In today’s briefing:
- Tokai Carbon (5301.T) – Portfolio Shift Underway; Margin Recovery Key to Re-Rating
- Resonac Holdings (TSE: 4004) – Strategic Pivot Toward Semiconductor Materials
- Ono Pharmaceutical (4528 JP): Label Expansion Helps, But Long-Term Growth Momentum Calls for More
- Rather than “Technical Guidance,” What Is Needed Is Thorough Fiduciary Duty to Shareholders
Tokai Carbon (5301.T) – Portfolio Shift Underway; Margin Recovery Key to Re-Rating
- Revenue peaked in FY23 but margins have declined due to cost pressures and impairments.
- The company is exiting underperforming assets and expanding in fine carbon, furnaces, and carbon black.
- At ¥1,010, it trades at ~19.6x FY25e P/E, in line with peers but below book at 0.8x P/B.
Resonac Holdings (TSE: 4004) – Strategic Pivot Toward Semiconductor Materials
- Past Performance: Revenues stable; margins improved due to semiconductor growth, despite weak performance in legacy chemicals and graphite electrodes.
- Strategy & Shutdown: Shutting 30% electrode capacity; refocusing on high-margin semiconductor, SiC, and packaging materials with ¥330 bn capex planned by FY25.
- Valuation: Trades at 8x EV/EBITDA and 14x P/E FY25E; re-rating possible with higher margins and semiconductor mix.
Ono Pharmaceutical (4528 JP): Label Expansion Helps, But Long-Term Growth Momentum Calls for More
- Ono Pharmaceutical (4528 JP) guided Opdivo revenue in FY26 to be ¥138.5B (Japan: ¥125B, up 4% and Overseas: ¥13.5B, up 3%), up 4% YoY.
- Opdivo in combination with Yervoy (from Bristol Myers Squibb) was approved in Europe, US, South Korea, and Japan for the first-line treatment of patients with unresectable or metastatic hepatocellular carcinoma.
- In FY26, Opdivo’s revenue growth will come from indication expansion but smaller addressable patient population remains a concern for long term.
Rather than “Technical Guidance,” What Is Needed Is Thorough Fiduciary Duty to Shareholders
- While very few companies allocate cash appropriately, many companies simply announce small-scale share buybacks, resulting in cash being used in a half-hearted manner for both growth and shareholder returns.
- The problem is that many managers lack awareness of their fiduciary responsibility to make sincere decisions on cash allocation based on the idea that free cash flow belongs to shareholders.
- Even for listed companies, the time has come to discuss the role of managers who are unable to thoroughly fulfill their fiduciary duties to shareholders.
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