In today’s briefing:
- [Japan M&A] Makino Milling (6135) – MBK as White Knight Appears To Have Made a Binding Bid
- Makino Milling Machine (6135 JP): Relief as a White Knight Bidder Surfaces
- ORIX JREIT (8954) Sponsor To Buy Units – Looks Minor, It’s Bigger
- Seven & I Holdings (3382 JP): Wait and Hope
- Conbini Winning by Adding Value but Not Seven Eleven
- Shionogi & Co (4507 JP): Change Of Gears Likely From FY26, Torii Acquisition Augurs Well
- Paycloud Holdings (4015 JP): Q2 Follow-Up – May 12, 2025
- Okinawa Cellular (9436 JP) – FY3/25 Record Earnings Beat Forecasts
- Japan Lifeline Co., Ltd (7575 JP): Research Update post FY24 results
- Dydo Drinco Inc (2590 JP): Q1 FY01/26 flash update
[Japan M&A] Makino Milling (6135) – MBK as White Knight Appears To Have Made a Binding Bid
- In December, Nidec Corp (6594 JP) made an unsolicited bid for Makino Milling Machine Co (6135 JP). Makino wanted more time. Nidec wanted to squeeze. Makino proposed a poison pill.
- Makino appeared to act slowly but white knight bidders were mooted in the media. Nidec launched, but apparently approvals may have been hard. They withdrew. Makino cancelled the poison pill.
- Shares fell sharply. Yesterday, they rose because it appears Effissimo owns 3%. Today, we got news post-close that MBK may be close to making an ¥11,000+ bid.
Makino Milling Machine (6135 JP): Relief as a White Knight Bidder Surfaces
- In response to a Nikkei article, Makino Milling Machine Co (6135 JP) confirmed it had received a legally binding acquisition proposal from MBK Partners.
- The price is expected to exceed Nidec Corp (6594 JP) JPY11,000 hostile offer. On 8 May, Nidec withdrew its offer due to the Board’s proposed countermeasures.
- My analysis suggests that MBK’s white knight bid could be JPY11,677 per share, 13.7% higher than the last close price of JPY10,270.
ORIX JREIT (8954) Sponsor To Buy Units – Looks Minor, It’s Bigger
- It has been a sport of the J-REITs the past 18-24mos to buy back their units at well under PNAV 1.0x and to have sponsor entities up their stakes.
- The goal? Get valuation to PNAV1+ so they can, in good faith, get the REIT to buy assets with an equity raise. Below PNAV1 would work with a rights offering.
- Now the Orix JREIT Inc (8954 JP) has announced it will triple its small holding. Meaningful portion of ADV, more meaningful portion of MRWF.
Seven & I Holdings (3382 JP): Wait and Hope
- The Seven & I Holdings (3382 JP) AGM was a vote of confidence in the Board’s strategy of pursuing two parallel paths to generate value.
- The Board’s management initiatives are steadily being implemented, but have yet to deliver shareholder value. Since they were announced, the share price has modestly outperformed the Nikkei 225.
- 7&I and Couche Tard signed an NDA but a viable divestiture plan to gain US regulatory approval remains in doubt, particularly as PE has emerged as the likely bidder.
Conbini Winning by Adding Value but Not Seven Eleven
- The four largest convenience stores all had varying results last year, two setting records for high profits, and the other two seeing worrying shortfalls.
- The biggest differentiating factor was how each handled the problem of inflation, either through lower prices or by offering added value.
- Unfortunately, Seven Eleven was the worst performer of the big three, still suffering from a price perception problem and lower levels of innovation compared to Lawson and Familymart.
Shionogi & Co (4507 JP): Change Of Gears Likely From FY26, Torii Acquisition Augurs Well
- Shionogi & Co (4507 JP) revenue up 1% YoY in FY25 as royalty income from HIV franchise compensates for lower sales from infectious disease drugs.
- Torii pharma and JT’s pharma division acquisition augurs well in terms of products category diversification.
- NDA for zuranolone, a treatment in development for major depressive disorder (MDD) submitted. JTE-061 (tapinarof) and TO-208 from Torii opens up opportunities in Japan market.
Paycloud Holdings (4015 JP): Q2 Follow-Up – May 12, 2025
- H1 Results Overview: On April 14, 2025, Paycloud Holdings Inc. (hereafter, the Company) announced its H1 FY2025/8 results.
- The Company reported net sales of JPY 4,838 mn (+143% YoY), adjusted EBITDA of JPY 679 mn (+200% YoY), and operating profit of JPY 404 mn (+370% YoY).
- While it was substantially attributable to having consolidated Cloudpoint, a digital signage business integrated in March 2024, it was also contributed by its upward momentum of business fundamentals reflecting the fact that the Company’s ongoing cashless service and IT solutions businesses posted nearly 30% operating profit growth with improved margins.
Okinawa Cellular (9436 JP) – FY3/25 Record Earnings Beat Forecasts
- Earnings mark 13th straight year of sales and profit growth – Q1-4 FY3/25 earnings outperformed revised company forecasts, with sales increasing +8.1% YoY to ¥84.31bn and operating profit rising +4.4% YoY to ¥17.76bn.
- Strong handset sales and Solutions business projects outperformed, aiding a particularly strong Q4- only performance of a +20.6% YoY increase in OP and +12% YoY in sales.
- For FY3/26, the company forecasts sales growth of +0.8% YoY and OP growth of +2.5% YoY thanks to mobile contract price hikes.
Japan Lifeline Co., Ltd (7575 JP): Research Update post FY24 results
- Japan Lifeline [hereinafter JLL] produced record earnings in FY24 with full-year OP of ¥12,326mil (+13.2% YoY) on sales of ¥56,610mil (+10.2% YoY), landing largely in line with the full-year guidance for OP of ¥12,600mil (+15.7% YoY) on sales of ¥56,800mil (+10.5% YoY), and is aiming for record earnings again in FY25, with 1H OP of ¥6,300mil (+0.6% YoY) on sales of ¥29,300mil (4.7% YoY), and full-year OP of ¥12,900mil (+4.7% YoY) on sales of ¥59,300mil (+4.8% YoY).
- The firm revised up its medium-term targets with the release of its FY25 earnings, and is now guiding for FY27 sales of ¥70,000mil, up from ¥63,000mil.
- JLL’s base shareholders’ return is the higher of a base dividend of 40% of net income or a DOE 5%, plus extra dividends or share buybacks, depending on circumstances.
Dydo Drinco Inc (2590 JP): Q1 FY01/26 flash update
- In Q1 FY01/26, revenue was JPY53.0bn (-0.4% YoY) with an operating loss of JPY1.4bn and recurring loss of JPY2.3bn.
- Domestic Beverage business revenue fell 4.6% YoY to JPY32.4bn, with an operating loss of JPY2.4bn due to price hikes.
- International Beverage business revenue increased 12.5% YoY to JPY12.9bn, achieving an operating profit of JPY972mn (+40.5% YoY).
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