In today’s briefing:
- JX Advanced Metals (5016 JP) IPO: The Bull Case
- Japan Eyewear Holdings: A Short-Term Setback, Long-Term Opportunity?
- JX Advance Metals Pre-IPO – The Negatives – Isn’t There Yet
- Duskin (4665 JP) – Entering a Critical Phase
- Japan Elevator Service Holdings (6544 JP) – Sustainable Margin Expansion
- MIXI Inc. (2121 JP) – Sustaining Higher Returns Looks Realistic
- MARUKA FURUSATO (7128 JP): Full-year FY12/24 flash update
JX Advanced Metals (5016 JP) IPO: The Bull Case
- JX Advanced Metals (5016 JP) is a global leader in the semiconductor and ICT materials sector. It is seeking to raise up to US$2.6 billion.
- JXAM is a wholly owned subsidiary of ENEOS Holdings (5020 JP). After the listing, it is expected to become an equity-method affiliate of ENEOS.
- The bull case rests on its leading market position, focus businesses’ improving performance, improving profitability, shift to cash generation, and low leverage.
Japan Eyewear Holdings: A Short-Term Setback, Long-Term Opportunity?
- On February 14, 2025, JEH announced the cancellation of its planned share offering and withdrew its Prime Market listing application due to a potential insider trading violation involving an executive.
- While the news may trigger a sharp correction in the stock, JEH’s core business remains strong, driven by pricing power, expansion opportunities, and growing inbound demand.
- If governance concerns are effectively addressed, the stock could offer a compelling buy-and-hold opportunity once market sentiment stabilizes.
JX Advance Metals Pre-IPO – The Negatives – Isn’t There Yet
- JX Advance Metal’s (JXAM) parent, ENEOS Holdings (5020 JP), is looking to raise around US$2.6bn via selling more than half of its stake in JXAM in its Japan IPO.
- JXAM engages in business activities primarily focused on the development, manufacture and sale of materials made from copper and rare metals, which are used in the semiconductor and ICT fields.
- In this note, we talk about the not-so-positive aspects of the deal.
Duskin (4665 JP) – Entering a Critical Phase
- Outperformance at the Food Group – Q1-3 FY3/25 results demonstrated the ongoing strength and outperformance at the Food Group, with the Mister Donut franchise maintaining high growth and sustaining margin expansion.
- The Direct Selling Group delivered a recovery in profitability YoY, which is a positive optic but derived from one-time events; with flat sales growth YoY, the underlying trend denotes a business making limited headway in delivering growth.
- With unchanged FY3/25 guidance, we expect no major surprises in Q4 FY3/25 but will pay close attention to the release of the new medium-term plan covering FY3/26-FY3/29, which will be a key event.
Japan Elevator Service Holdings (6544 JP) – Sustainable Margin Expansion
- Solid execution and high earnings visibility – The key takeaway from Q1-3 FY3/25 results is that JES is a robust business with strong fundamentals, with double-digit sales (+16.6% YoY) and OP growth (+28.2% YoY).
- Quarterly Q3 FY3/25 OPM reached a historic high of 17.9%, driven by operating leverage with recurring revenue volume from growing maintenance contracts and improving the productivity of its in-house engineers while not introducing any price hikes.
- The resultant gains in market share from OEMs and sustainable margin expansion position the company to continue generating value, especially in an inflationary environment that drives demand for cost-effective and high-quality service.
MIXI Inc. (2121 JP) – Sustaining Higher Returns Looks Realistic
- Stronger than expected performance – Q1-3 FY3/25 results were a positive surprise, with larger than expected OPM expansion YoY driven by effective advertising cost control in both the Digital Entertainment and Lifestyle segments and strong sales growth in the Sports segment driven by the Spectator Sports business.
- The company has upwardly revised FY3/25 guidance, denoting a strong finish for Q4 FY3/25 and indicating that profitability will remain higher than expected for the medium term.
- We have revised our earnings estimates for FY3/26, which denotes flat reported earnings growth YoY; the underlying trend, excluding the sale of Timee (215A) shares in FY3/25, shows OP growth of approximately 10% YoY.
MARUKA FURUSATO (7128 JP): Full-year FY12/24 flash update
- FY12/24 revenue declined 6.5% YoY, with operating profit down 32.3% and recurring profit down 30.0% YoY.
- FY12/25 forecasts show revenue at JPY170.0bn (+5.1% YoY) and operating profit at JPY4.5bn (+16.6% YoY).
- FY12/26 targets revised to JPY180.0bn revenue, JPY5.8bn operating profit, and 5.7% ROE due to market challenges.
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