In today’s briefing:
- Fujitsu (6702) – Earnings/Guidance OK, Margins Better, But New Quiddity Buyback Data Tool 🥳
- Gunma Bank (8334 JP): Daishi Hokuetsu (7327 JP) Share Exchange to Establish a Top Regional Bank
- Nidec (6594) | Chasing Trends to Fiscal Discipline
- Jafco Co Ltd (8595 JP): Full-year FY03/25 flash update
- Ono Sokki (6858 JP): Q1 FY12/25 flash update
- It Is Not a Question of Whether Investment in Growth or Shareholder Return Is Better
Fujitsu (6702) – Earnings/Guidance OK, Margins Better, But New Quiddity Buyback Data Tool 🥳
- Fujitsu Earnings. Revenues +2.1%, OP +77.5%, Pretax +65.1%, Net -13.0% (basis effect from FY23 one-offs). Forecast? Revs -2.8%, OP/adj +35.8%/+17.2%, Net/adj +77.4%/+3.7%. All guided measures shy vs the Street consensus.
- The company presented a progress update on its Medium-Term Management Plan. Core profits are better. Things are improving.
- The company also announced a big 11-month ¥170bn buyback. Last year’s was ¥180bn (completed 24 March). Worth checking out the details (and our brand-new buyback tool)
Gunma Bank (8334 JP): Daishi Hokuetsu (7327 JP) Share Exchange to Establish a Top Regional Bank
- Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP)/DHFG have announced an MoU to establish one of the largest regional banks in Japan by 1 April 2027.
- The transaction involves delisting Gunma through a share exchange with DHFG. A definitive agreement is expected around March 2026.
- The plan is long-dated. The lack of a controlling shareholder necessitates a “fair” exchange ratio. My estimated Gunma/DHFG exchange ratio range is 0.38-0.39x.
Nidec (6594) | Chasing Trends to Fiscal Discipline
- Nidec beat Q4 expectations but offered muted FY3/26 guidance, with flat sales and modest profit growth amid macro and tariff uncertainty.
- New CEO Kishida shifts focus from top-line ambition to margin discipline, targeting ¥150bn in cost cuts over three years.
- Once a high-growth play, Nidec now trades at value multiples — 1.5x book — offering a more grounded path to shareholder returns.
Jafco Co Ltd (8595 JP): Full-year FY03/25 flash update
- Revenue increased by 21.4% YoY to JPY29.7bn, with operating profit rising 53.1% YoY to JPY12.5bn.
- Capital gains reached JPY12.7bn, a 60.0% YoY increase, driven by IPO-related share sales and unlisted shares.
- Total assets under management stood at JPY458.4bn, with JPY198.5bn subject to management fees as of end-March 2025.
Ono Sokki (6858 JP): Q1 FY12/25 flash update
- Ono Sokki’s FY12/24 sales rose 23.2% YoY, with operating profit up 266.7% YoY, despite a 12.0% YoY order decline.
- Measuring Equipment segment’s operating profit dropped 74.4% YoY due to increased personnel expenses for overseas sales expansion.
- Custom Order Test Equipment and Service segment’s operating profit surged 555.1% YoY, driven by increased sales and fixed cost absorption.
It Is Not a Question of Whether Investment in Growth or Shareholder Return Is Better
- While the absolute amount of share repurchases has increased, many companies face challenges in using cash, given the slow growth in ROE and depth of equity capital over a decade.
- While growth investment should increase corporate value, it’s important for managers to manage to earn returns commensurate with investment risk, and to return cash to shareholders without taking unnecessary risks.
- The question is not whether investment in growth or shareholder return is better, but whether the company was managing its business in a shareholder-friendly manner.
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