After a 9.3% pullback on August 8, Zero is now up 20% since 1/8/25—when I first flagged the name. Over the same period, TOPIX has gained 11%.
Despite the recent price dip, I’m reiterating my view on Zero. The original thesis remains intact: the company is actively working to improve its operating profit margin, as evidenced by its FY6/25 results.
The reason behind a 9% share decline:
The company plans an off-auction distribution of 662,000 shares between Aug 19–22, 2025 at a price set based on the previous day’s closing price. Purchases are capped at 4,000 shares per customer, and the sale will take place on the Tokyo Stock Exchange. The aim is to boost liquidity and satisfy the TSE Standard Market’s requirement for a tradable share ratio of at least 25%, which the company expects to reach through this sale. The plan could be delayed or canceled if market conditions change drastically.
The share price in off-auction distribution is typically discounted a few percent below the previous closing price to attract buyers. This can lead to short-term selling pressure, as traders aim for quick profits, dragging the price down.
In addition, the FY6/26 guidance may have underwhelmed investors. While the outlook appears conservative, that’s consistent with the company’s historical approach to guidance.
If you believe the 9% drop was driven by other factors, I’d love to hear your take.
FY 6/25 highlights: Solid (TABLE is in the table of the note to the clients)
–Revenue: ¥147.8 billion (+5.0% increase)
– Operating Profit:¥10.2 billion (+64.4% increase)
– Operating Margin:6.9% (+2.5%)
– ROE: 17.9% (+6.1 %)
6/26 PE: 7.3X
–PB: 1.23x
–Dividend Yield: 4.75%
The reasons for OP increase:
*Focused on gross profit-driven sales activities, such as promoting the acquisition of backhaul cargo to reduce empty return trips and maximize the effective use of limited transport capacity.
*Benefited from strong performance at acquired subsidiaries Zero Plus BHS and Zero Plus IKEDA, and from consolidating Sowing Co., Ltd. as a group company.
*Increased transportation rates for new and used vehicles sequentially from January 2024, which contributed to profit growth.
My initial Zero note from 1/8/25 is available for my clients.
If you’re interested in learning more about Zero and its growth potential, I’d like to invite you to experience my service—completely free of charge. I am confident that once you discover the value, convenience, and quality I offer, you’ll be glad you gave me a try.