Daily Brief Japan: Taiheiyo Cement, Hogy Medical, SBI Shinsei Bank, Kioxia Holdings , Dowa Holdings, Nikkei 225, Tokyo Base, Prodelight , Rakuten, TSE Tokyo Price Index TOPIX and more

• Taiheiyo Cement’s California platform is vertically integrated and permit-constrained, yet valued at a Japanese consolidated multiple.
• Activist engagement targets U.S. asset re-rating, capital allocation discipline, and potential monetisation.
• Base case values shares at ¥4,800; activist outcome implies ¥7,200 driven by U.S. multiple normalisation.

• Hogy Medical (3593 JP) has recommended a tender offer from Carlyle at JPY6,700, a 2.1% premium to the last close and a 69.2% premium to the undisturbed price.
• The offer, resulting from an auction, represents an all-time high and is above the midpoint of the IFA DCF valuation range. 
• Dalton (27.58% ownership ratio) has provided an irrevocable and will reinvest to take a 20% stake in the relevant Carlyle Fund. This is a done deal. 

• The SBI Shinsei Bank (8303) IPO is positioned to benefit from rising Japanese interest rates and its mandate to lead regional bank consolidation under the “Fourth Megabank” strategy.
• Despite risks such as 2023 buyout litigation related to SBI’s majority control, market interest suggests the 1450 listing price seems to be undervalued.
• The anticipated BoJ rate hike of 25bp to 0.75% is expected to act as a catalyst, boosting margins across the Japanese banking sector and potentially providing post-IPO momentum

• Tape will be weak to start, but may find dip buying given the bullish read from Micron which is helping send futs higher 
• Chinese ex-ASML engineers have reversed engineered a EUV lithography machine. Not awesome news for Lasertec and Jeol either. 
• China cooling on Japan has led to a big drop in tourist arrival growth rates. Expected – but still negative for duty free, hotels and rails etc. 

• DOWA has re-rated from ¥4,500 to ~¥7,000 on risk compression and commodity optionality, not improved structural returns.
• FY25 earnings were revised upward, but ROIC remains mid-single digit, with Electronic Materials a persistent structural drag.
• Even at elevated silver prices, valuation appears largely priced in, supporting a Neutral stance.

• The Nikkei 225 (NKY INDEX) had a great run this year, since Trump’s Liberation Day in April 2025, but seems to be stalling as of lately. 
• The index started correcting this week, after a 3-week rally, the interest rate decision by the BOJ this Friday (most likely a hike) could increase volatility.
• This insight will try to define the best entry zones in case the index falls further in the next few days, weeks. 

• Tokyo Base struggled during and after Covid, but the promoter of Japanese design has begun to find a new following.
• As well as a new generation of Japanese customers thanks to new banners, it is becoming a favourite with inbound tourists, which account for as much as 25% of sales.
• It is now planning greater expansion both at home and overseas

Key points (machine generated)

• Prodelight, listed on the Tokyo Stock Exchange, is expected to see significant profit growth by August 2026.
• The company specializes in voice solutions, offering a cloud PBX system and IP phone services to modernize corporate communication.
• Prodelight is expanding through mergers and acquisitions and will launch a new mobile communication business in fiscal year 2025.

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• Rakuten and Yahoo Shopping continued to outperform the e-commerce sector overall in the past six months – Amazon data is due early next year – so market share is rising.
• However, a good chunk of recent growth was thanks to a now banned points scheme for tax offsets which led to a surge in sales pre-ban.
• This means revenues may now dip again without that incentive but the longer term outlook remains clear: the big malls continue to increase market share in Japanese e-commerce.

• More large companies adopting ROIC as a KPI for executive compensation can be viewed as a positive change, indicating a growing awareness of capital costs and capital profitability among companies.
• Shifting the growth strategy from sales and profits to capital profitability, and aligning the KPIs for that growth strategy with executive compensation KPIs, is also consistent with the investor perspective.
• However, adopting ROIC as a KPI for growth strategies and its integration into management practices has only just begun at large companies, and issues surrounding executive compensation remain unresolved.