In today’s briefing:
- Seven & I Holdings (3382 JP): A Potential Derailing of the MBO
- Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
- Japan Post Bank (7182) – Report of ¥600bn Offer Would Lead to Index Flows, and a New Future
- Japan Post Bank (7182 JP): Japan Post Holding (6178 JP)’s Rumoured Offering
- Tonami Holdings (9070 JP): Japan Post Holdings’ (6178 JP) JPY10,200 Tender Offer
- Toyo Corporation (8151 JP) – Q1 in Line with the Plan, Poised for Expansion with Strong Order Intake
- Torex Semiconductor (6616 JP) – Bright Spots on the Horizon for FY26/3
- Okinawa Cellular (9436 JP) – Au Denki Boosts Sales but Is a Burden on OP
Seven & I Holdings (3382 JP): A Potential Derailing of the MBO
- Bloomberg reports that the MBO is stalling due to disagreements within the consortium over who will control Seven & I Holdings (3382 JP) after it is privatised.
- The Nikkei reported that Itochu Corp (8001 JP) was set to withdraw from the MBO consortium. Along with CP ALL PCL (CPALL TB)’s non-participation, the MBO’s financing is in trouble.
- An Alimentation Couche-Tard (ATD CN) bid remains in play but has issues. While progressing, the Board’s restructuring plan fails to prove a credible alternative.
Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
- Media reports indicate that Japan Post Holdings (6178 JP) could sell JPY 600bn (US$4.02bn) of Japan Post Bank (7182 JP) with the announcement coming as early as this week.
- The selldown is driven by Japan Post Holdings (6178 JP) needing to reduce its holding in Japan Post Bank (7182 JP) to 50% or lower by March 2026.
- Passive index trackers will buy around 11.4% of the offering at the time of settlement of the placement shares with the balance being bought in January 2026.
Japan Post Bank (7182) – Report of ¥600bn Offer Would Lead to Index Flows, and a New Future
- On 22-February-2023 a Reuters suggested JPH (6178) had “started talks” to sell a big stake in JP Bank (7182). Five days later they announced a complicated deal discussed here.
- Today, an article suggests Japan Post Holdings (6178 JP) will sell ¥600bn in Japan Post Bank (7182 JP) to get ownership below 50% (as with JPI). A buyback might appear.
- JPB has issued a “there’s smoke” release. Like last time. Expected unwind of known overhang means minimal surprise here. The question is whether they could surprise (big buyback? capital plan?).
Japan Post Bank (7182 JP): Japan Post Holding (6178 JP)’s Rumoured Offering
- Reuters reports that Japan Post Holdings (6178 JP) (JPH) is planning to sell shares in Japan Post Bank (7182 JP) (JPB), which could total some JPY600 billion (US$4.0 billion).
- The potential offering would align with JPH’s stated goal of reducing its equity interest in JPB to 50% or less by FY 2025.
- The potential offering is relatively smaller than JPB’s 2023 offering. Compared to its peers, JPB’s valuation remains undemanding.
Tonami Holdings (9070 JP): Japan Post Holdings’ (6178 JP) JPY10,200 Tender Offer
- Tonami Holdings (9070 JP) has recommended a Japan Post Holdings (6178 JP)-sponsored MBO at JPY10,200, a 73.8% premium to the last close.
- The offer is attractive compared to historical trading ranges and peer multiples. The offer represents an all-time high.
- The offer is above the midpoint of the special committee IFA’s DCF valuation range but below that of the target IFA. However, the required minority acceptance rate is not onerous.
Toyo Corporation (8151 JP) – Q1 in Line with the Plan, Poised for Expansion with Strong Order Intake
- A high hurdle for OP in Q1 – Q1 FY9/25 results showed normalisation of OP growth as the one-off impact from a large order for AD (autonomous driving) / ADAS (advanced driver assistance systems came off compared to Q1 FY9/24.
- As a result, Toyo Corporation reported an operating loss, normalising to more ordinary performance for Q1 when OP tends to be weak due to seasonality.
- Notwithstanding the seasonal loss, the Q1 FY9/25 results were in line with the company’s initial plan.
Torex Semiconductor (6616 JP) – Bright Spots on the Horizon for FY26/3
- FY24/3 results were consolidated net sales -19.4% YoY, OP dropping from JPY 3,976mn in FY23/3 to an operating loss of JPY 1,778mn, and profit attributable to owners of parent dropping from JPY 2,179mn in FY23/3 to a net loss of JPY 4,297mn. Nevertheless, the Company maintained the dividend of 56 yen.
- The two main losses incurred in FY24/3 were 1) inventory write-down in mfg. cost of sales and 2) extraordinary impairment loss. Following weak 1H FY25/3 results, partly reflecting the Q2 foreign exchange loss of JPY 298mn due to the sharp yen appreciation in Q2, TOREX revised down its full-term forecasts for FY25/3, noting that the original budget had anticipated a completion of the adjustment of distribution inventories during the 1H, and a clear recovery in demand from the 2H.
- TOREX again revised down full-term profits, to net loss on Q3 results, with Phenitec citing weakness in industrial equipment, etc., particularly in North America (see our 2/17 Q3 Flash for details). Since depreciation peaks in FY25/3, it will become easier to record profits going forward.
Okinawa Cellular (9436 JP) – Au Denki Boosts Sales but Is a Burden on OP
- Sales continued to increase, while OP rose after falling in H1.
- The key earnings drivers came from a sales increase of +6.8% YoY to ¥62.41bn, benefiting from au Denki, handsets, local government projects and improved ARPU.
- OP rose +0.4% YoY to ¥13.73bn, as the company kept a lid on customer acquisition costs.
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