In today’s briefing:
- [Japan M&A] NTT To Buy Out SBI Sumishin Net Bank (7163) At a HUGE Price for Minorities
- [Quiddity Index] GMO (9449) Sub GMO Financial Gate (4051) Moves to TOPIX
- [Japan ECM] Financial Crossholders Offering Isuzu (7202) – Big Buyback Covers Most Of The Back End
- Isuzu Motors Placement – Relatively Small Deal Along with Buyback
- SBI Sumishin Net Bank (7163 JP): NTT’s (9432 JP) JPY4,900 Tender Offer a Done Deal
- CIT Saves the World from Tariffs, but Not Mazda (7261)
- Nippon Steel (5401 JP): Navigating Decline at Home, Expanding Abroad
- Shift: Shift in Recruitment Policy Supports Margin Recovery; Further Upside
- Migalo Holdings (5535 JP) – Q4 Follow-Up – May 23, 2025
[Japan M&A] NTT To Buy Out SBI Sumishin Net Bank (7163) At a HUGE Price for Minorities
- Late Nov-2024, SBI Sumishin Net Bank (7163 JP) was trading ¥2,900, weekly mag Bunshun scooped a possible NTT Docomo deal. The stock popped, I was skeptical. It popped more.
- At Q3 earnings, NTT seemed to downplay the possibility saying they wouldn’t overpay. SBI Sumshin fell. Then fell some more.
- Today we get a deal whereby NTT buys out SBI Holdings (8473 JP)‘s 34% stake, and minorities, and partners with Sumitomo Mitsui Trust. Then a side deal with SBI.
[Quiddity Index] GMO (9449) Sub GMO Financial Gate (4051) Moves to TOPIX
- Today after the close, GMO Internet Group (9449 JP) subsidiary GMO Payment Gateway (3769 JP) announced its subsidiary GMO Financial Gate (4051 JP) would move to TSE Prime 5 June.
- That means it moves to TOPIX at the close of trading 30 July 2025.
- This growth stock appears to have “de-growthed” somewhat in stock price terms – trading near its IPO price from covid era, so it is worth a look.
[Japan ECM] Financial Crossholders Offering Isuzu (7202) – Big Buyback Covers Most Of The Back End
- In line with the trend of financial institutions led by non-life insurers selling out of their cross-holdings, today we get an offering of shares held in Isuzu Motors (7202 JP).
- Today we got an announcement of 29.28mm shares being offered by a dozen financial institutions and a greenshoe for 15% more. At a 10% discount from here it’s ¥57bn/US$400mm.
- It is 16 days of ADV, which is big, but the company also announced a ¥50bn buyback from Pricing+6 to end of March 2026. That should stabilise things.
Isuzu Motors Placement – Relatively Small Deal Along with Buyback
- A group of shareholders aims to raise around US$380m via selling around 4% of Isuzu Motors (7202 JP).
- Being another cross-shareholding unwind in Japan, it shouldn’t carry much negative connotations, in our view.
- In this note, we will talk about the placement and run the deal through our ECM framework.
SBI Sumishin Net Bank (7163 JP): NTT’s (9432 JP) JPY4,900 Tender Offer a Done Deal
- SBI Sumishin Net Bank (7163 JP) has recommended a tender offer from NTT (Nippon Telegraph & Telephone) (9432 JP) at JPY4,900 per share, a 23.0% premium to the last close.
- Irrevocables from the two largest shareholders, representing a 68.38% ownership ratio, ensure a done deal as it exceeds the required 66.67% ownership ratio to pass the EGM share consolidation vote.
- The offer is attractive compared to historical trading ranges and peer multiples. The tender offer runs from 30 May to 10 July (30 business days).
CIT Saves the World from Tariffs, but Not Mazda (7261)
- Mazda leaped upward with other Auto companies following a Court of International Trade ruling that nullified Trump’s reciprocal tariffs but left auto tariffs at 25%.
- The CIT has historically given presidents much more leeway on rules that the auto tariffs fall under, so challenges to these tariffs are less likely to succeed.
- The tariff threat to Mazda is existential, and in our view, consensus forecasts have not even begun to appreciate this.
Nippon Steel (5401 JP): Navigating Decline at Home, Expanding Abroad
- Nippon Steel targets over 100 Mt capacity by 2030, focusing on global growth as Japan’s domestic demand shrinks.
- It plans to acquire U.S. Steel for $14.9B and expand in India via AMNS joint ventures.
- FY24 profit rose 36%, but export reliance, ESG lag, and U.S. deal hurdles pose risks.
Shift: Shift in Recruitment Policy Supports Margin Recovery; Further Upside
- Shift’s share price has been up by more than 35% YTD driven by improved margins which saw a temporary decline due to Shift’s investment on HR and system reinforcement.
- The company’s GPM reached an all-time high in 2QFY08/2025 while OPM has shown significant improvement driven by the company’s changes to recruitment policy that is aligned to utilisation rates.
- Though Shift’s top line growth has slowed down, it’s not something to worry too much about as its new businesses and large-scale project wins should help revive top line growth.
Migalo Holdings (5535 JP) – Q4 Follow-Up – May 23, 2025
- On May 12, 2025, MIGALO HOLDINGS Inc. (hereafter, the Company) announced its FY2025/3 full-year earnings results.
- Net sales increased 21.2% YoY to JPY 51,709 mn, and operating profit increased 8.5% YoY to JPY 2,713 mn. Results were solid overall, with surpassing the initial forecast of JPY 50,000 mn for sales and JPY 2,600 mn for operating profit.
- ROE came in at 12.9%, exceeding its management benchmark of 12.0%.
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