In today’s briefing:
- Toyota (7203 JP) Surges 14% — A Contrarian Option Strategy
- [Japan M&A] Nikkei Reports Pacific Industrial (7250) To Go Private Via MBO at ¥110bn
- Canon Marketing Japan (8060 JP): 1H FY12/25 flash update
- Kasumigaseki REIT Pre-IPO: Peer Comparison – Small Is Size but Matching Its Peers on Other Metrics
- Pca Corp (9629 JP): Q1 FY03/26 flash update
- The Data Also Shows that Companies with Low Stock Valuations Are Increasingly Using Share Buybacks
Toyota (7203 JP) Surges 14% — A Contrarian Option Strategy
- Context: On 23 July 2025, Toyota Motor (7203 JP) surged 14.3%, driven by macro factors tied to tariffs. This Insight examines how that sharp move affected the stock’s volatility surface.
- Key Observations: Implied volatility spiked to extreme percentiles, with two-week IV hitting the 99th–100th percentile. Skew dynamics show otm calls becoming historically rich relative to puts.
- Opportunity: Elevated implied volatility and historically flat skew present an attractive setup for a zero-cost option strategy.
[Japan M&A] Nikkei Reports Pacific Industrial (7250) To Go Private Via MBO at ¥110bn
- Overnight, the Nikkei carried an article saying Toyota valve supplier Pacific Industrial (7250 JP) would go private at a 40% premium in an MBO.
- The implied price would match its ATH, but would remain far below book value, which is disappointing for a company with a very strong customer base and market share.
- This is potentially blockable, but it would need to be activism from scratch I think. An activist or collection of them would need about 18-20% to block this deal.
Canon Marketing Japan (8060 JP): 1H FY12/25 flash update
- Sales rose 4.7% YoY, driven by IT solutions business growth; net income declined 6.4% YoY due to absent extraordinary gain.
- CMJ revised FY12/25 forecasts: operating profit to JPY57.0bn (+7.3% YoY), recurring profit to JPY58.0bn (+6.6% YoY).
- IT solutions sales projected to grow YoY, with a 7% increase in SI services and 10% in outsourcing.
Kasumigaseki REIT Pre-IPO: Peer Comparison – Small Is Size but Matching Its Peers on Other Metrics
- Kasumigaseki Hotel REIT (401A JP) is looking to raise up to US$195m in its upcoming Japan IPO.
- It is a REIT with hotel assets sponsored by affiliated developer, Kasumigaseki Capital (3498 JP).
- In this note, we examine the IPO dynamics, and undertake a peer comparison.
Pca Corp (9629 JP): Q1 FY03/26 flash update
- In Q1 FY03/26, the company reported revenue of JPY4.0bn (+2.4% YoY) and net income of JPY348mn (-23.5% YoY).
- Revenue from cloud services increased 15.6% YoY to JPY2.5bn, while maintenance services revenue decreased 16.0% YoY.
- The company forecasts FY03/26 revenue of JPY17.7bn (+8.9% YoY) and net income of JPY1.9bn (+9.0% YoY).
The Data Also Shows that Companies with Low Stock Valuations Are Increasingly Using Share Buybacks
- Data suggests that share buybacks/share cancellations are expected to have positive effect on ROE/ROA, while companies with low valuations increasingly utilize share buybacks as a measure to raise stock prices.
- Overseas investors share the value that companies should have business plans for growth and return surplus cash after investment to shareholders. There’s gap between investors and companies inn this value.
- More effective approach would be to require management to fulfill accountability by explaining fundamentals of returning unused cash to shareholders and disclosing business plans if they wish to retain cash.
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