.T): Diversified Industrial Business Positioned for Circular Economy Growth
- Pharos Energy Plc (LSE: PHAR): High impact drilling in Vietnam in 4Q25. Lower capex than expected.
- Rayonier Advanced Materials, Inc: While Disappointing, 1Q25 May Be the Low Point for the Year
- Sakai Chemical Industry Co (4078 JP): Full-year FY03/25 flash update
- Sinanen Holdings (8132 JP): Full-year FY03/25 flash update
[Japan Activism?] Toyota Group Equity Affiliate and Murakami Target Aichi Steel Does Large ToSTNeT-3
- Aichi Steel (5482 JP) announced earnings on 25-April during market hours. Results were OK. Guidance was OK. The div was WAY up for Mar26. Shares fell. Then rose 26-April.
- Aichi Steel is a Toyota Motors equity affiliate (26-27%), Toyota Industries, Toyota R.E., megabanks, the Kyoeikai, and Nippon Steel all have stakes. Nippon Steel recently reduced its position.
- Activist Murakami has about 10% across two entities. This morning, the Company was to buy back 16%. WHO is selling? We don’t know yet. Likely a mix. Details may matter.
Sumitomo Metal Mining (5713.T): Strategic Reset Amid Downstream Challenges and Valuation Discount
- Sumitomo Metal Mining (TSE:5713) faced challenges in FY2024, with earnings impacted by weak treatment and refining charges (TC/RCs) in the copper segment and underperformance in battery materials.
- Its recent 3-Year Business Plan 2027, to boost EBITDA from ¥150 billion to ¥275 billion by FY2027 by working on the mines, focussing on battery materials business, and recycling.
- The stock has declined approximately 37% over the past year, making it more attractive with a forward EV/EBITDA of around 4.0x, suggesting potential undervaluation.
Hakudo Co Ltd (7637 JP): Full-year FY03/25 flash update
- Revenue increased by 16.0% YoY to JPY66.4bn, driven by higher product prices and semiconductor equipment demand.
- Operating profit rose 18.2% YoY, aided by increased gross profit per unit and inventory valuation gains.
- FY03/26 forecast: Revenue JPY75.8bn (+14.1% YoY), operating profit JPY3.2bn (+8.3% YoY), net income JPY2.4bn (+5.1% YoY).
BHP: Last Strong Driver (Copper) Turns Volatile
- A volatile metal price has boosted the risk for BHP’s remaining strong major segment, copper, while the other two key divisions, iron ore and coal, are still sluggish
- We forecast a weaker 2025E-2026E than consensus, given the risk that global demand disappoints and continues to pressure metal prices for BHP’s three key segments
- Our conservative valuation puts BHP near fair value, and while the P/B of 2.4x is only moderately elevated versus recent history, we see the risks weighted to the downside
[ETP 2025/20] WTI Skittish on Trade Hopes and Oversupply Fears; Henry Hub Falls on Tepid Demand
- For the week ending 09/May, U.S. crude inventories grew by 3.5m barrels (vs. expectations of a 2m barrel fall). Meanwhile, gasoline and distillate stockpiles unexpectedly fell.
- The EIA reported a 110 Bcf storage build, slightly lower than the 111 Bcf forecast. Storage levels are 2.6% above the five-year average.
- Saudi Aramco’s Q1 profit fell 4.8% YoY but beat estimates by 2.8%. Morgan Stanley downgraded BP to Underweight from Equalweight, while HSBC lowered Chevron to Hold from Buy.
DOWA Holdings (5714.T): Diversified Industrial Business Positioned for Circular Economy Growth
- DOWA reported flat FY24 profits at ¥27.1 bn; FY25 guidance projects stable revenue at ¥692 bn and slightly lower profit of ¥27.0 bn.
- Diversified businesses in recycling, smelting, and materials processing are positioned to support long-term trends in resource efficiency and circular economy development.
- Valuations appear cheap despite low near-term growth visibility. We aligned to global trends towards recycling and sustainability.
Pharos Energy Plc (LSE: PHAR): High impact drilling in Vietnam in 4Q25. Lower capex than expected.
- • Production from January to April 2025 was 5,757 boe/d, comprising 4,216 boe/d from Vietnam and 1,541 bbl/d from Egypt.
- This is consistent with the FY25 production guidance of 5.0-6.2 mboe/d, which has been reaffirmed.
- • In Egypt, receivables increased from US$29.5 million at year-end 2024 to US$31.7 mm by the end of April.
Rayonier Advanced Materials, Inc: While Disappointing, 1Q25 May Be the Low Point for the Year
- Tough start to the year. RYAM reported 1Q25 results that included revenue of $356 million (down 8% Y/Y and below our $363 million estimate) and EBITDA of $17 million (well below the year-ago result of $52 million and our $48 million estimate).
- A non-cash environmental charge of $12 million and an FX hit of ($5) million, combined with weather, higher maintenance-related operating costs, and lower volumes, more than offset modestly higher prices in Cellulose Specialties and Cellulose Commodities and benefits from prior cost reduction efforts.
- New reporting structure highlights progress toward specialty. RYAM changed the way it reports results of its High Purity Cellulose division, splitting the division into three segments beginning in 1Q25 (Cellulose Specialties [CS], Cellulose Commodities [CC], and Biomaterials), highlighting the profitable nature of its CS (23% EBITDA margin in 1Q25) and Biomaterials (29% EBITDA margin in 1Q25) businesses and continuing deemphasis of CC sales.
Sakai Chemical Industry Co (4078 JP): Full-year FY03/25 flash update
- FY03/25 revenue reached JPY84.4bn, a 2.8% YoY increase; operating profit rose 107.1% YoY to JPY6.1bn.
- Electronic materials revenue grew 27.5% YoY; titanium dioxide and zinc products turned profitable, aiding overall recovery.
- FY03/26 outlook projects revenue of JPY86.0bn (+1.9% YoY) and operating profit of JPY6.5bn (+6.7% YoY).
Sinanen Holdings (8132 JP): Full-year FY03/25 flash update
- Sales declined 8.9% YoY to JPY317.1bn, with operating profit reaching JPY4.0bn from a JPY711mn loss in FY03/24.
- Sales rose 0.4% YoY to JPY75.3bn, while operating profit increased 23.2% to JPY1.0bn, despite higher costs.
- Sinanen forecasts FY03/26 sales of JPY367.3bn (+15.8% YoY) and plans to maintain a JPY90 per share dividend.
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