Hibiki Path Advisors (“Hibiki”) made a presentation ( link below) to Oisix ra daichi Inc.(“Oisix” or “the company”) on 15 November, .
Oisix has recently been in the spotlight for its complex transaction to acquire shares in SHIDAX CORPORATION (“SHIDAX”), and we assume that the stock market has temporarily taken an event-driven view of the transaction. With the acquisition successfully completed and the company now in peacetime mode, we have taken a further look at Oisix’s valuation and the scope for cash management.
Oisix’s cash conversion cycle (CCC) in normal times is in the zero to negative range, with very strong total cash flow output. As shown on page 5 of the attached document, we have estimated the future ROE forecast based on more conservative assumptions for sales growth and margins than Oisix’s forecasts, and without considering the acquisition of SHIDAX, and then we have concluded that Oisix’s annual share buy-back of 3 billion yen will finally lead to the company’s stated goal of “10 billion yen in cash and a sustained ROE of over 10%”.
Moreover, because of the company’s ambitious commitment to business strategy, M&A and sustainability, we feel that the company can first chart a new growth trajectory through deepening cooperation with SHIDAX, and attract investors’ expectations. As an idea of how to present future growth areas, we have also mentioned increasing our presence in the medical food market, which is one of the few growth areas in Japan.
We will continue to support Oisix for its excellent management skills and openness toward engaging in discussions with its shareholders.
This presentation does not constitute an offer, recommendation or solicitation to buy or sell any security or enter into any other transaction. Hibiki does not purport to provide any investment, financial, legal or other expert advice or recommendation in this document.