In today’s briefing:
- [Japan M&A] CareNet (2150 JP) – Opaque LBO/MBO Garners New Attention from Existing Shareholder
- CareNet (2150 JP): Kaname Capital Is Potentially a Headache for EQT
- Orion Breweries Pre-IPO – Brewing Growth Beyond Okinawa, Headwinds Ahead
- Sumitomo Metal Mining (5713 JP): Recovery Driven by Resources
- LY Finally Improves LINE Integration with Shopping Assets
- Q1 Follow-Up – TOREX SEMICONDUCTOR (6616 JP) – August 28, 2025
- Dydo Drinco Inc (2590 JP): 1H FY01/26 flash update
- Q1 Follow-Up: Geechs (7060 JP) – August 19, 2025
- Q1 Follow-Up – SHIMOJIMA (7482 JP) – August 28, 2025
[Japan M&A] CareNet (2150 JP) – Opaque LBO/MBO Garners New Attention from Existing Shareholder
- When EQT launched its deal for Carenet Inc (2150 JP) two weeks ago, I thought it opaque, and light, and strangely lacking in information which should be there.
- It has not gotten clearer, though three days ago, the largest foreign shareholder as of the announcement reported they had lowered their position by 3.77% (4.22% of votes).
- Then yesterday, someone else reported they had gone above 5%. The data implied in that filing suggests this may have legs. I’d buy through terms.
CareNet (2150 JP): Kaname Capital Is Potentially a Headache for EQT
- Kaname Capital reported a 5.80% ownership ratio in Carenet Inc (2150 JP). Most of the shares were purchased on August 18 and 19, i.e., after the announcement of the offer.
- Kaname has a recent history of agitating for a bump in the Proto Corp (4298 JP) tender offer. Kaname failed to prevent Proto from being privatised.
- EQT will initially take a wait-and-see approach. If Kaname acquires a 10% stake, EQT will start to worry, but it has several options to respond.
Orion Breweries Pre-IPO – Brewing Growth Beyond Okinawa, Headwinds Ahead
- Orion Breweries Limited’s (409A JT) operations span across alcoholic beverages, tourism and hotel businesses, aiming to raise ~US$126m in its Japan IPO via a mix of primary and secondary offerings.
- Orion Breweries (OBL) has a strong Okinawa market position (~40% beer share). Share of overseas sales has been growing (~23% of FY25 revenues), while profitability has also largely been steady.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
Sumitomo Metal Mining (5713 JP): Recovery Driven by Resources
- FY2024–25 results showed a sharp rebound, with Resources strength (copper, gold) more than offsetting Smelting losses.
- August FY2025 guidance raised PBT and dividend despite trimming sales and Smelting outlook, reflecting confidence in core earnings.
- EBITDA is set to grow ~6–7% over FY2025–27, leaving the stock inexpensive on P/E (~12x vs peers ~16x).
LY Finally Improves LINE Integration with Shopping Assets
- LY is finally moving to integrate LINE and Yahoo more effectively. It has taken too long.
- LINE has 100 million users in Japan and yet until now, there has not been a decent shopping tab within the LINE app to encourage cross-use.
- This is finally happening next month and, along with some AI-based UI and search improvements should help LY maintain parity with Rakuten if not surpass on growth rates.
Q1 Follow-Up – TOREX SEMICONDUCTOR (6616 JP) – August 28, 2025
- Despite tariffs and geopolitics reshaping global supply chains, the cyclical recovery in the semiconductor market is continuing, while customer inventories remain at low levels.
- This coincides with a full-fledged recovery in PC demand driven by the October Windows 10 end-of-service PC replacement, and rapid diffusion of AI PCs (equipped with dedicated AI accelerators designed to optimize and accelerate AI tasks, providing improved performance and efficiency in handling GenAI workloads without relying on external servers or cloud services).
- Q1 2025 Gartner worldwide PC shipments increased +4.8% YoY, with Q2 +4.4% (the US slowed to flat after frontloading ahead of tariffs), for 1H 2025 +4.7%, entering a full-fledged recovery.
Dydo Drinco Inc (2590 JP): 1H FY01/26 flash update
- In 1H FY01/26, revenue was JPY117.7bn (+0.1% YoY), with operating profit at JPY1.4bn (-39.5% YoY).
- Domestic Beverage business revenue was JPY71.5bn (-2.0% YoY), with an operating loss of JPY2.0bn.
- International Beverage business revenue was JPY28.8bn (+7.5% YoY), with operating profit of JPY3.1bn (+37.2% YoY).
Q1 Follow-Up: Geechs (7060 JP) – August 19, 2025
- On August 8, 2025, Geechs Inc. (hereafter, “the Company”) announced its Q1 FY2026/3 (Apr-Jun) earnings results.
- Net sales rose 9% YoY to JPY 6,373 mn, EBITDA rose 84% YoY to JPY 197 mn, and operating profit rose 128% YoY to JPY 183 mn.
- In addition to the steady expansion of the core Japan The IT Human Resources Matching Business (hereafter, “Japan IT HRM Biz”), improved profitability in the IT Human Resources Matching Business, Overseas (hereafter, “Overseas IT HRM Biz”) and the Seed Tech business also contributed.
Q1 Follow-Up – SHIMOJIMA (7482 JP) – August 28, 2025
- Since this is the final year of the current 5-year MTP, focus growth initiatives for FY26/3 are shifting out with a view toward the next MTP.
- Regarding cash allocation for investments and shareholder returns, in addition to FY26/3 capex plans for IT investment in various key systems, as well as renovation work on the Company’s head office, management announced a new 3-year plan to construct a new mother distribution center in Hyogo Prefecture to cover Western Japan at a total estimated cost of JPY 15bn (internal funds plus bank loans).
- At the same time, it added DOE > 3.0% in addition to targeting a consolidated payout ratio of ≥ 50% to its policy on shareholder returns.
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