In today’s briefing:
- [Japan ECM] Lifedrink (2585) – Fast-Growing Beverage Seller Meets P.E. Firm Selldown
- Lifedrink Placement: Cleanup Sale but Placement Properties Are Not Great
- Orion Breweries IPO – Smaller Scale Warrants Discount
- Nitto Boseki (Nittobo, TSE:3110) – Expansion Unlocks AI-Linked Growth, but Execution Key
- Japan Inc. And the Copper Supercycle: Who Benefits Most?
- Orion Breweries IPO: Turning Local Strength into Growth Abroad
- Continuing Parent-Subsidiary Listings Is Losing Value that Could Be Reliably Obtained
- Nippon Steel (5401.T) – Financial and Strategic Analysis Post-U.S. Steel Acquisition
- Hirano Tecseed (6245 JP): Research Update
- Raccoon Holdings, Inc. (3031 JP): Q1 FY04/26 flash update
[Japan ECM] Lifedrink (2585) – Fast-Growing Beverage Seller Meets P.E. Firm Selldown
- Today post-close, Lifedrink (2585 JP) announced the Sunrise PE funds which own 22% of the company will sell their stake in a clean-up offering with pricing in 8 days.
- This offering comes 8 trading days after a new post-earnings all-time-high. At 24x ADV, the offering will increase Max Real World Float by 50+%.
- There are some index and buyback supply/demand dynamics to note. It’s a heavy offering, so bullish/bearish may be a matter of horizon.
Lifedrink Placement: Cleanup Sale but Placement Properties Are Not Great
- Lifedrink (2585 JP) is looking to raise around US$175m from a secondary placement.
- The deal is a large one to digest, representing 20.7 days of the stock’s three month ADV, despite being 18.4% of total shares outstanding.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Orion Breweries IPO – Smaller Scale Warrants Discount
- Orion Breweries Limited’s (409A JT) operations span across alcoholic beverages, tourism and hotel businesses, aiming to raise ~US$126m in its Japan IPO via a mix of primary and secondary offerings.
- Orion Breweries (OBL) has a strong Okinawa market position. Share of overseas sales has been growing (~23% of FY25 revenues), while profitability has also largely been steady.
- In our previous note, we looked at the firm’s past performance. In this note, we talk about the peer comparison and IPO valuations.
Nitto Boseki (Nittobo, TSE:3110) – Expansion Unlocks AI-Linked Growth, but Execution Key
- ¥15 Bn investment to triple glass cloth capacity at Fukushima plant, with new operations starting Q4 FY2026.
- Demand for low-dielectric and T-glass cloth in AI servers and semiconductors has outpaced supply, creating a strategic bottleneck and premium pricing.
- Full earnings uplift from FY2027 onward, with projected revenue and EPS rising 12–15% post-expansion.
Japan Inc. And the Copper Supercycle: Who Benefits Most?
- Copper Bull Case: Electrification and constrained supply support a bullish $10k/t copper outlook, positioning Japan Inc. as a strategic beneficiary of the energy transition.
- Japan Inc. Exposure: ~0.95 Mt attributable output (~63–66% demand) drives ~$6bn EBITDA; SMM and JX Advanced Metals are most leveraged, trading houses offer diversified exposure.
- Growth Optionality: Nittetsu’s Chile projects add near-term growth (2026–28), while Quechua provides long-dated optionality into the 2030s, enhancing Japan’s copper security.
Orion Breweries IPO: Turning Local Strength into Growth Abroad
- Orion Breweries Limited (409A JT) has become synonymous with Okinawa, combining heritage, loyalty, and local identity into a brand experience that larger rivals struggle to replicate.
- The company benefits from Okinawa’s nearly 10 million annual visitors, turning tourism into both a sales driver and a powerful channel for brand amplification abroad.
- The IPO offers attractive valuation versus peers, despite risks from MBO-related debt and potential share overhang from private equity owners.
Continuing Parent-Subsidiary Listings Is Losing Value that Could Be Reliably Obtained
- Listed subsidiaries focusing on core businesses have higher capital profitability and stock valuations than parent companies, while parent companies with diversified businesses have lower than listed subsidiaries in the both.
- By converting a listed subsidiary with high capital profitability into a wholly owned subsidiary, or by selling a listed subsidiary with low capital profitability, it could increase profitability of parent.
- Even though this was expected, parent-subsidiary listings continue to this day (recently, more subsidiaries are listing on Standard Market), and the value that can be reliably obtained is being lost.
Nippon Steel (5401.T) – Financial and Strategic Analysis Post-U.S. Steel Acquisition
- Nippon Steel’s $14.9 billion acquisition of U.S. Steel, finalized in July 2025, significantly expands its North American presence but introduces margin and cost challenges.
- Announced Plans: A $11 billion capex plan through 2028 targets a new EAF mill, Gary Works upgrades, and efficiency enhancements to drive synergies.
- What to Watch: Monitor synergy execution, steel price trends, and U.S. Steel’s FCF generation to assess whether Nippon can offset margin dilution and balance sheet strain.
Hirano Tecseed (6245 JP): Research Update
- Hirano Tecseed (hereinafter HT) reported FY25 Q1 OP of ¥821mil (+181.1-% YoY) on sales of ¥10,719mil (-11.4% YoY), which resulted in an OPM of 7.7%, a significant improvement from FY24 Q1’s OPM of 2.4%.
- Sales were largely in line with expectation on the back of progress in working through order backlogs, especially in C&LM for secondary LiB.
- Given successful passing through of cost increases to customers in the C&LM segment, FY25 1H guidance was revised from OP of ¥750mil (-26.8% YoY) on sales of ¥16,750mil (-31.3% YoY) to OP of ¥1,000mil (-2.4% YoY) on unchanged sales.
Raccoon Holdings, Inc. (3031 JP): Q1 FY04/26 flash update
- Revenue increased 2.3% YoY, with EC business up 6.6% and Financial business down 3.2% due to deconsolidation.
- Operating profit decreased 19.6% YoY; SG&A expenses rose 3.8pp, driven by personnel and overseas shipping costs.
- EC business revenue rose 6.6% YoY; Financial business payments handled increased 12.2% YoY, guarantees outstanding grew 14.9% YoY.
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