In today’s briefing:
- Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap
- Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel
- JAMCO (7408 JP): Bain’s Tender Offer Is Light but Likely a Done Deal
- Shift Beats Q1 Consensus by 30%
- Money Forward (3994) | SaaS Growth Engine Shows Resilience
- Mani Inc (7730 JP): Dental Loosing Shine In China; Margins Eroding; FY25 Guidance Reiterated
- The Good News Is that Companies May Change in Less than 17 Years!
- WingArc1st Inc (4432 JP): Q3 FY02/25 flash update
- J Com Holdings (2462 JP): 1H FY05/25 flash update
- Nakamoto Packs (7811 JP): Q3 FY02/25 flash update
Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap
- Bain is buying out JAMCO (a long time ago called Itochu Aircraft Maintenance) from Itochu, ANA, Bain’s own portfolio company, and the public. It’s an expected deal. A done deal.
- It is being done too cheaply. The price is 6x next year’s expected EBIT. This year expected ROE is 22%. Next year could be double that.
- And the company has more in non-operating financial assets than its net equity. And a lot of really old land assets are not marked up. Just a shame.
Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel
- Tokyo Metro (9023 JP) listed on 23 October and was added to the TSE Tokyo Price Index TOPIX (TPX INDEX) at the close on 28 November.
- Tokyo Metro (9023 JP) was not expected to be added to one global index (it was not added), while it was expected to be added to the other (and missed).
- The stock could be added to one global index in February (its close!) and to the other in June (pretty much a sure thing).
JAMCO (7408 JP): Bain’s Tender Offer Is Light but Likely a Done Deal
- Jamco Corp (7408 JP) announced a preconditional tender offer from Bain Capital at JPY1,800 per share, a 27.8% premium to the last close.
- The offer, which is preconditional on regulatory approvals and will open in mid-February, is attractive compared to historical trading ranges.
- On the other hand, the offer is light as it is below the midpoint of the IFA DCF valuation range. However, the modest required acceptance rate suggests a done deal.
Shift Beats Q1 Consensus by 30%
- Shift reported a 95% increase in OP, to ¥3.2bn, compared to consensus estimate of ¥2.6bn on January 14 after the close.
- Just under 5 months ago, we suggested the stock was about 45% undervalued. It is up 40%.
- We still expect 20% annual growth through 2030. This is no longer a turnaround stock, but now one of the most solid growth stocks in the market.
Money Forward (3994) | SaaS Growth Engine Shows Resilience
- Money Forward, Japan’s leading SaaS provider, reported strong results for its fiscal year ending November 2024: Sales +33% YoY to ¥40.4 billion
- FY11/25 EBITDA guidance of ¥3.5 billion significantly lags consensus expectations of ¥6 billion.
- The disappointing EBITDA guidance may trigger further selling, but there is no material change to the company’s long-term fundamentals. Time to be bullish
Mani Inc (7730 JP): Dental Loosing Shine In China; Margins Eroding; FY25 Guidance Reiterated
- Mani Inc (7730 JP) Q1FY25 revenue rose 8% YoY, mainly driven by surgical and eyeless needles segments, and favorable foreign exchange. However, profitability declined year-over-year.
- Despite the underperformance of dental segment, management reiterated FY25 guidance. Dental segment contributes more than 30% of total revenue.
- Mani shares plunged 20% since it published its Q1 results. Investors should avoid Mani due to its uncertain revenue outlook and deteriorating profitability in short-term.
The Good News Is that Companies May Change in Less than 17 Years!
- After 17 years of failure to change, Sapporo’s policy change was triggered by the fact that sales in beer business were beginning to recover after the long tunnel of deflation.
- Regulators, weighed down by the growing number of companies with low profitability and declining competitiveness, want to change the situation, even if it means leveraging the power of activist investors.
- Many companies bottomed out due to exiting the deflationary economy, and TSE requests prohibit companies from ignoring investors’ proposals, which makes it easier for companies to change.
WingArc1st Inc (4432 JP): Q3 FY02/25 flash update
- Revenue for cumulative Q3 FY02/25 was JPY21.6bn, operating profit JPY6.5bn, net income JPY4.7bn, EBITDA JPY7.6bn.
- BDS sales revenue rose 12.7% YoY to JPY14.2bn, with cloud services growing 17.3% YoY, invoiceAgent JPY1.7bn.
- Full-year FY02/25 forecast revised to revenue JPY28.5bn, operating profit JPY8.1bn, EBITDA JPY9.6bn, profit JPY5.9bn.
J Com Holdings (2462 JP): 1H FY05/25 flash update
- Operating profit is highest in Q4 due to subsidies in Child-Rearing Support Service and lowest in Q2.
- Revenue increased in Child-Rearing Support and Nursing Care-Related Services, but declined in Comprehensive Human Resources Service.
- LIKE opened two new facilities in FY05/25, with total childcare facilities reaching 415 as of October 2024.
Nakamoto Packs (7811 JP): Q3 FY02/25 flash update
- Cumulative Q3 FY02/25 results: Revenue JPY36.8bn (+9.1% YoY), Gross profit JPY6.6bn (+28.1% YoY), Operating profit JPY2.4bn (+47.9% YoY).
- Full-year FY02/25 forecast revised: Revenue JPY48.0bn (+8.2% YoY), Operating profit JPY2.8bn (+53.2% YoY), Net income JPY1.9bn (+79.7% YoY).
- Dividend forecast increased: Annual dividend JPY66.0 per share, payout ratio 31.0%, maintaining dividend for eight consecutive fiscal years.
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