Dalton Investments, known for its deep involvement with companies like Fuji Media, Ezaki Glico, and Toyo Suisan, has now adopted a different approach to activism with Helios Techno.
On 5/9/24, Helios upped its OP guidance for FY3/25 by 26.8% from the one issued on 2/7/25. The stock was down by 8% on 5/12, maybe due to profit takings.
Then, Helios, on 5/14/25, announced that it entered into a business alliance with its largest shareholder, Dalton Investments (24.26% as of 1/17/25) through Rising Sun Management (which represents Dalton Investments, Nippon Active Value Fund and NAVF Select).
Since the stock hasn’t responded to the news yet, this could be an opportunity to take a deeper look if you believe in Dalton’s approach.
Business Alliance Details:
Rising Sun Management (RSM) will participate hands-on in the company’s management through the appointment of 2 executive directors. Unlike previous investment approaches within the Dalton Group, this direct engagement will support the company’s efforts in M&A-driven business creation and portfolio expansion.
Key Initiatives:
- Establishment of a Wholly-Owned Investment Subsidiary
To further accelerate M&A-driven portfolio expansion, the company will launch a wholly-owned investment subsidiary, which will operate investment activities under RSM’s strategic guidance to enhance corporate value.
- Strategic Planning and Execution Support for M&A
RSM will directly contribute to identifying value-enhancing M&A opportunities, evaluating target companies, negotiating and executing deals, and accelerating acquisitions—all while ensuring the company maintains its independence as a listed entity and achieves sustainable corporate growth.
- Business Portfolio Expansion
The company, under RSM’s hands-on management involvement, will restructure its business portfolio, emphasizing continuous M&A-driven growth, with the goal of significantly enhancing corporate value.
A brief bio of Helios
Phoenix Electric, once a leader in projector lamps, transformed into a holding company in April 2009, integrating Japan Technical Center and acquiring Nakan Techno (formerly Nakan), a producer of precision printing equipment for LCD panels.
Today, Nakan Techno drives most of the company’s revenue, with its alignment film printing equipment holding the top global market share. Meanwhile, the lamp division is shifting toward high-value industrial LEDs, while the manufacturing equipment division is expanding into semiconductors, focusing on wafer polishing machines for China and new technologies.
FY3/26 revenue is expected to grow significantly despite weak lamp division due to delayed orders from the previous period and large-scale deals in the printing equipment sector, which remains the company’s core business. The payout ratio is set at 100%.
Cap Y20.3 Bn
OP margin 9.1%
PE 14.51x
PB 1x
ROE 3.4% (!)
Div yield 8.64% (!)