In today’s briefing:
- Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book
- Daito Trust Buys Out Listed Private Co Ascot (3264 JP) – Small Done Deal at ¥260
- Ascot Corp (3264 JP): Daito Trust Construction (1878 JP)’s Tender Offer a Done Deal
- Nikkon Pays 273% Premium for Chuoh Pack (3952 JP) In Takeover
- Avant Corp (3836 JP): 1H FY06/25 flash update
- Resona Holdings (8308 JP) – Positive 3QFY24 Results
- Freebit (3843) Buys Out Minorities in Giga Prize (3830) – Light, But Tough to Block
- Orient Corp (8585 JP): Q3 FY03/25 flash update
- Itochu Enex (8133 JP): Q3 FY03/25 flash update
- Cota Co Ltd (4923 JP): Q3 FY03/25 flash update
Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book
- 6-7 years ago Sanyo Special Steel (5481 JP) bought out a large foreign specialty steel company, and funded it by getting Nippon Steel to inject capital at below book.
- Now Nippon Steel is buying the rest of Sanyo Special Steel in a Tender Offer at 0.66x book, where most of book is Net Receivables, Inventory, WIP, and Materials.
- This is the second time in a decade where the Board has decided to sell control of itself at far below book value. They should be ashamed of themselves.
Daito Trust Buys Out Listed Private Co Ascot (3264 JP) – Small Done Deal at ¥260
- Ping An Insurance bought into a small Tokyo-based condo developer in 2017 at ¥255/share. In 2020, it reinvested on the dip with SBI at ¥155/share.
- Ping An and SBI started with zero shares. By 2020 they had 80+% of shares. Now they are selling out to Daito Trust Construct (1878 JP).
- This is a done deal at a slight premium to book value. Daito Trust buys Real Estate Available for Sale and assumes debt. That’s it. Easy peasy done deal.
Ascot Corp (3264 JP): Daito Trust Construction (1878 JP)’s Tender Offer a Done Deal
- Ascot Corp (3264 JP) announced a tender offer from Daito Trust Construct (1878 JP) at JPY260 per share, a 20.4% premium to the last close.
- Ascot currently does not meet the 25% tradeable share ratio criterion. The offer is attractive compared to historical trading ranges but below the mid-point of the IFA DCF valuation range.
- This is a done deal, as irrevocables represent an 82.78% ownership ratio, well above the minimum acceptance condition (67.86% ownership ratio).
Nikkon Pays 273% Premium for Chuoh Pack (3952 JP) In Takeover
- Today, Nikkon Holdings (9072 JP) announced it would take over Chuoh Pack Industry (3952 JP) for ¥5,034/share. It closed today at ¥1,349. This is a HUGE win for governance.
- The 273% premium is not the big win here. For holders it is, of course, but for Japan Inc shareholders everywhere, the win was the auction process.
- This could have come out at 100% premium and that might have been OK. As it is, cross-holders and one big holder together get this deal done. Congrats!
Avant Corp (3836 JP): 1H FY06/25 flash update
- Revenue rose to JPY14.0bn (+19.3% YoY), with operating profit margin increasing to 18.1% (+2.0pp YoY).
- Outsourcing and software businesses drove revenue growth, with order backlog in Q2 FY06/25 at JPY4.8bn (+24.0% YoY).
- Consolidated employees increased to 1,567, with substantial profit growth in Corporate Management Solutions Business in 1H FY06/25.
Resona Holdings (8308 JP) – Positive 3QFY24 Results
- Resona’s 3QFY24 results confirm that it is well geared to higher interest rates in Japan, with its high floating rate loan exposure, low LDR and high BoJ cash balance
- In addition, management is executing effectively to deliver revenue growth well ahead of opex growth, and NPL trends continue to improve, resulting in sharply lower cost of risk
- Resona’s equity holdings value to market cap ratio is 36%, the highest of the six biggest Japanese banks by market cap; management is actively divesting holdings to free up capital
Freebit (3843) Buys Out Minorities in Giga Prize (3830) – Light, But Tough to Block
- Today, Freebit Co Ltd (3843 JP) announced it would launch a Tender Offer next Monday to buy out minorities in 60.9%-owned Giga Prize (3830 JP).
- The multiple is not terribly impressive. It could be better. But they only need 5.8% of the 39.1% they do not own to get this over the hump.
- Synergies are clear. They are expected. They are not priced in the valuation. This is disappointing. Again.
Orient Corp (8585 JP): Q3 FY03/25 flash update
- Operating revenue rose by JPY13.9bn (+8.2% YoY) to JPY182.5bn, driven by core business growth and new subsidiaries.
- Operating expenses increased JPY15.4bn (+9.7% YoY) to JPY174.0bn, mainly due to higher SG&A and financing expenses.
- Recurring profit decreased JPY1.6bn (-15.8% YoY) to JPY8.5bn, with net income impacted by income tax adjustments.
Itochu Enex (8133 JP): Q3 FY03/25 flash update
- Cumulative Q3 FY03/25 sales revenue was JPY678.3bn (-4.4% YoY), with operating profit at JPY23.0bn (+2.2% YoY).
- Home-Life Division sales revenue rose to JPY52.5bn (+5.7% YoY), driven by higher LP gas import prices.
- Power and Utility Division sales revenue declined to JPY58.3bn (-36.0% YoY) due to decreased market transactions.
Cota Co Ltd (4923 JP): Q3 FY03/25 flash update
- Sales reached JPY7.4bn (+1.7% YoY), with strong performance from new hair styling products, despite a decline in toiletries.
- Operating profit was JPY1.7bn (-6.2% YoY), impacted by increased costs in talent acquisition, development, and capital expenditures.
- Revised FY03/25 forecasts: Sales JPY9.3bn, operating profit JPY1.8bn, due to lower sales expectations and higher expenses.
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