In today’s briefing:
- 7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
- Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
- Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging
- Sodick (6143 JP) – Signalling a Positive Shift
- Geniee (6562 JP) – SaaS Drives Accelerating Growth, M&A Adds Momentum
- Toyobo (3101 JP) – Strong Profit Growth Despite One-Off Costs
7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
- On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.
- It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update.
- It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.
Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
- The Seven & I Holdings (3382 JP) Board has released a public letter to address Artisan Partners’ letter and provide more details on the Alimentation Couche-Tard (ATD CN) constructive engagement.
- The letter effectively addresses most of Artisan’s concerns. The Board is engaging with Couche-Tard, particularly by agreeing on a strategy to find a solution to secure antitrust approvals.
- However, the statement suggests that the Board retains deep scepticism that the Couche-Tard is viable and is manoeuvring to shift the blame on a failed bid on a flawed proposal.
Makino Milling Machine (6135 JP): A White Knight Bidder Is Emerging
- Makino Milling Machine Co (6135 JP) has disclosed that it has received initial letters of intent from multiple third parties, reportedly private equity funds, to launch a competing tender offer.
- My analysis suggests that a white knight bid could be as high as JPY13,284, 20.8% higher than Nidec’s JPY11,000 offer and 10.2% higher than the last close price of JPY12,050.
- Nidec Corp (6594 JP) will take a wait-and-see approach. However, regardless of whether a white knight bidder emerges, Nidec will eventually have to bump.
Sodick (6143 JP) – Signalling a Positive Shift
- A turnaround in progress – Q1-4 FY12/24 results were significantly ahead of guidance and a positive surprise, showing a solid recovery YoY with 9.7% sales growth YoY and a return to positive earnings territory.
- This indicates solid execution of structural reforms, with fixed costs being reduced by streamlining overseas staff and internalizing parts production that were previously outsourced.
- An uptick in demand in Q4 FY12/24 for both Machine Tools and Industrial Machinery was driven by connectors used in high-density fiber optic connections in the data center and telecommunications sectors.
Geniee (6562 JP) – SaaS Drives Accelerating Growth, M&A Adds Momentum
- Geniee delivered accelerating double-digit growth in sales (+40.6% YoY) and normalized OP (+50.8% YoY) with its Q1-3 FY3/25 results.
- The new Digital PR business (formed following the Social Wire acquisition) is in its early days, but there are signs that it is performing above. forecasts.
- Coupled with accelerating growth and improving profitability in the Company’s Overseas and Marketing SaaS segment, we think Geniee is turning a corner on its growth trend.
Toyobo (3101 JP) – Strong Profit Growth Despite One-Off Costs
- Q3 FY3/25 results showed strong OP recovery (+23.3% YoY), fuelled by price hikes, volume expansion, and cost reduction efforts.
- Although the OP run rate was 60% of the full-year target, relatively low for Q3, reflecting one-off costs, FY3/25 guidance was maintained.
- By segment, Films was the largest contributor to segment OP growth (+11.5x YoY), followed by Functional Textiles and Trading, which reduced its segment operating loss.
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