In today’s briefing:
- [Japan M&A] KKR and Founder to Take Engineer Staffing Agency Forum Engineering (7088) Private
- Shiseido (4911) | Progress on Reforms, but Growth Still Elusive
- Forum Engineering (7088 JP): KKR’s Tender Offer at JPY1,710
- Mitsui Chemical (4183): Releasing the Crackers!
- JFE Holdings (5411 JP) – Deep Value with Hidden JSW Optionality
- Hamamatsu Photonics (6965 JP): Capex Peaking, Profits to Rebound
- Olympus Corp (7733 JP): A Much-Awaited Turnaround On the Cards? One Quarter At a Time
- Aruhi Corp (7198 JP): 1H FY03/26 flash update
- Mitsuboshi Belting (5192 JP): 1H FY03/26 flash update
- Meiwa Estate (8869 JP): 1H FY03/26 flash update
[Japan M&A] KKR and Founder to Take Engineer Staffing Agency Forum Engineering (7088) Private
- Today after the close, KKR announced a deal whereby they and founder OKUBO Izumi-san would take Forum Engineering Inc (7088 JP) private in an LBO.
- The process of this deal ticks most all of the “bad process” boxes but the price is pretty good.
- 52% is locked in. Insiders and cross-holders appear to own another 15-18%. This looks like a done deal to me. Money comes 30 December.
Shiseido (4911) | Progress on Reforms, but Growth Still Elusive
- Shiseido’s Q3 revenue rose 4.6% YoY to ¥224bn, marking its first growth in three quarters, though full-year sales guidance was cut 3%.
- Profitability remained pressured by tariffs and Drunk Elephant weakness; product margins fell 340bps YoY, but SG&A improvements limited overall margin decline to 80bps.
- Management maintained core OP profit guidance and continued executing structural reforms, achieving ¥21bn cost savings YTD, with deeper efficiency cuts planned through 2026.
Forum Engineering (7088 JP): KKR’s Tender Offer at JPY1,710
- Forum Engineering Inc (7088 JP) has recommended a tender offer from KKR & Co (KKR US) at JPY1,710, a 32.6% premium to the last close price.
- The offer is arguably light due to a lack of an auction and is below the midpoint of the target IFA DCF valuation range.
- However, the offer is attractive compared to precedent transactions, peer multiples and represents an all-time high. The large number of cross-holders will help meet the required tendering rate.
Mitsui Chemical (4183): Releasing the Crackers!
- Mitsui Chemicals is slashing exposure to commodity chemicals and ramping up high-margin specialty films and resins—setting the stage for its RoE to soar from 5% to over 13%.
- Restructuring is unlocking massive cost savings while driving growth from cutting-edge segments that are poised for double-digit growth and global dominance.
- The stock trades at a deep discount, but could easily command a premium with solid execution, driving the share price to more than double or even treble within 3 years.
JFE Holdings (5411 JP) – Deep Value with Hidden JSW Optionality
- Trough valuations: JFE trades at only US$525/t EV/t and 0.5× P/B, despite stable guidance and improving high-value steel mix.
- Hidden value: 15% JSW Steel stake (~¥500 bn) equals ~45% of JFE’s market cap—cheap India exposure with re-rating potential.
- Upside case: SOTP implies +50–60% equity upside, supported by 4–5% dividend yield and H2 margin recovery.
Hamamatsu Photonics (6965 JP): Capex Peaking, Profits to Rebound
- Announced last Friday, FY Sep-25 sales and net profit were in line with guidance, but operating profit fell short. On Monday, the shares dropped 4.5%, wiping out a month’s gains.
- Looking ahead, management expects three years of sales and profit growth as capex declines, depreciation and R&D level off, and the NKT Photonics acquisition approaches breakeven.
- In this scenario, semiconductor, bio-medical, defense and quantum computing applications should drive 3-year sales growth of 24% and a 71% increase in net profit, bringing the P/E down to 20X.
Olympus Corp (7733 JP): A Much-Awaited Turnaround On the Cards? One Quarter At a Time
- Olympus Corp (7733 JP) registered 20% QoQ rise in revenue to ¥247.8B in Q2FY26 while the adjusted operating profit witnessed 183% QoQ growth to ¥37.4B (margin expanded 870bps to 15.1%).
- The company reiterated full-year forecasts for FY26. The company expects revenue to be ¥998B, flat YoY (+3% after FX adjustment).
- Sequential improvement offers early green shoots. Moreover, decreasing “Elevate” program cost, product launches and venturing into endoluminal surgical robotics segment will slowly help propel growth in the near to midterm.
Aruhi Corp (7198 JP): 1H FY03/26 flash update
- Operating revenue increased by 9.9% YoY to JPY11.8bn, driven by growth in recurring and asset-related revenue.
- Operating expenses rose 13.3% YoY to JPY10.6bn, mainly due to higher finance and personnel costs.
- Pre-tax profit decreased 12.2% YoY to JPY1.2bn, despite revenue growth, due to increased operating expenses.
Mitsuboshi Belting (5192 JP): 1H FY03/26 flash update
- Mitsuboshi’s revenue rose 0.9% YoY, with Belts segments offsetting lower Building & Construction Materials revenue.
- The company plans to pay an annual dividend of JPY186 per share in FY03/26, unchanged from FY03/25.
- Mitsuboshi announced a resolution to repurchase 350,000 shares, valued at JPY1.0bn, via market purchases on the Tokyo Stock Exchange.
Meiwa Estate (8869 JP): 1H FY03/26 flash update
- In 1H FY03/26, revenue increased by 69.4% YoY to JPY59.0bn, with operating profit rising 185.0% YoY.
- Built-for-sale condo business saw revenue of JPY40.5bn (+93.6% YoY) and 620 units delivered (+230 units YoY).
- Purchase and resale business revenue reached JPY9.4bn (+81.8% YoY), while brokerage revenue fell 3.3% YoY.
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