In today’s briefing:
- Gas Pains, Metal Gains: Mitsubishi’s Bumpy Road to the Next Commodity Cycle
- Rigaku Holdings (268A JP) – Capitalizing on Rising Semiconductor Complexity
- Kurita Water (6370): Stable AI CapEx Beneficiary
- Yutori Bets on M&A and AI for Further Growth
- Nichirei (2871 JP) Vs Kikkoman (2801 JP): Packaged Foods Pair with a Valuation Edge
- Systems Engineering Consulta (3741 JP): Q1 FY03/27 flash update
- Round One Corp (4680 JP): Q1 FY03/27 flash update
- Toyo Business Engineering (4828 JP): Q1 FY03/27 flash update
- Giken Ltd (6289 JP): Coverage Initiation
- Dic Corp (4631 JP): 1H FY12/26 flash update
Gas Pains, Metal Gains: Mitsubishi’s Bumpy Road to the Next Commodity Cycle
- After initial good absolute and relative performance, the stock has corrected with the oil and gas complex
- Q1 results show the company is exceeding its plan as higher prices impact the P&L positively
- The highest commodity weightings across the major trading houses mean this will be a winner as the next leg of the commodity bull market unfolds
Rigaku Holdings (268A JP) – Capitalizing on Rising Semiconductor Complexity
- Rigaku’s valuation has re-rated upwards over the past year from a scientific- instrument multiple (low teens PER) to a semi-cap multiple (high 30s to low 40s PER) as investors increasingly recognize the Company’s Semiconductor Process Control Instruments business as the primary growth and earnings driver.
- We believe Rigaku’s growth upside remains underappreciated as the Company’s FY12/27 medium-term plan (MTP) targets were anchored on a less constructive semiconductor industry environment and outlook.
- Furthermore, the demand visibility for Rigaku’s X-ray metrology equipment has improved as the leading chipmakers and WFE reaffirmed their increasingly complex product roadmaps and announced record multi- year capex plans.
Kurita Water (6370): Stable AI CapEx Beneficiary
- Kurita Water Industries (6370 JP) is an indirect beneficiary of the growing AI CapEx spending, and as a result, it trades at a discount to its global peers.
- The management is committed to doing a share buyback of around USD 220 million from now to mid-next year, which will provide some floor for the share price.
- It is also less volatile and less correlated with the other large caps within the AI CapEx spending beneficiaries such as TSMC, and SK Hynix.
Yutori Bets on M&A and AI for Further Growth
- Yutori started as a Gen Z streetwear platform but has rapidly evolved into a diversified lifestyle group spanning fashion, cosmetics, lingerie, and Korea.
- After revenues jumped 71% in FY2025, the company is now targeting ¥18.5 billion this year but, despite this, the share price has fallen more than half.
- The upside is coming from both organic growth, full ownership of Her lip to, aggressive M&A, and AI-driven efficiency. A good time to invest perhaps.
Nichirei (2871 JP) Vs Kikkoman (2801 JP): Packaged Foods Pair with a Valuation Edge
- Context: The Kikkoman (2801 JP) vs. Nichirei (2871 JP) price ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlight: Going long Nichirei (2871 JP) and short Kikkoman (2801 JP) targets a 4% return.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
Systems Engineering Consulta (3741 JP): Q1 FY03/27 flash update
- Q1 FY03/27 saw record highs in revenue (JPY2.8bn), operating profit (JPY441mn), and net income (JPY353mn), with YoY growth.
- Orders in Q1 FY03/27 decreased by 33.6% YoY to JPY1.7bn, while the order backlog increased by 22.3% YoY.
- Public Infrastructure revenue grew 33.7% YoY to JPY1.4bn, with a 71.2% YoY decrease in orders to JPY348mn.
Round One Corp (4680 JP): Q1 FY03/27 flash update
- Revenue increased by 18.1% YoY to JPY51.4bn, with operating profit up 4.3% YoY to JPY6.3bn.
- Japan segment saw a 16.9% YoY revenue increase to JPY28.5bn, with a 52.0% YoY rise in operating profit.
- US segment revenue grew 20.6% YoY to JPY22.6bn, but operating profit declined 43.1% YoY to JPY1.6bn.
Toyo Business Engineering (4828 JP): Q1 FY03/27 flash update
- Orders increased 17.0% YoY to JPY7.2bn, and revenue rose 12.3% YoY to JPY6.8bn, setting record highs.
- Operating profit increased 10.5% YoY to JPY1.9bn, while net income declined 7.1% YoY to JPY1.3bn.
- mcframe license revenue reached new highs, rising 43.5% YoY to JPY2.0bn, driven by strong license sales.
Giken Ltd (6289 JP): Coverage Initiation
- Revenue reached JPY19.5bn (+11.9% YoY), operating profit JPY1.8bn (+27.2%), and net income JPY1.5bn (+225.0% YoY).
- Domestic revenue was JPY10.5bn (+7.4% YoY), overseas revenue JPY2.9bn (+80.3% YoY), with operating profit JPY2.8bn (+29.1% YoY).
- Domestic revenue declined YoY due to fewer development projects, while overseas revenue increased, boosting overall segment revenue.
Dic Corp (4631 JP): 1H FY12/26 flash update
- Sales increased by 13.3% YoY to JPY593.0bn, with operating profit rising 92.2% YoY to JPY51.9bn.
- Recurring profit rose 157.7% YoY to JPY52.3bn, and net income attributable to owners increased 184.1% YoY to JPY37.2bn.
- DIC revised its full-year forecast, expecting sales of JPY1.14tn and operating profit of JPY78.0bn.
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