In today’s briefing:
- Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
- MUFG Partial Offer by MUFG to Buy ~50% of Small Cap Zenhoren (5845) – Watch the Back End
- Weekly Deals Digest (16 Feb) – Trend Micro, Zenhoren, HKBN, Fosun Tourism, Paragon REIT, CATL
- [Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.
- High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance
- EQD | Nikkei Index Options Weekly (February 10 – 14): Mired in Sideways Range
- Soliton Systems Kk (3040 JP): Full-year FY12/24 flash update
- Kokuyo Co Ltd (7984 JP): Full-year FY12/24 flash update
- J Trust Co Ltd (8508 JP): Full-year FY12/24 flash update
Nikkei 225 Index Rebalance: Performance of Potential Adds/Deletes & Positioning
- The changes to the Nikkei 225 (NKY INDEX) as part of the March rebalance should be announced in just over 2 weeks. We expect 2-3 changes at the review.
- The forecast adds have massively outperformed the forecast deletes and the Nikkei225 Index over every time period going back 3 months with the largest outperformance in the last month.
- Positioning appears to be stretched in one forecast add while there appears to be under positioning in a couple of the forecast deletes.
MUFG Partial Offer by MUFG to Buy ~50% of Small Cap Zenhoren (5845) – Watch the Back End
- Friday after the close, Mitsubishi UFJ Financial (MUFG) (8306 JP) announced a partial offer to buy up to 13.026385mm shares (minimum 11.661185mm shs) of rent guarantor Zenhoren (5845 JP).
- That is 49.6% but an MUFJ sub already owns 1.46%. The offer comes at a 32% premium to last. Two holders with 33.59% of the register have agreed to tender.
- This will turn the company into a consolidated subsidiary of MUFG under MUFJ Nicos, the group’s consumer credit subsidiary. Shareholder structure matters. Watch the back end.
Weekly Deals Digest (16 Feb) – Trend Micro, Zenhoren, HKBN, Fosun Tourism, Paragon REIT, CATL
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Contemporary Amperex Technology (CATL) (300750 CH) filed for an H Share listing to raise US$5 billion, and Hexaware Technologies (HEXW IN) seeks to raise US$1 billion.
- Event-Driven developments: Trend Micro Inc (4704 JP), Kaonavi Inc (4435 JP), Zenhoren (5845 JP), HKBN Ltd (1310 HK), Fosun Tourism (1992 HK), Paragon REIT (PGNREIT SP).
[Quiddity Index Feb25] Nikkei 225 Mar Rebal: 2 or 3 IN, 2 or 3 OUT, ~$3bn 1-Way, 1 Squeeze.
- The data observation period is done. No rank changes in the top candidates since mid-Jan. Capping for Fast Retailing (9983 JP) is confirmed.
- For me, it is 2 or 3 ADDs, depending. Kokusai Electric (6525 JP) is still tops. BayCurrent Consulting (6532 JP) second. Shift Inc (3697 JP) third.
- Kokusai is +26.7% in 5 weeks since I wrote bullishly, despite news/confirmation of getting the boot from a global index at end-Feb. Baycurrent is +39.7% (link). Now we count flows.
High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance
- Freee KK (4478 JP) reported 2QFY06/2025 results on Friday which beat consensus estimates. The company also reported a second consecutive quarter of operating profits in 2Q.
- Despite cutting down significantly on selling and marketing, freee has managed to maintain growth. The company also has revised upwards its OP guidance and expects positive adj. free cashflows.
- Though freee’s share price has moved up 35% YTD, strengthening profitability and its solid business model vs Money Forward (3994 JP) should further drive share price up.
EQD | Nikkei Index Options Weekly (February 10 – 14): Mired in Sideways Range
- USD/JPY more volatile relative to Nikkei, trading in a 2.3% range on the week and historic vol continuing to climb compressing the hv spread.
- Nikkei is trading at the mid-point of the sideways range it’s been in since the end of September.
- Most heavily traded strikes were at the top and bottom of the sideways range.
Soliton Systems Kk (3040 JP): Full-year FY12/24 flash update
- In FY12/24, Soliton’s revenue was JPY18.6bn (-2.4% YoY), with operating profit at JPY2.0bn (-21.7% YoY).
- Soliton forecasts FY12/25 revenue of JPY19.5bn (+4.8% YoY) and operating profit of JPY2.2bn (+7.7% YoY).
- Personnel expenses are expected to rise, with JPY50mn planned for office improvements, including SG&A and fixed assets.
Kokuyo Co Ltd (7984 JP): Full-year FY12/24 flash update
- Revenue increased by 2.9% YoY to JPY338.2bn, with net income rising 14.3% YoY to JPY21.8bn.
- The FY12/25 forecast predicts revenue of JPY366.0bn (+8.2% YoY) and operating profit of JPY24.0bn (+9.0% YoY).
- The company plans an annual dividend per share of JPY91.0, targeting a consolidated payout ratio of 50.1%.
J Trust Co Ltd (8508 JP): Full-year FY12/24 flash update
- Operating revenue reached JPY128.2bn, a 12.2% YoY increase, driven by growth in financial and real estate businesses.
- Profit attributable to owners decreased 63.0% YoY to JPY6.0bn, impacted by deferred tax liabilities reversal from a merger.
- FY12/25 forecasts JPY135.1bn operating revenue, JPY11.1bn operating profit, and JPY6.5bn profit attributable to owners.
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