July 11, 2025 Japanese Stock Deep Dive List

—Fast Retailing / Bookoff / Sugi HD / USMH / JAFCO

Market Overview

The 2025 market is being shaken by three pillars: the generative AI bubble, the yen depreciation scenario, and tariff risks. We have entered a phase where we can simultaneously pick up "dips in high-valuation stocks" and "rebounds in structural reform-related stocks." Here, we will deep dive into five notable stocks following a 4-step framework (1. News correlation, 2. Intrinsic value, 3. Undervaluation factors, 4. Investor sentiment).

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1. Fast Retailing (9983)

① Recent News

Net profit for the September-May period was 339 billion yen, a record high for the fourth consecutive year. The flagship store offensive in the West has been successful, with overseas sales once again exceeding the domestic ratio.

② Intrinsic Value
• The number of Uniqlo stores in the West exceeded 2,500 in the fall of 2024, and high-unit-price roadside stores are also expanding. • Although it may seem expensive with a PER of 35-40x and a PSR of 4.8-5.0x, an operating profit margin of over 15% and an ROE in the 25% range are being maintained.
③ Undervaluation Factors

• Concerns about rising costs for autumn/winter items due to tariffs are easily over-discounted. • Domestic investors sensitive to PER tend to sell quickly due to caution over high prices.
④ Investor Sentiment and Strategy
• The adjustment in the 47,000 yen range is a dip toward a PBR of around 6.7x. If assuming long-term holding, buy in 1/3 increments during downturns. • For short-term, prepare for volatility from tariff headlines and strictly enforce a 10% stop-loss.

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2. Bookoff Group HD (9278)
① Recent News

Net profit for the fiscal year ending May 2025 increased by 23%, driven by trading cards and hobby goods, marking a record high for the second consecutive year. The forecast for the fiscal year ending May 2026 also shows a 5% increase in net profit and a dividend increase to 30 yen.

② Intrinsic Value

• Inventory turnover improved through DX in the second-hand market. The e-commerce ratio rose from 12% to 15%. • The ordinary profit target for the fiscal year ending May 2028 was revised upward to 5 billion yen, maintaining a CAGR of over 10%.

③ Undervaluation Factors

• The fixed idea that "second-hand equals low growth." In reality, the hobby sector is seeing double-digit growth, with gross margins reaching the 40% range. • Compared to the retail sector average PER of 15x, the company is in the 12x range—there is significant room for market re-evaluation.
④ Investor Sentiment and Strategy
• Company plans are conservative. Do not chase the price jump on the day after earnings; enter gradually near the 25-day moving average. • The cooling of trading card fever is the biggest risk. Check the progress of sales diversification (home appliances, apparel) every quarter.

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3. Sugi Holdings (7649)
① Recent News

Full-year net profit was significantly revised upward to 44.2 billion yen due to the additional recording of deferred tax assets. Ordinary profit for 1Q (March-May) increased by 24%, a record high.
② Intrinsic Value
• Dispensing pharmacy integration rate is over 80%, a structural tailwind from rising medical costs. • Operating cash flow has been positive for three consecutive terms, and the equity ratio is maintained in the 50% range.

③ Undervaluation Factors

• Profits are prone to fluctuations due to extraordinary losses and tax factors, often misunderstood as "one-time high profitability." • Due to caution regarding M&A costs, the PER remains in the low 20x range.

④ Investor Sentiment and Strategy

• The 5,000 yen range is at a PBR of 2x and a dividend yield of 1.2%. Pick up if it dips due to uncertainty over dispensing fee revisions. • For short-term, use the two indicators of monthly existing store sales and prescription counts for trading decisions.

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4. United Super Markets HD (3222)
① Recent News

The final deficit for the period from March to May 2025 narrowed significantly from 1.1 billion yen to 130 million yen. The main reason is the increase in customers at Maruetsu. The plan for the fiscal year ending February 2026 is to double operating profit to 11 billion yen.
② Intrinsic Value
• Aiming for a gross margin in the 28% range by expanding the ratio of private brand products. • Annual procurement and logistics synergies of 4 billion yen are expected due to the Inageya integration. The PSR is extremely low at 0.15x.

③ Undervaluation Factors
• The image of a chronic deficit structure from the past remains. Profit momentum is difficult to read due to soaring SG&A expenses. • Uncertainty in capital policy due to being under the Aeon umbrella.
④ Investor Sentiment and Strategy

• Short sellers are assuming an expansion of the deficit, so even a small shift to a surplus has room for a short squeeze. • Verify every six months whether ROIC improves from the 3% range to 5%, and aim for a correction of the low PSR.

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5. JAFCO Group (8595)

① Recent News

To establish one of the largest domestic funds exceeding 100 billion yen for AI, quantum, and nuclear fusion startups by early 2026.
② Intrinsic Value
• With equity capital on the scale of 340 billion yen, leverage is low, and the balance sheet is unlikely to be damaged even in an economic downturn. • The 20 billion yen self-contribution to the new fund is directly linked to shareholder returns in terms of both investment timing and exit profits.

③ Undervaluation Factors
• VC revenue is difficult to read as it depends on exit timing, and it tends to be discounted by institutional investors. • There are also concerns that ultra-large funds lead to "difficulty in operation -> dilution of returns."
④ Investor Sentiment and Strategy

• Speculative buying will occur in three stages: fund establishment -> completion of LP solicitation -> execution of initial investment. • When the stock price is below 0.8x the net asset value (NAV), it is a good opportunity for long-term accumulation.