Industrials

Report by Yuka Marosek

Under new leadership, Kyodo is accelerating its pivot from the declining paper-printing business towards higher-margin niches such as high-performance packaging materials, flexible packaging and tube products. Margin gains in recent years already reflect this shift and the company’s 10-year plan aims to scale these efforts further. The key question for investors: with DNP and Toppan well ahead in diversification, can Kyodo leverage its niche strengths to establish itself as a viable third player in a consolidating industry. Yuka Marosek argues it can. While Kyodo’s OP recovery appears partially priced in (13.9x P/E vs. DNP at 14x and Toppan at 18.4x), a 4.8% dividend yield should appeal to income investors and with FY26 OP projected +20% y/y and ROE rising to 6.1%, further upside remains possible.

Industrials

Report by LightStream Research

Activism on easy street - shares soar after response to Elliott’s demands. While there is some operational / fundamental / earnings risk in the near future, Mio Kato would not be surprised to see the market mostly ignore this and instead choose to focus on what the “new” DNP will look like. He describes it as a less sexy play than Toshiba and Softbank, but thinks the returns on offer are greater, while the risks feel noticeably lower. Mio also believes this could prove to be a key acceleration point for Japanese governance improvement and provides a simple and obvious playbook for activism in the country.