Hello, this is Yuya Shimizu, Chief Investment Officer of Hibiki Path Advisors. Today, following my previous comment(Only Japanese) on April 10th, I would like to provide an update on KAWAI (Kawai Musical Instruments Manufacturing Co., Ltd., hereinafter referred to as “KAWAI” or “the Company”).
KAWAI has just announced its new Medium term management plan (“MPT”) as well as its March 2025 financial results. From our perspective, the first half of this MTP (especially the first three years) is a period for strengthening their foundation. However, we highly commended their stance toward achieving mid-to-long-term growth and their ambitious quantitative targets.
On May 29th, we visited the Company’s headquarters for the first time after the MTP and financial results announcement. We engaged in a candid 90-minute discussion with the executive management regarding the essence of their ambitious plan (shown below).
(Source: KAWAI mid-term-plan material)
While this is my personal view, we felt hugely and positively surprised after our candid conversation that the Company’s medium-term plan has deep rational planning and thoughtfulness than we initially perceived.
It comes with a stark contrast with our other major investee, Japan Pure Chemical (JPC), which we are now making our three years consecutive shareholder proposal due to the management’s unsatisfactory performance and lack of vision. Their medium-term plan lacked clarity on numeric profit target as well as ROE target and we are disappointed (please see here regarding our shareholder proposal to JPC).
As an energetically engaging investor, we fully support management that aims to enhance corporate value based on a clear corporate philosophy and healthy ambition, like KAWAI (and we are not shy to confront those without such mentality). While KAWAI’s unique digital strategy based growth has only just begun, it appears that results are steadily accumulating. We anticipate this success will spread throughout the company and become visible in their financial performance from next year onward. We continue to be extremely excited with KAWAI’s future. We encourage investors to talk to their IR division respectively to form your own opinion to the company’s future while it is still trading at 0.5x. We believe there is still a wide gap between its strong brand value and what it is priced in the capital markets.
Here is our initial letter we sent to the company where it explains our view on the business.
Yuya Shimizu
Chief Investment Officer
Hibiki Path Advisors Pte. Ltd.
This post does not constitute a solicitation to subscribe for, or a recommendation to buy or sell, any specific securities, nor does it constitute investment, legal, tax, accounting, or other advice.