Daily Brief Japan: Digital Holdings Inc, Softbank Group, TSE Tokyo Price Index TOPIX, Robot Payment Inc, Iseki & Co Ltd, Create Sd Holdings Co, Alinco Inc, Segue Group and more

• Today, in something of a surprise but not a complete surprise, Silvercape came out with its own bid for Digital Holdings Inc (2389 JP) at +20% from the Hakuhodo bid.
• They make it clear that the original bid does not protect minority shareholders or give them sufficient value. This one would. Which means that is Hakuhodo’s bogey.
• It would not be impossible for Silvercape to get to its minimum hurdle, but despite being lower than Hakuhodo’s it’s not a gimme. 

• Softbank Group (9984 JP)‘s weight in the Nikkei 225 (NKY INDEX) has broken through 10% and staying there will lead to capping at the March rebalance.
• Nearly half of Softbank Group‘s float is held by passive trackers, and the real float is much lower. Capping will increase the real float by a few percentage points.
• Softbank Group has outperformed the Nikkei 225 (NKY INDEX) significantly over the last 6 months and cumulative excess volume has started to increase sharply. Watch out for pullbacks.

• SilverCape has launched a hostile preconditional tender offer for Digital Holdings Inc (2389 JP) at JPY2,380, a 20.8% premium to the Hakuhodo Dy Holdings (2433 JP) JPY1,970 offer. 
• The Board stonewalled SilverCape’s attempts to negotiate a friendly offer. SilverCape’s offer is based on EV/EBITDA multiples and will commence in late November.
• The situation shares similarities with Soft99’s contested offer. The Board is likely to oppose the SilverCape offer. Hakuhodo’s likely move will be to extend the close and disclose current acceptances. 

• In the past, dividends paid out of net income were often mistakenly regarded as “equity costs.” Consequently, many companies have adopted the concept of payout ratio as their dividend policy.
• The increasing number of companies adopting dividend policy based on DOE may help curb the expansion of shareholders’ equity, but it hasn’t yet led to active use to raise ROE.
• Few managers still understand that entire FCF belongs to shareholders. Due to the unfortunate history of dividends mistakenly viewed as “equity costs,” few companies clearly articulate their cash allocation strategies.

Key points (machine generated)

• ROBOT PAYMENT, listed on the Tokyo Stock Exchange under ticker 4374, is growing rapidly due to its subscription-based services.
• Approximately 98% of the company’s revenue comes from recurring sources, indicating strong customer retention and expansion.
• In the first half of the fiscal year ending December 2025, ROBOT PAYMENT reported significant revenue growth, maintaining double-digit increases in revenue and profit since its 2021 listing.

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Key points (machine generated)

• Iseki & Co., Ltd. is revising its full-year forecast positively for the fiscal year ending December 2025 due to progress with Project Z.
• The company manufactures a wide range of agricultural machinery, including tractors and combines, for both hobbyists and professionals.
• Iseki is expanding internationally, with overseas sales nearing half of its domestic market, while integrating advanced technologies to tackle workforce challenges.

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• Create SD is one of the largest food & drug hybrid retailers in Japan and dominates its home Kanagawa market. 
• The company now plans to grow sales by 49% over the next five years, adding 30-40 stores a year.
• With the supermarket sector now entering a period of significant disruption, Create also plans to acquire local chains to accelerate expansion.

• Revenue increased by 3.0% YoY to JPY31.7bn, achieving 50.0% of the full-year forecast, while operating profit fell 4.4% YoY.
• Segment revenue for scaffolding equipment rose 3.7% YoY to JPY13.0bn, but segment profit decreased 24.0% YoY.
• Revenue from digital firefighter radios grew 12.3% YoY to JPY2.7bn, narrowing the segment loss compared to 1H FY03/25.

Key points (machine generated)

• Segue Group, listed on the Tokyo Stock Exchange, reported record sales and profits for the interim period of fiscal year 2025.
• The company operates in four segments: Value Added Distribution, system integration, in-house security product development, and overseas business.
• Segue Group has shifted its focus to proprietary software development, particularly the ‘RevoWorks*’ series, while maintaining traditional product sales.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.