In today’s briefing:
- [Japan ECM] Koei Tecmo (3635 JP) Needs to Sell Shares To Stay in Prime ($280mm Offering)
- Koei Tecmo Placement: Some Non-Fundamental Selling; but Weak Fundamentals
- Shibaura Electronics (6957 JP): Signed, Sealed, Delivered as Yageo Secures FEFTA Approval
- Kyoto Financial Group (5844 JP): Disposals Plan for Equity Holdings Warrants More Ambitious Target
- Shimano (7309 JP) — Q2 Miss Resets Expectations; China Drag Masks EU Recovery
- Air Water Inc. (TSE: 4088) – Diversified Japanese Industrial Gas & Healthcare Player
- Asahi Intecc (7747 JP): Strong FY25 Result; FY26 Guidance Initiation; New Business Plan Announced
[Japan ECM] Koei Tecmo (3635 JP) Needs to Sell Shares To Stay in Prime ($280mm Offering)
- In December 2021, Koei Tecmo Holdings (3635 JP) announced a complex but lower-impact move to increase float share count in order to stay listed on TSE Prime.
- Scheme: buyback from two holders plus CB issuance. Unfortunately, shares did not rise enough to convert the CBs so as of March 2025, the tradable share criteria was not met.
- So now the two main holders are selling more shares and the company is diluting holders with new issuance to get float/tradable shares up with a US$280mm offering.
Koei Tecmo Placement: Some Non-Fundamental Selling; but Weak Fundamentals
- Koei Tecmo Holdings (3635 JP) is looking to raise around US$270m from a primary and secondary placement.
- The deal is a large one to digest, representing 37.6 days of the stock’s three month ADV and 6.1% of the shares outstanding.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Shibaura Electronics (6957 JP): Signed, Sealed, Delivered as Yageo Secures FEFTA Approval
- Yageo Corporation (2327 TT) has finally secured FEFTA approval for its JPY7,130 offer for Shibaura Electronics (6957 JP). The close of the tender offer has been extended to 18 September.
- The Board has opposed the Yageo offer due to synergies, dis-synergies and cultural differences. However, on 29 August, the Board’s update suggested a possible pathway to recommend Yageo’s offer.
- Despite Minebea Mitsumi (6479 JP)’s tendency to go against its declarations and increase its offer on several occasions, this time it is different. Minebea is likely to exit.
Kyoto Financial Group (5844 JP): Disposals Plan for Equity Holdings Warrants More Ambitious Target
- Kyoto Financial has equity holdings relative to market cap of 135%, well above its larger cap Japanese peer banks, and amounting to a market value of over JPY1.1trillion
- Management has stated that it is targeting JPY100bn+ of disposals in terms of market value by March 2029, but we believe that the market expected more
- Sizeable disposals of equity holdings is Kyoto’s primary source of prospective shareholder value creation; aside from this, its fundamental attractions are limited and so we downgrade Kyoto to a neutral
Shimano (7309 JP) — Q2 Miss Resets Expectations; China Drag Masks EU Recovery
- Q2 saw sales growth slow sharply (+8% yoy vs +16% in Q1) with OPM collapsing 600bps qoq; OP cut 34% sequentially.
- China sales reset to long-term average, but FY25 outlook slashed to ¥58b (-42% vs prior) with limited disclosure on margin impact.
- Stock down 25% post-results; buyback expansion (¥50b cap maintained) and long-only accumulation (First Eagle to 9.4%) provide near-term support.
Air Water Inc. (TSE: 4088) – Diversified Japanese Industrial Gas & Healthcare Player
- Company: Founded in 2000 through the merger of Hoxan, Daido Sanso, and Kyodo Oxygen, Air Water is a diversified conglomerate spanning industrial gases, healthcare, food logistics, and energy.
- Future Plans: Driving growth through semiconductor gases, UPS systems for AI/data centers, and hydrogen infrastructure, while scaling healthcare and logistics.
- Valuation: Trades at ~7x EV/EBITDA and 11x forward P/E, a deep discount to global peers (Linde, Air Liquide at 14–17x EV/EBITDA).
Asahi Intecc (7747 JP): Strong FY25 Result; FY26 Guidance Initiation; New Business Plan Announced
- Asahi Intecc (7747 JP) reported 12% YoY revenue growth in FY25, driven by the continued strong trajectory of medical division. FY25 gross profit margin improved to 67.7% (FY24: 64.2%).
- The company expects 9% YoY revenue growth to ¥131B in FY26, while gross profit margin is expected to contract 140bps to 66.3% due to the impact of the U.S. tariffs.
- The company has set a goal of achieving revenue of ¥180B and operating profit margin of 28% in FY30. Strengthening profitability of existing businesses will help to meet this target.
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