In today’s briefing:
- Daiichi Sankyo Placement – US$1.2bn Deal but Momentum Isn’t the Best, Last Deal Didn’t Do Well
- Kokusai Electric (6525 JP): Q1 Miss; FY Guidance Maintained, 2H Ramp Critical, Valuation Discount
- Nikkei 225 Index Outlook: Key Buy Targets To Watch
- Rohm Co Ltd(6963 JP): Advancing from Breakdown to Breakthrough; Strong Outlook for Q2
- Nittobo (3110 JP) – Q1 Solid, Guidance Retained; 2H Execution Key for AI-Led Growth
- The Main Battlefield for Dissolution of Parent-Subsidiary Listings Will Shift to Standard Market
- IHI Corporation (7013 JP) – Strong Orders, Weak Profits; Guidance Backloaded on Aero & Disposals
- Morito (9837 JP) – An Over-A-Century-Old Company with a Strong, High-Margin Profit Structure…
- Kawasaki Heavy (7012 JP) – Soft Start to FY26, Steep H2 Profit Ask Vs Guidance
Daiichi Sankyo Placement – US$1.2bn Deal but Momentum Isn’t the Best, Last Deal Didn’t Do Well
- A group of shareholders are looking to raise up to US$1.2bn via selling most of their stake in Daiichi Sankyo (4568 JP) .
- While the deal shouldn’t come as a surprise, given the ongoing cross-shareholding unwind, the last deal in the stock didn’t do well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Kokusai Electric (6525 JP): Q1 Miss; FY Guidance Maintained, 2H Ramp Critical, Valuation Discount
- Results: Q1 revenue ¥51.8B (–21% YoY) and OP ¥10.9B (–44%) came in weak, with DRAM softness offset partly by NAND strength.
- Guidance: FY26/3 outlook (¥244B revenue, ¥55.2B OP) reiterated, implying a sharp 2H acceleration in shipments and margin recovery.
- Valuation: Shares trade at ~11× EV/EBITDA, a discount to peers, but execution risk keeps the multiple constrained.
Nikkei 225 Index Outlook: Key Buy Targets To Watch
- As predicted in our July 15th insight, the Nikkei 225 (NKY INDEX) rallied past 41k (reached near 44k) and now, as predicted by our latest WEEKLY HEAT MAP, went down.
- The index reached a low of 42724 this week, it is only mildly oversold so far, probability of reversal is around 52% at the moment.
- Key support levels to watch are 42577 (Q2) and 41606 (Q3). A file with all our PRICE/TIME model dataset for the Nikkei 225 is attached at the end, for your reference.
Rohm Co Ltd(6963 JP): Advancing from Breakdown to Breakthrough; Strong Outlook for Q2
- Advancing from Breakdown to Breakthrough:ROHM Co Ltd (6963 JP) returned to profitability in Q1FY25 on improved demand and cost controls with strong outlook for Q2.
- Rohm is actively implementing structural reforms, with a priority on ensuring profitability in any market environment. It is also drafting its second Medium-Term Management Plan for FY26 to FY28.
- It continues to be available at significantly cheaper valuation versus peers of just 0.8x price to book. Also, it has been added to the Nikkei 225 Index recently.
Nittobo (3110 JP) – Q1 Solid, Guidance Retained; 2H Execution Key for AI-Led Growth
- Results: Q1 FY26 came in solid, with strength in Electronic Materials offsetting weakness in Insulation.
- Guidance/Estimates: FY26 guidance was reiterated, and we retain our estimates, with 2H execution key.
- Valuation: At ~9.5x EV/EBITDA FY26E, Nittobo looks inexpensive, with its monopoly T-glass exposure offering direct leverage to NVIDIA-driven AI/data center demand.
The Main Battlefield for Dissolution of Parent-Subsidiary Listings Will Shift to Standard Market
- Standard Market is home to companies that face challenges that fail to meet tradable shares ratio, can’t grow market capitalization, or feel it burdensome to meet governance and disclosure requirements.
- TSE is likely to request companies listed on the Standard Market to disclose improvement measures in response to TSE’s requests, rather than raising the listing maintenance criteria.
- 262 Standard Market companies are listed subsidiaries. It’s considered that the quickest way to improve the quality of the Standard Market is to delist these companies by eliminating parent-subsidiary listings.
IHI Corporation (7013 JP) – Strong Orders, Weak Profits; Guidance Backloaded on Aero & Disposals
- Q1 FY2026 results showed weak earnings (net profit –38% YoY) but a strong +29% YoY orderbook driven by Aero & Carbon Solutions.
- Management retained FY2026 guidance, banking on aero aftermarket growth and disposal gains to drive a backloaded recovery.
- Valuations (~14× EV/EBITDA, 24× P/E) look reasonable versus peers, but execution risks remain if disposals or aero demand underdeliver.
Morito (9837 JP) – An Over-A-Century-Old Company with a Strong, High-Margin Profit Structure…
- MORITO (hereafter, the Company) posted consolidated net sales of JPY 25,805 mn (+8.7% YoY), operating profit of JPY 1,570 mn (+5.9% YoY), ordinary profit of JPY 1,713 mn (+9.4% YoY), Profit attributable to owners of parent (hereafter, net profit) of JPY 2,359 mn (+69.3% YoY), which showed both an increase in revenue and profit.
- The Company achieved record high H1 net sales, operating profit, and ordinary profit. The main drivers underpinning the strong earnings are the inclusion of Ms.ID in the scope of consolidation, higher revenue from existing businesses, and improvement in gross profit margin.
For FY2025/11, the Company forecasts net sales of JPY 56,000 mn (+15.4% YoY), operating profit of JPY 3,200 mn (+11.5% YoY), ordinary profit of JPY 3,300 mn (+9.9% YoY), and net profit of JPY 2,800 mn (+8.9% YoY).
Kawasaki Heavy (7012 JP) – Soft Start to FY26, Steep H2 Profit Ask Vs Guidance
- Q1 revenue +10% YoY, with business profit up ~21% YoY on strength in Rolling Stock and ES&M, but headline net profit –72% YoY on FX headwinds and higher NCI drag.
- Guidance / Revisions: FY26/3 guidance left unchanged, but steep H2 ask implies ~12% revenue and ~29% profit growth vs last year.
- Outlook & Valuation: Near-term pressured by FX/tariffs, but aero/energy support medium-term growth; trades at ~14x NTM P/E, ~7.6x EV/EBITDA, a discount to peers.
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