In today’s briefing:
- Renesas Electronics (6723 JP): Denso Exits as Stock Price Falters
- Renesas Electronics Block – Well Flagged, Clean up but Momentum Isn’t Great
- [Japan M&A] Bain Deal for Nissin (9066) Is Still Light Vs Comparable Deals
- Nissin Corp (9066 JP): Bain-Sponsored MBO at JPY8,100 Is Arguably Light
- Recruit: Weakening Labour Markets and More Downside Ahead
- Marubun Corp (7537 JP): Full-year FY03/25 flash update
- Medical System Network Co (4350 JP): Full-year FY03/25 flash update
- Meiwa Estate (8869 JP): Full-year FY03/25 flash update
- Minato Holdings (6862 JP): Full-year FY03/25 flash update
- Nagaoka International (6239 JP): Q3 FY06/25 flash update
Renesas Electronics (6723 JP): Denso Exits as Stock Price Falters
- Denso Corp (6902 JP) is looking to raise up to JPY137bn (US$940m) by selling 73.9m shares of Renesas Electronics (6723 JP) to international investors.
- The indicative price range is JPY 1,812-1,848/share, a discount of 1-2.95% to Monday’s close. The placement is 4.1% of shares outstanding and is 4.7 days of ADV.
- We do not expect any passive buying at the time of settlement of the placement shares. The earliest passive buying will take place in August and September.
Renesas Electronics Block – Well Flagged, Clean up but Momentum Isn’t Great
- Denso Corp (6902 JP) is looking to raise US$940m via selling its remaining stake in Renesas Electronics (6723 JP).
- DENSO last sold some of its stake nearly a year ago and hence, this deal is well flagged.
- In this note, we will talk about the placement and run the deal through our ECM framework.
[Japan M&A] Bain Deal for Nissin (9066) Is Still Light Vs Comparable Deals
- The deal price is higher than the Bloomberg article insinuated. The closing date is earlier than the Bloomberg article suggested. But that doesn’t mean it’s enough.
- The Large ToSTNeT-3 buyback last year changed the shareholder structure significantly, but many holders who sold are unknown. I would expect they were cross-holders.
- For that, this deal is NOT a done deal. There may be games played on this deal.
Nissin Corp (9066 JP): Bain-Sponsored MBO at JPY8,100 Is Arguably Light
- Nissin Corp (9066 JP) has recommended a Bain-sponsored MBO tender offer of JPY8,100 per share, a 27.6% premium to the last close.
- The offer is attractive compared to peer multiples and historical trading ranges. However, it is light compared to precedent transaction multiples.
- While the offer represents an all-time high, it is below the midpoint of the target IFA DCF valuation range. A counterbid cannot be ruled out.
Recruit: Weakening Labour Markets and More Downside Ahead
- Recruit Holdings (6098 JP) reported 4Q and Full-year FY03/2025 results on Friday which fell below consensus estimates. However, earnings were in line with the company’s guidance.
- Labour markets have begun to cool off with concerns over potential impact of trade wars and economic uncertainty, and the company expects top line to decline in FY03/2026E.
- Though the company’s monetisation efforts have paid off, we expect Recruit’s earnings to remain under pressure and think there’s opportunity to gain on the Short side.
Marubun Corp (7537 JP): Full-year FY03/25 flash update
- Net sales decreased 10.8% YoY to JPY210.8bn, with operating income down 31.0% YoY to JPY9.0bn.
- Ordinary income increased 12.7% YoY to JPY6.3bn, supported by foreign exchange gains from yen appreciation.
- Dividend forecast revised to JPY66.0 per share, with a payout ratio of 40.4%, up from JPY52.0.
Medical System Network Co (4350 JP): Full-year FY03/25 flash update
- FY03/25 sales increased by 6.1% YoY to JPY122.4bn, while operating profit decreased by 17.7% YoY to JPY3.2bn.
- FY03/26 forecast projects sales of JPY125.5bn (+2.5% YoY) and operating profit of JPY3.4bn (+7.8% YoY).
- Community Pharmacy Network segment FY03/26 targets: 12,000 network affiliates, 9,000 partner pharmacies, and 6,850 digital service adopters.
Meiwa Estate (8869 JP): Full-year FY03/25 flash update
- In FY03/25, revenue and operating profit increased YoY, driven by the Real Estate Agency Business’s strong performance.
- Built-for-Sale Condo Business saw revenue increase but operating profit decline due to lower condo sales revenue and margins.
- FY03/26 forecasts a YoY revenue increase, driven by Real Estate Agency Business, with a JPY5.00 commemorative dividend planned.
Minato Holdings (6862 JP): Full-year FY03/25 flash update
- Revenue increased by 29.0% YoY to JPY24.5bn, with significant growth in the Digital Device Business segment.
- Operating profit decreased by 37.9% YoY to JPY767mn, with varying performance across business segments.
- Net income attributable to owners fell by 74.8% YoY, influenced by the absence of a prior extraordinary gain.
Nagaoka International (6239 JP): Q3 FY06/25 flash update
- Cumulative Q3 FY06/25 results show revenue of JPY5.4bn, operating profit of JPY771mn, and net income of JPY496mn.
- Water-related business revenue was JPY1.7bn, with segment profit of JPY54mn, impacted by increased personnel expenses.
- Energy-related business revenue reached JPY3.7bn, with segment profit of JPY1.1bn, affected by project delays and personnel costs.
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