Daily Brief Japan: Makino Milling Machine Co, Toyota Industries, Medical Data Vision, Gumi Inc, Sumitomo Metal Mining, SBI Shinsei Bank, TSE Tokyo Price Index TOPIX, ROHM Co Ltd, Shikoku Electric Power Co and more

• On Friday, after market close, Makino Milling Machine Co (6135 JP) finally issued a progress update on the MBK preconditional tender offer. The update, while mixed, should calm nerves. 
• The positive read-across is a pathway to regulatory approvals, the Homeplus saga has not derailed the offer, and the likely breach of the long-stop date is not a termination event.
• The negative read-across is the lack of a revised tender start timeline, an unexplained delay in securing most regulatory approvals and ongoing uncertainty on the long-stop date.

• I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Smart Share Global (EM US), Dongfeng Motor (489 HK), Raksul Inc (4384 JP), Jinke Smart Services (9666 HK), Qube Holdings (QUB AU), ENN Energy (2688 HK).       
• Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Toyota Industries (6201 JP), Hainan Meilan International Airport (357 HK), Ainsworth Game Technology (AGI AU).

• Medical Data Vision (3902 JP) was IPOed in 2014. MitCorp sold. Others sold. Fujifilm and Medipal stayed in. The stock ran up. SBI bought from Fujifilm in Nov2020 at ¥2355.
• The stock fell, SBI bought more in 2021-2022. Then it fell more in 2023 and SBI bought more, then fell more in 2024 and SBI bought more. 
• The Nikkei reports today that Nippon Life will announce a TOB on 15 December with a max price of ¥60bn (242% premium), which coincidentally would bring SBI close to breakeven.

• The Nikkei reports that Nippon Life Insurance will launch a tender offer for Medical Data Vision (3902 JP) at a valuation up to JPY60 billion.
• If the valuation refers to market cap, the offer is JPY1,500, a 225% premium to the last close of JPY462. If it relates to EV, the offer price is JPY1,550. 
• Despite the staggering premium, it does not represent an all-time high (share price traded higher in November 2021). Nevertheless, a binding proposal would be a done deal. 

• Strategic Pivot to Web3 and Metaverse: Gumi is aggressively shifting its focus from a reliance on hit-driven mobile games to becoming a comprehensive Web3 enterprise, underscored by strategic partnerships with Square Enix and SBI Holdings, and significant investments in cryptocurrencies like XRP and Bitcoin.
• Financial Volatility and Restructuring: The company has experienced significant financial turbulence, with a substantial net loss in FY24 driven by underperforming titles, leading to the discontinuation of flagship games, workforce reductions, and a halt in the development of high-risk original titles.
• Leveraging Existing IP for Future Growth: Despite sunsetting major titles, Gumi plans to leverage its well-known ‘Brave Frontier’ IP for a new Web3 game, ‘Brave Frontier Versus’, in partnership with the Sui Foundation, aiming to blend its established brand with new blockchain-based gaming experiences.

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• Earnings re-based higher: FY2025–27 EPS upgraded ~20%, driven by copper and gold prices; resource earnings dominate while smelting volatility remains largely accounting-driven.
• Valuation near fair value: At ~¥6,000, SMM trades around mid-cycle value; upside depends on sustained copper/gold strength rather than multiple expansion.
• Downside cushioned: Strong balance sheet and ~2× FCF dividend cover limit downside, with pullbacks offering better entry than chasing spot-driven rallies.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, this week will probably see the last of the big listings in Asia this year
• On the placements front, Swiggy was the main deal in the market. There are still a few lockup expiries left for 2025.

• Among companies failing the listing criteria for Standard Market and Growth Market, many that cannot meet 1 billion yen tradable shares market capitalization criteria will migrate to Nagoya Stock Exchange.
• These companies failed to grow market capitalization. For these companies, the purpose of going public may have been to increase their visibility and credibility than to achieve growth after listing.
• Companies migrating from TSE to other markets face a significant hurdle in achieving growth and improving corporate governance to enhance management transparency, especially when institutional investor engagement is lacking.

• Sales are growing again and the company has turned profitable with capacity utilization up and costs down. Guidance for 2H of FY Mar-26 looks conservative. 
• Sales of power devices is rising after a long period of weakness, supported by auto, industrial and data center related demand.
• Projected valuations are once again reasonable. The share price should continue to trend upwards.

• Shikoku Electric Power is demonstrating a significant financial turnaround, with net income rebounding strongly in the latest fiscal years after a loss in FY2023, driven by operational efficiencies and a favorable regulatory environment.
• The company is strategically expanding its renewable energy portfolio, with a target to increase capacity to 500MW by FY2030 and 2GW by FY2050, focusing on solar (including floating solar), biomass, and wind power.
• The stable operation of its sole nuclear reactor, Ikata Unit 3, is a critical earnings driver, though it remains subject to regulatory oversight, legal challenges, and periodic maintenance shutdowns.

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