Daily Brief Japan: Kokusai Electric , Sony Financial Group, Japan Post Bank, Tekscend Photomask, Astroscale, Japan Steel Works, FineToday Holdings, FCE, Bell System24 Holdings Inc and more

• Three weeks ago I wrote that KKR’s lockup would expire about now in [Japan ECM] Kokusai Elec (6525) – KKR’s Lock Up Expiry in 3 Weeks – $700mm Clean-Up Coming? 
• Today post-close, Applied Materials (AMAT US) announced a 10.7mm share (4.5%) Accelerated Block Offering to be priced tomorrow morning, at an indicated 4.5-6.5% discount. This would put them at 10+%. 
• This should be very well taken up. There is index demand on the follow. The question is more about the unwind of KKR’s last bit. Perhaps to come soon?

• Sony Financial Group (8729 JP) started ToSTNeT-3 buybacks last week and did one this week to jumpstart the buyback, cushioning the Nikkei 225 deletion on 29 Sep and subsequent overhang.
• In three ToSTNeT-3 buybacks in 6 trading days spending ¥28.9bn, the company bought back 177.513mm shares or 2.5% of shares out, or about 6.2% of Max Real World Float (MRWF).
• With ¥71.1bn left, at last that’s 460mm shares, or 16.2% of MRWF. Over 10mos that is 1.62%/month. That will boost Mar26 DPS, Mar27 DPS projections, EPS, etc.

• Once every quarter the TSE reassesses free float weights for a set of companies whose fiscal years ended 7-10 months prior. Calendar Q1 is the biggie so October is too.
• This year, as companies have made dramatic changes in their shareholder registries through crossholder sales, activist acquisitions, and other, there are some big changes and big dollar changes.
• We see nearly 600 FFW changes up and down, and then nearly 1,100 stocks which see a significant (average 0.5x ADV) funding trade. $35bn in total.

• Applied Materials (AMAT US) is looking to raise approximately US$330m through an accelerated secondary offering for around 4.5% of Kokusai Electric (6525 JP) (KE) stock.
• KE had seen two selldown earlier, from KKR, with mixed results. KKR just came out of its last lockup.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Tekscend Photomask (429A JP) has set the IPO pricing at JPY2,900–3,000 per share, and will offer 39.6m shares raising around ¥115-118bn (US$800m) at a valuation of ¥240-250bn.
• The company is a leading global photomask manufacturer with strength in advanced EUV masks, and generates most of its revenue from overseas markets.
• We have compared the company against its closest pure-play peer Photronics Inc (PLAB US)  and believe the IPO is valued attractively given its expansion plans and technological edge.

• After months of going nowhere, Astroscale shot up more than 20% in the two trading days following the election of defense hawk Sanae Takaichi as president of the LDP.
• Astroscale made a small gross profit last quarter, but needs a rising flow of contracts and subsidies in order to turn profitable at the operating and net levels.
• At ¥825, the stock price is 38% below the ¥1,326 high reached just over a year ago. If Takaichi becomes prime minister, the chances of regaining that high would improve.

• Defense expansion priced in: JSW remains a key beneficiary of Japan’s multi-year defense buildup, but recent political optimism has driven valuations ahead of fundamentals.
• Structural growth secured: Medium-term defense sales set to more than double by FY2028, supported by artillery dominance, APC production, and new railgun development projects.
• Valuation headwinds: Even under bullish growth and margin assumptions, DCF implies ¥8,000 fair value; current 20x EV/EBITDA multiple looks rich versus domestic peers.

• FineToday Holdings (420A JP) (FT) is planning to raise around US$280m via selling a mix of primary and secondary shares.
• FineToday (FT) is a beauty and personal care company in Asia offering a range of products, including hair care, skin care and body care products.
• In our previous note, we had looked at its past performance. In this note, we will talk about valuations.

Key points (machine generated)

• FCE Ltd. has increased its earnings forecast for the fiscal year ending September 2025 due to strong performance and the launch of its AI agent business.
• The company specializes in Robotic Process Automation software and offers a human resource development platform called ‘Smart Boarding.’
• FCE aims to enhance human capital in Japan by integrating ‘subjectivity’ with ‘productivity’ through various educational tools and training programs.

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• In FY02/25, Bellsystem24 Holdings reported revenue of JPY143.6bn (-3.4% YoY), operating profit of JPY11.6bn (+0.9% YoY), and profit attributable to owners of the parent of JPY8.0bn (+6.1% YoY).
• The company captured outsourcing demand for contact center and back-office operations, raising the number of clients to 1,586 (from 1,520 in FY02/24).
• As a result, SC operations generated revenue of JPY123.2bn (+2.4% YoY) and SB operations, JPY20.0bn (+6.0% YoY).