This Week in Asia #39

Record DRAM prices continue to hurt the demand for consumer electronics, with Taiwanese e-paper giant E Ink cutting its full-year guidance. Many Japanese companies like Seiko and ASICS have reported strong results, partly thanks to the weak yen. Finally, there's been recent insider buying in Malaysian credit bureau CTOS Digital.

Watchlist update

• Japanese accounting software developer Freee popped after its FY2026 earnings report, which reported +28% top-line growth. More importantly, Freee guided for a +116% rise in FY2027 adjusted operating profit. The market had been worried about Freee's AI spending spree, which hurt margins from late 2025 onwards. (Full disclosure: I own shares in Freee.)
• Industrial gas supplier Air Water posted a net loss in FY2026 due to JPY 108 billion of impairments from the accounting scandal. FY2026 revenues grew +5% and underlying profit +6%. The special-committee report was received on 31 March 2026, and an additional report came out on 22 June 2026 with a restatement of FY2025 net profit by -19%. The number of subsidiaries with improper accounting rose from 37 to 42, and there's proof forged documents had been given to the auditor. The audit opinion is still qualified, stating that the problems are "material but not pervasive". The FY2027 guidance is for "business profit" to reach JPY 76 billion, and net profit well below that number.
• On the negative side, the Taiwanese e-paper producer E Ink downgraded its full-year revenue growth from 20-25% to 10-15%. High memory prices have hurt the demand for consumer electronics, making E Ink yet another "anti-AI stock".
• Another disappointment was Samsonite's 2Q2026 report, which showed -2% constant-currency revenue growth and an -18% drop in net profit, excluding the positive effect from the recent tariff refunds. Management blamed softer travel demand, but even if that's true, Samsonite is clearly underperforming. The US$179 million acquisition of 85% of female-focused luggage/lifestyle bag brand BÉIS will give Samsonite access to a digital-native brand that could help it in its direct-to-consumer efforts. (Full disclosure: I own shares in Samsonite.)
• Smart Insider data showed that credit bureau CTOS Digital's CFO Tan Ming Yew bought almost US$100,000 worth of shares last week. New CEO Ankur Sehgal is targeting the opex/revenue ratio to decline from 46% to 42%. However, CTOS Digital will face a much higher tax rate in 2026.

Worth your time

• IMAX Corporation's Richard Gelfond joined The Compound discussing the recent bump in the global box office that resulted from the success of The Odyssey and Spider-Man: Brand New Day. (Full disclosure: I own shares in its listed subsidiary IMAX China.)
• A Substack author called Eden Bradfield wrote a fun post about accounting software developer Xero's CEO Sukhinder Singh Cassidy, about how she resembles Marissa Mayer. Eden argues that her share sales, recent M&A and weak internal morale are all causes for concern.
• Acid Investments discussed a few Korean names, including tax refund service provider Global Tax Free and industrial maintenance company Geumhwa Plant. Both are overcapitalized, trade at low multiples and (in Acid's words) could well end up being value traps.
• Jeremy Raper/Rangeley Capital launched a campaign to maximize value at Dainichi, the market leader in kerosene fan heaters. On their numbers, the stock trades at 0.57x Price/Book with a large portfolio of cash and financial investments. They argue that Dainichi should pay a special dividend, buy back shares and adopt a 50% payout ratio target.

China Tower

Yesterday, I published a post on monopoly tower operator China Tower.

The company's earnings growth has been strong at 10% annually, but primarily due to falling depreciation charges. The stock trades at 9.4x run-rate P/E. Management is now guiding for a 100% payout ratio. But the next 5-year master pricing agreement will be finalized in December 2027.

Read the full story here:

Update: China Tower (788 HK)

China’s telecom tower monopoly

Asian Century StocksMichael Fritzell

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