In today’s briefing:
- Saint-Care (2374 JP): An Attractive MBO
- Merger Arb Mondays (10 Nov) – Soft99, Digital Holding, Saint-Care, ANE, ENN Energy, Mayne, AUB
- Weekly Deals Digest (09 Nov) – Toyota Industries, Mandom, Pacific Industrial, Saint-Care, ANE, Mayne
- Mitsubishi Electric: Digital Pivot Sparks 60% Profit Surge, What’s Next?
- Japan 2025 H1 Bank Guidance/Results UPDATE – Strong Uplift Continues on Better Core Biz Income
- Combining Equity Method Affiliates and Founder Family Companies Provide Sufficient Number of Targets
- Advantest Q2 FY2025, Navigating Post-Earnings Volatility
- Medical System Network Co (4350 JP): 1H FY03/26 flash update
Saint-Care (2374 JP): An Attractive MBO
- Saint-Care Holding (2374 JP) has recommended an MBO from the founding family at JPY1,220, a 48.8% premium to the last close price.
- The offer is attractive compared to historical trading ranges and is above the midpoint of the target IFA DCF valuation range.
- Due to the irrevocables, it is not onerous to meet the minimum acceptance condition. This is a done deal.
Merger Arb Mondays (10 Nov) – Soft99, Digital Holding, Saint-Care, ANE, ENN Energy, Mayne, AUB
- 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: Mayne Pharma (MYX AU), Saint-Care Holding (2374 JP), Smart Share Global (EM US), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Digital Holdings Inc (2389 JP).
- Lowest spreads: Bright Smart Securities (1428 HK), Mandom Corp (4917 JP), Pacific Industrial (7250 JP), Toyota Industries (6201 JP), Seven West Media (SWM AU), Jinke Smart Services (9666 HK).
Weekly Deals Digest (09 Nov) – Toyota Industries, Mandom, Pacific Industrial, Saint-Care, ANE, Mayne
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: CNGR Advanced Material (300919 CH) is seeking to raise US$507 million through a H Share listing.
- Event-Driven developments: Toyota Industries (6201 JP), Japan Infrastructure Fund Investment Corporation (9287 JP), Mandom Corp (4917 JP), Pacific Industrial (7250 JP), Saint-Care Holding (2374 JP), ANE Cayman Inc (9956 HK).
Mitsubishi Electric: Digital Pivot Sparks 60% Profit Surge, What’s Next?
- Mitsubishi Electric is successfully executing a multi-year pivot toward becoming a high-margin digital solutions provider, anchored by its DX strategy and acquisition of OT security leader Nozomi Networks.
- H1 FY26 financial results confirm clear operating strength, showing a strong 60% year-over-year surge in net profit and strong revenue growth, especially within the Infrastructure and Life segments.
- Management’s shift to higher-margin software and services, along with disciplined capital management, is materializing value and helps justify a positive long-term view.
Japan 2025 H1 Bank Guidance/Results UPDATE – Strong Uplift Continues on Better Core Biz Income
- This four-day week saw 10 new guidance revisions (+61% on average), and 21 H1 earnings results (13 which hadn’t guided, averaging +41%, 8 which had, averaging 5.7% uplift vs guidance)
- It was a Good Week, though banks fell 0.4% as TOPIX fell 1% on the week.
- Once again, lower credit costs, higher net interest income, and some equity sales dominated. H2 implied guidance lower in many cases, some because of expected portfolio rebalancing (loss-taking).
Combining Equity Method Affiliates and Founder Family Companies Provide Sufficient Number of Targets
- In response to calls from overseas investors to eliminate parent-subsidiary dual listings, the number of listed subsidiaries has decreased, while the number of equity-method affiliates has increased.
- Some companies that found themselves with no wayout resorted to selling off part of their holdings to transition to equity method affiliates, for the time being, driven by herd mentality.
- When considering investment strategies focused on parent-subsidiary listings, in the highly liquid Prime Market, equity method affiliates are more promising investment targets than the limited number of listed subsidiaries.
Advantest Q2 FY2025, Navigating Post-Earnings Volatility
- Advantest’s updated guidance and MTP3 targets confirm its dominant, long-term growth trajectory as a key supplier for the high-performance computing and AI semiconductor supply chain.
- Despite a strong structural growth story, the stock faces near-term headwinds from a sequential decline in Q2 operating income and an elevated valuation that reflects peak market optimism.
- We suggest a tactical adjustment to vega exposure due to market dynamics, recommending a strategy to monetize the heightened implied and realized volatility following the strong earnings report.
Medical System Network Co (4350 JP): 1H FY03/26 flash update
- 1H FY03/26 sales reached JPY63.9bn (+6.9% YoY), operating profit JPY1.3bn (+25.2% YoY), net income JPY452mn (+118.4% YoY).
- Community Pharmacy Network segment sales JPY120.1bn forecasted, with segment profit JPY6.0bn, driven by network expansion and digital services.
- FY03/26 forecast includes sales JPY125.5bn (+2.5% YoY), EBITDA JPY6.9bn (+4.9% YoY), net income JPY1.3bn (+3.0% YoY).
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