In today’s briefing:
- [Japan Event/Buyback] The Sony Financial Spinoff – ‘Maybe’ BUYBACK Complicates Planning
- Orion Breweries IPO – Deal Upsized; Lower End Looks Digestible
- TOPIX Inclusions: Who Is Ready (Sep 2025)
- Long Isuzu (7202 JP) Vs. Short Suzuki (7269 JP): Statistical Arbitrage in Japanese Autos Targets 10%
- Tokyo Electron — Navigating the Cycle, Leveraged to AI/HBM Growth
- Daifuku (6383 JP): Global Automation Leader with Structural AI Tailwinds
- Q1 Follow-Up – TEKKEN CORPORATION (1815 JP) – August 27, 2025
- Nippon Shinyaku (4516 JP): Flurry of Concerns Going Ahead; Revenue Steady for Now; Guidance Revised
- How Long Will the ‘Parent-Subsidiary Listing Prolongation Scheme’ Work?
[Japan Event/Buyback] The Sony Financial Spinoff – ‘Maybe’ BUYBACK Complicates Planning
- The Sony Financial Holdings (8729 JP) (now called Sony Financial Group Inc (“SFGI”)) spinoff approaches. It will start trading 20 days from now.
- Yesterday, the TSE confirmed approval (outline, Securities Report (J), Corporate Governance Report (J). The company provided details of a possible ToSTNeT-3 buyback on Day 2 pre-open. That complicates things.
- The introduction of that type of buyback flexibility indicates that supply overhang may be managed better than buyers would hope. Means other strategies may be necessary.
Orion Breweries IPO – Deal Upsized; Lower End Looks Digestible
- Orion Breweries’ (409A JP) operations span across alcoholic beverages, tourism and hotel businesses. It aims to raise around US$162m in its Japan IPO which could increase to US$196m (including over-allotment).
- Orion Breweries (OBL) has a strong Okinawa market position. Share of overseas sales has been growing (~23% of FY25 revenues), while profitability has also largely been steady.
- In our previous note, we looked at the firm’s past performance and peer comparison. In this note, we talk about the pricing updates and IPO valuations.
TOPIX Inclusions: Who Is Ready (Sep 2025)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Our long-term TOPIX Inclusion pre-event candidate Core Concept Technologies Inc (4371 JP) has experienced a sharp price decline and has moved further away from the required thresholds for Section Transfers.
- Separately, Japan Business Systems (5036 JP) has announced a potential move to the Prime market which could result in a TOPIX inclusion in late-October 2025.
Long Isuzu (7202 JP) Vs. Short Suzuki (7269 JP): Statistical Arbitrage in Japanese Autos Targets 10%
- Context: The Isuzu (7202 JP) vs. Suzuki (7269 JP) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: Going long Isuzu (7202 JP) and short Suzuki (7269 JP) targets a 10% return.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
Tokyo Electron — Navigating the Cycle, Leveraged to AI/HBM Growth
- Steady past performance, soft Q1: TEL doubled revenues and EPS since FY2021 with margins near 30%, but Q1 FY2026 showed a YoY dip as NAND/DRAM digestion hit.
- Expansion plans: ¥700 bn capex and ¥1.5 tn R&D by FY2029 will lift capacity ~+80%, aligned with AI logic and HBM-driven WFE growth.
- Valuation & growth: At ~18× forward P/E, TEL trades fair vs Lam/Applied but at a steep discount to ASML/KLA, offering upside if recovery unfolds.
Daifuku (6383 JP): Global Automation Leader with Structural AI Tailwinds
- Business: Designs and integrates intralogistics, cleanroom, airport, and automotive automation systems.
- Expanding AI-driven logistics and semiconductor cleanroom solutions, with recurring service growth.
- Earnings projected to grow mid-teens CAGR to FY27E, with multiples compressing from ~25× P/E / 15× EV/EBITDA to ~20× / 12×, justifying a structural premium.
Q1 Follow-Up – TEKKEN CORPORATION (1815 JP) – August 27, 2025
- On August 7, TEKKEN CORPORATION (hereinafter, the Company) announced its Q1 FY2026/3 consolidated financial results.
- Net sales rose 0.7% YoY to JPY 44,370 mn, and operating profit surged 536% YoY to JPY 1,712 mn.
- The significant profit growth was driven by earlier-than-expected securing of design change orders in both the civil engineering and architectural construction businesses, together with contributions from the real estate business.
Nippon Shinyaku (4516 JP): Flurry of Concerns Going Ahead; Revenue Steady for Now; Guidance Revised
- In 1QFY26, Nippon Shinyaku (4516 JP) revenue grew 1% YoY to ¥39.5B and operating profit stood at ¥10.1B (down 9% YoY) as company incurred forex losses.
- Viltepso witnessed slowing in US. Licensing income increased on higher overseas sales of Uptravi. Newly launched drugs like Vyxeos and Fintepla showed promise.
- FY26 guidance revised downwards taking into account FDA’s rejection of BLA for CAP-1002. The company reduced FY26 revenue guidance to ¥166B from ¥173B.
How Long Will the ‘Parent-Subsidiary Listing Prolongation Scheme’ Work?
- Investors are disappointed that this is not put forward as a management strategy to resolve the parent-subsidiary listing, but the TSE believes that friendly disclosure is the solution.
- It’s problematic for parent company’s shareholders to allow the parent’s resources to be used and to leave part of subsidiary’s profits outside the company for a long period of time.
- For both the parent company and its subsidiaries, this is a lost opportunity to shift to management that can create more value. It’ill only delay the shift to value-creating management.
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