In today’s briefing:
- Furukawa (5715 JP) – Third Capital Policy Change in a Year Means Big Buyback
- Japanese Auto, Tire Firms Sense Opportunity As Trump Clamps Tariffs
- Toyota Motors: Is It Really Adapting to China’s Market For Long-Term Growth?
- Shimano (7309) | Q4 Preview and Outlook
- United Arrows Rising Again
- Activist Investors with Increased AUM Will Also Likely Target Larger Companies for Investment
- Minato Holdings (6862 JP): Q3 FY03/25 flash update
- Wacom (6727 JP) – Laying the Groundwork
- Macnica Holdings (3132 JP) – Q3 FY3/25 Results Update
- Shofu (7979 JP) – Positive Dynamics Intact
Furukawa (5715 JP) – Third Capital Policy Change in a Year Means Big Buyback
- In May 2023, Furukawa Co Ltd (5715 JP) decided it would review cross-holdings as part of its Actions to Implement Management Awareness of Capital Cost and Share Price.
- In February 2024, it announced a cross-holding reduction policy, and then accelerated it in May 2024. They’ve been selling. They did a small buyback too.
- Monday they announced a LARGE buyback (looks larger than it is) leaving future capital allocation policy better, but still wanting. The question is now the forward-forward bet.
Japanese Auto, Tire Firms Sense Opportunity As Trump Clamps Tariffs
- Japanese tire firms mull option of broadening production base in US
- May explore low-cost Southeast Asian destinations too
- Diversifying supply-chain network to be on top of agenda
Toyota Motors: Is It Really Adapting to China’s Market For Long-Term Growth?
- Toyota Motor Corporation’s financial results for the second quarter of fiscal year 2025 reveal a period of cautious resilience amidst both internal challenges and external pressures.
- The company’s operating income for the first half of the fiscal year was recorded at JPY 2.4642 trillion, closely matching the figures from the same period last year, despite hurdles including production halts due to certification issues and the incremental costs associated with addressing these disruptions.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Shimano (7309) | Q4 Preview and Outlook
- Q4 Risks Remain: Market conditions deteriorated in late 2024, and key data points suggest a potential miss on Q4 earnings expectations.
- Focus on 2025 Outlook: Investors should shift attention to Shimano’s guidance, capital allocation strategy, and potential shareholder return initiatives in the coming year.
- Long-Term Value: Despite short-term uncertainties, Shimano’s strong fundamentals and disciplined strategy position it well for sustainable growth and high returns.
United Arrows Rising Again
- United Arrows spent a few years in retreat as a succession of problems around e-commerce, Covid and merchandising hit sales.
- Instead, competitors like the unlisted retailers, Baycrews and Mash Holdings, took greater share thanks to innovative ideas and new chains mixing fashion, lifestyle and food.
- United Arrows now claims the backend fixes are complete and it is starting to expand again, with new chains and target segments, both at home and overseas. Can it succeed?
Activist Investors with Increased AUM Will Also Likely Target Larger Companies for Investment
- Engagement begins only when there is a common understanding that “the management goal is to increase corporate value and shareholder interest.
- Because of differences in the level of understanding among listed companies, not all companies are able to smoothly discuss solutions to management issues based on the same common understanding.
- While ROA improved moderately, ROE improved slightly, indicating that more and more companies are committed to shareholder returns.
Minato Holdings (6862 JP): Q3 FY03/25 flash update
- Revenue increased by 28.8% YoY to JPY18.2bn, driven by strong growth in the Digital Device Business segment.
- Operating profit decreased by 43.3% YoY to JPY669mn, with a significant decline in the Digital Engineering Business.
- Minato Holdings revised FY03/25 forecast: revenue JPY23.0bn (+20.9% YoY), operating profit JPY735mn (-40.5% YoY).
Wacom (6727 JP) – Laying the Groundwork
- With the company close to announcing its new medium-term plan ‘Wacom Chapter 4’ covering FY3/26 to FY3/29, Q1-3 FY3/25 results continue to indicate strength in the Technology Solution Business with OEM partnerships, with the decline in demand from the non-professional sector for the Branded Business.
- With the decrease in temporary costs related to inventory and structural business reform, segmental losses are being lowered in the Branded Business which is positive and points to breakeven being achieved in the medium term.
- Management has telegraphed additional business restructuring expenses in Q4 FY3/25, underlining the importance of optimizing operations before FY3/26.
Macnica Holdings (3132 JP) – Q3 FY3/25 Results Update
- Robust Network and Sales mix improvement – Q3 FY3/25 results showed an uptick in gross profit (+8.0% QoQ), driven by the expansion of the network business, sales mix improvement, and enhanced product mix in the semiconductor business where lower- margin memory weakened whilst relatively higher-margin PLDs grew.
- OP margin also improved (Q2 FY3/25 3.9%, Q3 FY3/25 4.1%).
- Network maintained a positive segment OP growth trend (Q1-Q3 FY3/25 cumulative +79% YoY), leading to segment OP margin improvement to 8.2%.
Shofu (7979 JP) – Positive Dynamics Intact
- Demand for Shofu’s competitive Chemical products continue to drive overseas growth and improve the sales mix, with 58.6% of total Q1-3 FY3/25 sales derived overseas.
- Reported quarterly Q3 FY3/25 GPM and OPM have declined QoQ, but these were due to one-time events, resulting in a robust underlying trend indicating that the business is becoming more profitable whilst still investing in business expansion.
- The weak yen has been a tailwind, but the company has maintained FY3/25 guidance. With no end-loaded costs expected for Q4 FY3/25, we maintain our earnings estimates.
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