In today’s briefing:
- 7&I (3382 JP) – Alimentation Couche-Tard Walks, Lobbing a Letter Bomb
- [Japan Activism] Mitsui Matsushima (1518 JP) Buyback Tender – Surprising Results and Implications
- Seven & I Holdings (3382 JP): Dead Money as Couche-Tard Unsurprisingly Walks
- Ryohin Keikaku (7453 JP): Global Index Inclusion Likely in August
- Square Enix (9684) | Turnaround in Motion
- Hagihara Industries Co., Ltd. (7856 JP): Research Update
- Shofu Inc (7979 JP): Coverage Initiation
7&I (3382 JP) – Alimentation Couche-Tard Walks, Lobbing a Letter Bomb
- Alimentation Couche-Tard (ATD CN) which proposed a takeover to Seven & I Holdings (3382 JP) almost a year ago, has walked. They delivered a letter bomb on the way out.
- The letter is titled “ALIMENTATION COUCHE-TARD ANNOUNCES WITHDRAWAL OF PROPOSAL TO ACQUIRE SEVEN & I HOLDINGS DUE TO LACK OF ENGAGEMENT.” This is not the first time they have complained.
- The letter is not aimed at the 7&i Board or at ATD stakeholders. It is meant to drive a wedge between 7&i active shareholders and its management team. We’ll see.
[Japan Activism] Mitsui Matsushima (1518 JP) Buyback Tender – Surprising Results and Implications
- Today, Mitsui Matsushima (1518 JP) announced the results of its Buyback Tender Offer to repurchase up to 3,999,999 shares (35.8% of shares out ex-Treasury) at ¥5,000/share.
- Murakami-San owned 42% of the voting rights at announcement, then bought more on the dip just below ¥5,000/share.
- The Tender Offer Buyback was “successful” in that it bought back 3.3mm shares. But the result was FAR more interesting than I expected. Surprising Results with Surprising Implications
Seven & I Holdings (3382 JP): Dead Money as Couche-Tard Unsurprisingly Walks
- Couche-Tard has withdrawn its offer for Seven & I Holdings (3382 JP) by unfairly laying the entire blame on the Board.
- The Board has made credible progress, but the jury is still out on whether the Board’s plan will generate returns. Shareholders remain sceptical as the shares have underperformed the index.
- In theory, the sell-off presents a buying opportunity (My SoTP valuation is JPY 2,376). However, the shares are likely to tread water as there are no near-term catalysts.
Ryohin Keikaku (7453 JP): Global Index Inclusion Likely in August
- Ryohin Keikaku (7453 JP)‘s stock price has more than doubled this year and the increased market cap could now result in a global index inclusion.
- Ryohin Keikaku (7453 JP) has outperformed its peers by a BIG margin since its inclusion in the Nikkei 225 (NKY INDEX) in September 2024.
- There appears to be significant positioning in the stock. Given the huge outperformance over the last few months, trim into strength.
Square Enix (9684) | Turnaround in Motion
- Square Enix holds globally recognized IP with monetization upside across platforms, and recent pipeline discipline signals a shift toward higher-margin, high-quality titles that can stabilize earnings and restore growth.
- Activist involvement is intensifying, creating strong pressure for capital returns, governance reform, and strategic clarity – unlocking shareholder value in a business that remains structurally underleveraged and undervalued vs peers.
- With operating margins improving, digital sales accelerating, and cost structures being realigned, Square Enix is positioned to re-rate meaningfully as investor confidence rebuilds and management delivers on core turnaround objectives.
Hagihara Industries Co., Ltd. (7856 JP): Research Update
- Hagihara Industries [HI] (7856 JP) reported FY25 (Oct year-end) 1H earnings results on 9 June 2025, producing 1H operating profit [OP] of ¥899mil (-30.8% YoY) on sales of ¥16,400mil (+0.2% YoY) versus 1H OP guidance of ¥1,160mil (-10.7% YoY) on sales of ¥16,780mil (+2.5% YoY).
- Although 1H sales hit a record in semi-annual sales, 1H OP declined -30.8% YoY.
- HI forecasts FY25 RP of ¥2,500mil (+14.2% YoY) vs the RP target of ¥3,300mil.
Shofu Inc (7979 JP): Coverage Initiation
- In FY03/25, the company reported revenue of JPY38.7bn (+10.3% YoY), operating profit of JPY5.4bn (+14.5% YoY), recurring profit of JPY5.5bn (+7.9% YoY), and net income attributable to owners of the parent of JPY4.6bn (+18.1% YoY).
- Domestic revenue rose 7.5% YoY to JPY16.0bn, while overseas revenue increased 12.4% YoY to JPY22.7bn.
- The overseas revenue growth was driven by sales expansion in China and other Asian markets (excluding forex impact, overseas revenue grew 7.1%).
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