In today’s briefing:
- [JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
- Pacific Metals (5541 JP): Here We Go Again Murakami Becomes a Substantial Shareholder
- Japan – Passive Selling in a Few Weeks & Shorts Build Up
- High Conviction 2024 – CyberAgent: Strong Recovery Across All Three Business Segments
- Sumitomo Pharma (4506 JP): Q1FY25 Result Shows Early Sign of Performance Reversal
- Career Design Center (2410 JP): Q3 FY09/24 flash update
- AS ONE Corporation (7476 JP): Q1 FY03/25 flash update
- Daiichi Jitsugyo (8059 JP): Q1 FY03/25 flash update
- Marubun Corp (7537 JP): Q1 FY03/25 flash update
- Cota Co Ltd (4923 JP): Q1 FY03/25 flash update
[JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
- In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP). The market dropped. But that was an opportunity.
- There was an announcement, a ToSTNeT-3 buyback, the offering, and more buyback to come. On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.”
- Exedy is up 21% since. On 17 June, activist Murakami-san’s group went over 5%. Then they bought more. Now they have 15%. Or more. Still cheap. Still vulnerable.
Pacific Metals (5541 JP): Here We Go Again Murakami Becomes a Substantial Shareholder
- Murakami’s entity, City Index Eleventh, and daughter reported a 5.40% stake in Pacific Metals (5541 JP). The shares were purchased from 27 May to 25 July.
- Murakami’s average buy-in price is JPY1,259 per share, an 11.1% discount to the last close price. Murakami has been a substantial shareholder twice before.
- Murakami’s previous dealings in Pacific Metals were a pump-and-dump where he built up around 8% stake, only to sell into the share price pop subsequently. Expect more of the same.
Japan – Passive Selling in a Few Weeks & Shorts Build Up
- Up to 12 stocks could be deleted from global passive portfolios in August. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
- There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
- The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.
High Conviction 2024 – CyberAgent: Strong Recovery Across All Three Business Segments
- CyberAgent Inc (4751 JP) reported 3QFY09/24 results yesterday. Both revenue and OP grew YoY, while revenue beat consensus marginally, OP beat consensus by a huge margin.
- All three business segments showed strong recovery with notable improvement in gaming business as newly released titles perform well including the newly released UMA MUSUME: Pretty Derby movie.
- Media business reported OP for the second consecutive quarter and the company has plans to further strengthen monetisation around AbemaTV.
Sumitomo Pharma (4506 JP): Q1FY25 Result Shows Early Sign of Performance Reversal
- Sumitomo Pharma (4506 JP) reported double-digit revenue growth in Q1FY25, driven by North America. Operating loss narrowed. Net profit stood at ¥16B in Q1FY25 (Q1FY24 net loss: ¥39B).
- Robust performance of key products, gross margin expansion, achievement of sizable benefits from the North America business restructure, and streamlining R&D initiatives are the key positives in Q1FY25 result.
- Sumitomo is expected to revise FY25 guidance during H1FY25 result announcement. Better-than-expected performance from key drugs as well as favorable Fx should lead to upward revision of revenue guidance.
Career Design Center (2410 JP): Q3 FY09/24 flash update
- In cumulative Q3 FY09/24, revenue was JPY13.3bn (+2.1% YoY), operating profit JPY1.1bn (-17.2% YoY), and net income JPY752mn (-16.8% YoY).
- Media Information business revenue was JPY4.5bn (+7.1% YoY), segment recurring profit JPY464mn (+39.0% YoY) in cumulative Q3 FY09/24.
- Revised full-year FY09/24 forecast: revenue JPY17.8bn (+2.3% YoY), operating profit JPY1.4bn (-9.9% YoY), net income JPY989mn (-15.0% YoY).
AS ONE Corporation (7476 JP): Q1 FY03/25 flash update
- Q1 FY03/25 sales were JPY24.2bn (+11.2% YoY), operating profit JPY2.7bn (+11.3% YoY), and net income JPY2.0bn (+10.9% YoY).
- Research and Industrial Instruments sales JPY19.7bn (+10.9% YoY), Scientific sales JPY14.6bn (+10.0% YoY), Industrial sales JPY5.1bn (+13.6% YoY).
- E-commerce sales JPY8.0bn (+23.3% YoY), overseas business sales JPY1.2bn (+4.6% YoY), China sales down 7.3% YoY.
Daiichi Jitsugyo (8059 JP): Q1 FY03/25 flash update
- Orders: JPY45.4bn (+5.7% YoY), Revenue: JPY43.4bn (+26.1% YoY), Operating Profit: JPY2.1bn (+203.8% YoY), Net Income: JPY1.1bn (+144.9% YoY).
- Revenue rose due to increased sales of plant equipment, lithium-ion battery manufacturing equipment, and molding machines.
- Revenue declined YoY in electronic component manufacturing equipment, automotive industry equipment, and medical device manufacturing equipment.
Marubun Corp (7537 JP): Q1 FY03/25 flash update
- Net sales: JPY50.8bn (-15.9% YoY); Operating income: JPY2.6bn (-15.4% YoY); Ordinary income: JPY572mn; Profit: JPY429mn.
- Electronic Devices business: Net sales JPY40.6bn (-17.7% YoY); Operating income JPY2.7bn (-11.2% YoY); decreased semiconductor demand.
- Foreign exchange losses: JPY1.1bn due to yen depreciation; minor impact on consolidated earnings for FY03/25.
Cota Co Ltd (4923 JP): Q1 FY03/25 flash update
- Q1 FY03/25 sales were JPY1.5bn (-11.9% YoY) with an operating loss of JPY87mn and a net loss of JPY81mn.
- Sales of toiletries totaled JPY1.1bn (-13.7% YoY), hair styling products JPY302mn (-13.7% YoY), and hair coloring products JPY80mn (+53.8% YoY).
- The gross profit margin dropped 0.3pp YoY to 72.7%, and the SG&A ratio rose 11.5pp YoY to 78.6%.
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