In today’s briefing:
- Oriental Watch (398 HK): Resilient Despite Tough HK Environment, Dividend A Slight Disappointment
- Asian Dividend Gems: Septeni Holdings
- Kobelco (5406.T) – Diversified Industrial at Deep Value
- Japanese Big Cap Banks – Key Fundamental Tailwinds Drive Our Positive Picks
- The Yen’s Volatility & Japanese Hotel REITs: A Tourism-Driven Comeback Story
- CSL Ltd (CSL AU): First In-House Antibody Drug Gets US Approval; Has Blockbuster Potential
- BlackLine Inc.: Can Its New Platform Pricing Model & Its AI Agents Become Key Growth Catalysts?
- Japan Business System (5036 JP) – Cloud Integration Profitability Recovering Sharply
- Capri Holdings: An Insight Into Its Strategic Wholesale and Digital Expansion & Other Major Drivers
- AS ONE (7476 JP) – A Royalty on Japan’s Scientific Advancement
Oriental Watch (398 HK): Resilient Despite Tough HK Environment, Dividend A Slight Disappointment
- Oriental Watch (398 HK) delivered a resilient result with revenue/profits -5%/-20% YoY (ex-one offs -11.5% YoY), despite weakness in HK (22% of sales), where the company is now making losses.
- Cash & Investments dipped to 901 mn HKD, representing about 54% of the market capitalization. The company declared a 16.7 HKD cent/dividend (FY25: 41.3 HKD/cent yield 12%).
- We believe that FY26 will be a year of consolidation, and with a weak HK, profits will remain subdued. Stock trades at 8.4x FY25 with a 12% dividend yield.
Asian Dividend Gems: Septeni Holdings
- Septeni Holdings is one of the leaders in Japan in the digital marketing business which mainly includes digital advertising, marketing support, data & AI-driven solutions.
- The company has also aggressively raised dividend payouts which is a clear sign of improving corporate governance.
- The company is also well positioned to deliver sales growth rate of about 5-7% per year in the next 2-3 years with 20%+ per year growth in operating profit.
Kobelco (5406.T) – Diversified Industrial at Deep Value
- Earnings stable over 3 years as machinery and power offset weak steel margins; ROIC gradually improving.
- Focus on KOBEMAG®, machinery expansion, and carbon-neutral projects with disciplined capex.
- Trades at ~5x P/E due to low ROIC, past governance issues, and misperception as a pure steel cyclical.
Japanese Big Cap Banks – Key Fundamental Tailwinds Drive Our Positive Picks
- The Bank of Japan left the short-term interest rate unchanged, but the governor stated that the tapering of JGB buying will continue, albeit with an eye on market stability
- This implies that the JGB yield curve is likely to continue steepening going forward, which is constructive for Japanese banks; in addition, market lending rates to April continue to rise
- We reassert buys on Resona, Mizuho, Shizuoka and Kyoto aided by our proprietary scorecard, and based on two core attributes; gearing to higher interest rates and cross-holdings to market capitalization
The Yen’s Volatility & Japanese Hotel REITs: A Tourism-Driven Comeback Story
- The JPY Yen has depreciated 25% against USD for the last 5 years, this has made Japan an extremely attractive destination for foreigners
- The Japan’s hotel sector is known by its low supply, partly due to higher development cost and labour shortage. We think REVPAR and ADR will continue to be strong
- We like Japan Hotel REIT and Invincible for their hotel exposure. We think investors should closely monitor the Yen movement as well as BOJ policy
CSL Ltd (CSL AU): First In-House Antibody Drug Gets US Approval; Has Blockbuster Potential
- CSL Ltd (CSL AU) received FDA approval of Andemry, for prophylactic use to prevent attacks of hereditary angioedema (HAE) in adult and pediatric patients aged 12 years and older.
- CSL will launch Andemry in the U.S. immediately, with availability before the end of June. Thus far, Andemry has been approved in Australia, the UK, EU, Japan, Switzerland, and UAE.
- With FDA approval, Andembry is now set to compete with Takeda’s blockbuster drug Takhzyro and BioCryst Pharmaceuticals’ oral HAE drug Orladeyo. Andembry has a convenience and efficacy edge over Takhzyro.
BlackLine Inc.: Can Its New Platform Pricing Model & Its AI Agents Become Key Growth Catalysts?
- BlackLine, a leader in financial automation solutions, recently announced its Q1 2025 earnings results, highlighting both opportunities and challenges as the company navigates its ongoing journey towards growth and market expansion.
- The company reported a total revenue increase of 6% year-over-year, reaching $167 million, with strong subscription and services revenue performance.
- However, the financial results are a mix of positives and certain areas that might require attention.
Japan Business System (5036 JP) – Cloud Integration Profitability Recovering Sharply
- In Q2 FY24/9 financial results reported exactly one year ago, profit attributable to owners of parent declined -74.1% due to recording an impairment loss of JPY 1,720mn in the 2Q as an extraordinary loss for the entire unamortized balance of goodwill associated with the acquisition of consolidated subsidiary NEXTSCAPE Inc.
- In SIR’s follow-up report, we wrote “management promptly recognizing the impairment and withdrawing the FY25/9 OP MTP target effectively minimizes future down-side risk.
- In the meantime, core business performance continues to grow at double-digits. ”
Capri Holdings: An Insight Into Its Strategic Wholesale and Digital Expansion & Other Major Drivers
- Capri Holdings Limited’s recent earnings reflect a mix of strategic changes and financial outcomes that should be carefully considered by investors.
- The company is in a transitional phase, highlighted by the announcement of the pending sale of Versace to Prada Group.
- The decision to divest Versace aims to refocus resources on the Michael Kors and Jimmy Choo brands, with potential benefits of debt reduction and reinstatement of a share repurchase program.
AS ONE (7476 JP) – A Royalty on Japan’s Scientific Advancement
- As scientific progress increasingly depends on more complex equipment and precision instruments, we believe wholesaler and distributor AS ONE is well-positioned to capture demand through expanding its presence in the high-end segment.
- Demand for scientific supplies and lower-end scientific equipment remains stable, providing a resilient, recurring revenue base.
- The company’s growth has consistently outpaced and shown limited correlation with national R&D spending.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
