In today’s briefing:
- TOPIX Inclusions: Who Is Ready (Aug 2025)
- [Japan M&A] Furukawa Battery (6937 JP) Take Private – Ugly Then, Ugly Still, But Now It’s On…
- JPX Nikkei 400 Index Rebalance: US$6.4bn Round-Trip Trade Coming Up
- [Japan M&A] Air Water Takes over C.I. Medical (3540) – Done Deal, Not Bad
- Toyota (7203 JP) Vs. Subaru (7270 JP): Rare Mean-Reversion Setup After Earnings
- The Story of Serendie, Mitsubishi Electric’s Digital Innovation in the Era of AI
- With Most Companies Still Unable to Show Results, There Is No Returning to “Stakeholderism”
- CI Medical (3540 JP): Air Water (4088 JP)’s Tender Offer Is a Done Deal
- JR East – Full Steam Ahead!
- Carna Biosciences (4572 JP): 1H FY12/25 flash update
TOPIX Inclusions: Who Is Ready (Aug 2025)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- GMO Financial Gate (4051 JP), Azoom (3496 JP) and Kitazato (368A JP) (recent IPO) were included in the TOPIX index at the end of July 2025.
- Our long-term pre-event candidate Core Concept Technologies Inc (4371 JP) is getting close to meeting the key Section Transfer requirements.
[Japan M&A] Furukawa Battery (6937 JP) Take Private – Ugly Then, Ugly Still, But Now It’s On…
- 54 weeks ago Advantage Partners and Furukawa Electric announced a deal to take Furukawa Electric (5801 JP) sub Furukawa Battery (6937 JP) private. The acquisition price was LOW.
- Minorities got more – more than book. But the deal included a payment delay allowing BVPS to rise 8.8% from the announcement date. No synergies.
- Furukawa Electric gets to buy back in at a price below book. And because there are cash and securities and lots of net receivables, the operating assets are well below.
JPX Nikkei 400 Index Rebalance: US$6.4bn Round-Trip Trade Coming Up
- There are 39 adds/34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
- Based on the adds, deletes and capping changes, we estimate one way turnover of 6.7% and a round-trip trade of JPY 946bn (US$6.4bn).
- The adds have outperformed the deletes over the last year and there has been a move higher in the last few days too.
[Japan M&A] Air Water Takes over C.I. Medical (3540) – Done Deal, Not Bad
- Today, Air Water Inc (4088 JP) and Ci Medical (3540 JP) announced that the CEO and Air Water who together own 85% would be taking over the company.
- That’s nice. That means it’s a done deal and nobody can do anything about it. Complain all you want, it’s done.
- Helpfully, the Board did its job (as did Shimizu-san – he’s selling most of his stake). This is not badly-priced for an ultimately coercive deal.
Toyota (7203 JP) Vs. Subaru (7270 JP): Rare Mean-Reversion Setup After Earnings
- Context: The Toyota (7203 JP) vs. Subaru (7270 JP) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlight: Both companies in this highly correlated pair reported results on 7 August 2025, opening up a rare opportunity.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
The Story of Serendie, Mitsubishi Electric’s Digital Innovation in the Era of AI
- Mitsubishi Electric’s Serendie platform marks a decisive shift toward AI-powered, customer-centric services, with tangible cost savings, ecosystem expansion, and a tripling of Digital Innovation workforce planned by FY2031.
- AI Leadership: The company showcased advanced automation and optimization capabilities at AWS Summit Japan, positioning itself as a leader in applied AI.
- Punchline is the Japan beta vol trade. Macro risks remain pivotal, as navigating tariff shocks, labor distortions, and central bank policy shifts could shape both performance and volatility exposure.
With Most Companies Still Unable to Show Results, There Is No Returning to “Stakeholderism”
- Most companies have only made superficial improvements to meet numerical targets, and have not attempted to improve capital profitability or stock price valuation through improvements in board practices.
- Very few companies proceed with uncodified practices based on company policy. Conversely, these companies demonstrate a willingness to change from their previous management style.
- Previously, the idea of “treating shareholders equally with all other stakeholders” was widespread among many companies. As a result of “Stakeholderism,” capital profitability and stock price valuations have continued slow.
CI Medical (3540 JP): Air Water (4088 JP)’s Tender Offer Is a Done Deal
- Ci Medical (3540 JP) has recommended a tender offer from Air Water Inc (4088 JP) at JPY1,500, a 48.5% premium to the last close.
- The offer is attractive compared to historical trading ranges and is above the mid-point of the IFA DCF valuation range.
- This is a done deal as the offeror and irrevocable represent an 85.02% ownership ratio, which ensures that the EGM vote for share consolidation will pass.
JR East – Full Steam Ahead!
- Company continues to outperform as a new management plan is released
- Focus on cash flow generation, increased dividends and flexible buybacks
- Continued execution in their real-estate business is key to success
Carna Biosciences (4572 JP): 1H FY12/25 flash update
- The company reported a sales decline of 20.4% YoY to JPY251mn, with an operating loss of JPY1.1bn.
- R&D spending increased by 9.2% YoY to JPY2.1bn, focusing on clinical trials for kinase inhibitors.
- The company raised JPY675mn through unsecured convertible bonds to fund R&D expenses for FY12/25.
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