In today’s briefing:
- [Japan Activism?] Toyota Group Equity Affiliate and Murakami Target Aichi Steel Does Large ToSTNeT-3
- Appier (4180 JP) | AI Marketing Leader Positioned for Long-Term Growth
- Paramount Bed Holdings (7817 JP): Demand to Remain Sluggish; Margins to Hold, For Now
- High Conviction 2025 – Freee: Robust Business Model Supports Stable Margins; Further Upside Ahead
- Asics (7936) | Q1 Earnings Impress, But Market Reacts to Unchanged Guidance
- Fast Fitness Japan Inc (7092 JP): Full-year FY03/25 flash update
- Sumitomo Metal Mining (5713.T): Strategic Reset Amid Downstream Challenges and Valuation Discount
- Hakudo Co Ltd (7637 JP): Full-year FY03/25 flash update
- Grandy House (8999 JP): Full-year FY03/25 flash update
- Forum Engineering Inc (7088 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.
Appier (4180 JP) | AI Marketing Leader Positioned for Long-Term Growth
- Solid Q1 and reaffirmed guidance: Appier delivered 27% organic growth in Q1, maintained FY targets, and continues to benefit from resilient demand for AI marketing solutions.
- Strategic acquisition of AdCreative.ai: The deal expands Appier’s AI portfolio, enhances creative automation capabilities, and supports cross-sell potential, despite short-term margin pressure from integration.
- Attractive valuation with upside: Despite strong fundamentals, shares trade below 3x EV/sales; H2 seasonality and AI adoption present a compelling re-rating opportunity.
Paramount Bed Holdings (7817 JP): Demand to Remain Sluggish; Margins to Hold, For Now
- In FY25, Paramount Bed Holdings Co Lt (7817 JP) reported 2% YoY revenue growth to ¥109B, mainly driven by the nursing care business.
- Due to higher SG&A expenses, operating profit decreased 6% YoY to ¥13B and net profit was down 15% YoY to ¥9B.
- Paramount guided FY26 revenue to grow 4% YoY to ¥113B and also trimmed FY27 targets in mid-term plan.
High Conviction 2025 – Freee: Robust Business Model Supports Stable Margins; Further Upside Ahead
- Freee KK (4478 JP) reported 3QFY06/2025 results today. Revenue for the quarter was marginally below consensus despite increasing 27% YoY, while GAAP OP beat consensus by a huge margin.
- Due to the tax filing season, freee’s S&M costs tends to be higher during 3Q which led to slightly lower Adj. OP during the quarter. Price revisions have improved ARPU.
- Freee’s share price has been up more than 40% YTD, strengthening profitability and its solid business model vs Money Forward (3994 JP) mean there is further upside.
Asics (7936) | Q1 Earnings Impress, But Market Reacts to Unchanged Guidance
- Asics reported its first-quarter results during trading hours, with the stock closing down 8.6% on the day.
- While headline numbers were strong, investors may have been disappointed by the lack of upward revision to full-year guidance.
- Our positive view on Asics remains unchanged. The company is successfully navigating geopolitical and macro uncertainties while strengthening its brand.
Fast Fitness Japan Inc (7092 JP): Full-year FY03/25 flash update
- FY03/25 revenue increased 13.8% YoY to JPY18.0bn, driven by membership growth in domestic Anytime Fitness clubs.
- Operating profit decreased 4.7% YoY to JPY3.3bn due to higher costs, despite revenue growth and cost-curbing efforts.
- FY03/25 saw 71 club openings and 11 closures, ending with 1,194 clubs and 974,000 members.
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).
Grandy House (8999 JP): Full-year FY03/25 flash update
- Grandy House’s FY03/25 sales increased YoY, driven by higher sales volume in Tokyo, despite a decline in homes sold.
- Pre-cut Parts segment faced YoY declines in sales and profit due to a sluggish housing market and factory upgrades.
- Total assets decreased by JPY5.7bn from end-FY03/24, mainly due to reduced inventories in the Real Estate Sales business.
Forum Engineering Inc (7088 JP): Full-year FY03/25 flash update
- FY03/25 revenue reached JPY34.7bn (+10.9% YoY) with operating profit at JPY4.2bn (+38.7% YoY) due to increased engineer utilization and staffing rates.
- FY03/26 forecasts project revenue of JPY38.2bn (+10.1% YoY) and operating profit of JPY5.0bn (+32.1% YoY), focusing on Cognavi Staffing and Graduates.
- Revised medium-term plan targets FY03/26 revenue of JPY38.2bn and operating profit of JPY5.0bn, emphasizing engineer staffing and India expansion.
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