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RNS Number : 5765Z AVI Japan Opportunity Trust PLC 17 September 2025
AVI JAPAN OPPORTUNITY TRUST PLC
INTERIM REPORT 2025
LEI: 894500IJ5QQD7FPT3J73
Interim Report for the six months ended 30 June 2025
The Directors present the unaudited Interim Report for the six months ended 30
June 2025.
Copies of the Interim Report can be obtained from AVI Japan Opportunity Trust
plc's website www.ajot.co.uk or by contacting the Company Secretary by
telephone on +44 (0) 333 300 1932.
AVI Japan Opportunity Trust plc ("AJOT" or "the Company") invests in a focused
portfolio of quality small and mid-cap listed companies in Japan that have a
large portion of their market capitalisation in cash or realisable assets.
Dividend
An interim ordinary dividend of 1.60p and a special dividend of 0.60p per
Ordinary Share have been declared for the Period ended 30 June 2025 and will
be paid on 7 November 2025 to Ordinary Shareholders on the register at the
close of business on 10 October 2025 (ex-dividend date is 9 October 2025).
PERFORMANCE SUMMARY
30 June 2025 30 June 2024
Net Asset Value* (£'000) 234,098 195,593
Net Asset Value per share (total return) for the Period 11.7% 7.7%
Net Asset Value per share (p) 172.3 139.4
Comparator Benchmark
MSCI Japan Small-Cap Index (£ adjusted total return for the Period) 6.5% (0.2%)
Portfolio Valuation*
Net Cash as % of Market Cap 21.2% 30.6%
Net Financial Value as % of Market Cap 51.2% 49.0%
EV/EBIT 7.2x 7.7x
FCF Yield 5.4% 4.9%
Six months to 30 June 2025 Six months to 30 June 2024
Earnings and Dividends
Profit before tax £25.0m £14.3m
Investment income £4.1m £2.8m
Revenue earnings per share 2.2p 1.3p
Capital earnings per share 15.9p 8.7p
Total earnings per share 18.1p 10.0p
Ordinary dividends per share 1.6p 1.0p
Special dividends per share 0.6p -
Ongoing Charge
Management, marketing and other expenses
(as a percentage of average Shareholders' funds) 1.4% 1.5%
2025 Period's Highs/Lows High Low
Net Asset Value per share 176.1p 149.2p
Net Asset Value per share at 30 June 2025 172.3p
Share price at 30 June 2025 174.5p
Premium (discount) as at 30 June 2025 +1.3%
(difference between share price and Net Asset Value) 2.2p
( )
NAV TR (GBP) Since inception H1 2023 2022 2021 2020 2019 2018 1
2025 2024
AJOT 89.7% 11.7% 20.9% 15.8% (4.3%) 12.3% (1.2%) 19.0% (4.0%)
MSCI Japan Small Cap 31.5% 6.5% 6.2% 6.9% (1.0%) (1.4%) 3.2% 14.7% (6.0%)
Relative Performance +58.1% +5.1% +14.6% +8.8% (3.4%) +13.7% (4.3%) 4.3% +2.0%
1 Since inception on 23 October 2018.
*For all Alternative Performance Measures, please refer to the definitions in
the Glossary in the full Half Year Report.
( )
CHAIRMAN'S STATEMENT
"AVI continues to identify compelling opportunities in Japan's
under-researched small to mid-cap space, employing its constructive engagement
strategy to unlock substantial corporate value."
Norman Crighton, Chairman
Performance and Introduction
Welcome to the sixth interim report for AVI Japan Opportunity Trust plc ("the
Company" or "AJOT"), covering the period from 1 January 2025 to 30 June 2025
("the Period"). The year to date has seen a continuation of corporate reform
in Japan, as regulators have stepped up the pressure on companies to enhance
corporate value. The Tokyo Stock Exchange ("TSE") has introduced several
mechanisms for improvement, including mandating timely English disclosures of
both quantitative and, perhaps more importantly, qualitative information. In
line with this, it was also announced that the TSE plans to make dedicated
investor relations systems mandatory to enhance companies' relationships with
investors.
To date this year, the MSCI Japan Small Cap Index has returned +6.5% (in GBP)
and +7.1% (in JPY), compared to the TOPIX's total return of +3.8% (in JPY) and
+3.4% (in GBP). AJOT returned +11.7% (in GBP) and +12.3% (in JPY), delivering
outperformance of +5.1% (in GBP) and +5.2% (in JPY) relative to the Benchmark
Index. AJOT also outperformed its peer group of UK-listed Japan smaller
companies investment trusts over the same period.
The Board maintains high conviction in the AJOT strategy, which it believes is
set to benefit from the ever-improving corporate outlook in Japan. Your
manager, AVI, continues to identify compelling opportunities in Japan's
under-researched small- to mid-cap space, employing its constructive
engagement strategy to unlock substantial corporate value across a
high-conviction, concentrated portfolio of overcapitalised and high-quality
businesses.
In H1 2025, AVI launched public campaigns for two portfolio companies: Rohto
Pharmaceutical and Wacom. AVI's comprehensive presentation, "Awakening Rohto
(https://www.assetvalueinvestors.com/campaign/awakening-rohto/) ", highlights
the team's focus on strategy enablement and operational improvement backed by
years of collective experience at top consulting firms in Japan, in addition
to the traditional engagement areas targeted by "activist" investors, such as
capital efficiency and corporate governance. The Board views this expertise as
a key differentiator from other Japan engagement strategies. This was further
demonstrated during the Period as AVI released "Draw Wacom's Future
(https://www.assetvalueinvestors.com/campaign/draw-wacoms-future/) ", which
details over a dozen constructive suggestions to management.
The investment team travelled to Japan during the Period to continue their
engagement efforts with portfolio companies and to strengthen relationships
with management, as well as hold meetings with several other investors.
Since AJOT's launch in October 2018, the portfolio has subtly shifted focus
towards more operationally resilient companies that hold strong market
positions and exhibit high-quality, growing earnings. Portfolio companies
remain significantly overcapitalised, with net cash and securities covering
51% of the market cap on average, and undervalued, with an average EV/EBIT of
7.2x. However, this greater focus on high-quality companies has enabled AJOT
to perform resiliently despite the volatility seen in the global market in
recent times. Additionally, the small- to mid-cap focus has seemingly shielded
the portfolio from tariff uncertainty, as around 80% of portfolio companies'
revenues are derived from the domestic market.
The macroeconomic environment in Japan has entered a period of relative
stability, with modest inflation, record nominal wage growth (while real wage
growth remains flat), and a stable Yen. The benchmark interest rate is not
expected to be raised as quickly as previously thought, with the Bank of Japan
hoping to see sustained economic strength before increasing the current 0.5%
rate.
The Board is pleased to report the continued outperformance by AJOT over what
has been a volatile year for global markets thus far, and we remain confident
in AVI's differentiated engagement strategy.
Dividend
The Board has elected to propose an interim ordinary dividend of 1.6 pence per
share, as well as a special dividend of 0.6 pence per share, reflecting the
receipt of non-recurring income from investments during the period. As stated
in the Prospectus at the Initial Public Offering ("IPO"), the Company intends
to distribute substantially all net revenue arising from the portfolio and is
expected to pay an annual dividend. However, this may vary substantially from
year to year.
Investment Strategy
AJOT was listed in October 2018 to take advantage of the highly attractive
opportunity to invest in undervalued, overlooked Japanese small-cap equities
with strong underlying business fundamentals. We believed then, as much as we
still do, that AVI's unique brand of constructive engagement and high-quality
research would enable the unlocking of valuation anomalies rarely found in
other global developed markets, offering the potential for attractive absolute
and relative returns.
Discount and Buybacks
As of 30 June 2025, your Company's shares traded at a premium of +1.3% to net
asset value per share. Over the Period, this ranged from a -9.5% discount to a
+1.5% premium. The Board monitors the discount/premium situation closely,
ensuring investors are protected on the downside from a widening discount
while also taking advantage of the premium to grow the Company.
During the Period, the Company bought back 535,000 shares. No further shares
have been bought back since the Period end on 30 June 2025. All repurchased
shares are held in treasury rather than cancelled, so they may be reissued if
sufficient demand arises.
At the end of the Period, the total number of shares in issue was 137,198,943.
Of these, 1,360,716 shares were held in treasury. As a result, the total
voting rights attached to the shares in issue stood at 135,838,227.
During the Period, AVI purchased 170,000 shares as part of its ongoing
commitment to invest one quarter of its management fee in AJOT shares, at an
average discount of -3.9%.
Debt Structure and Gearing
At the end of the Period, AJOT held £33.3 million worth of Yen debt, with net
gearing equal to 8.2% of NAV.
Annual General Meeting
The Company's Annual General Meeting was held on 20 May 2025. All resolutions
were passed with at least a 97% approval. The Board thanks Shareholders for
their continuing support.
Proposed combination with Fidelity Japan Value ("FJV")
A significant development since the period end is the proposed combination of
the Company with Fidelity Japan Trust Plc ("FJV").
Background
After a comprehensive review process, the FJV Board of Directors concluded
that a combination with the Company, pursuant to a scheme of reconstruction,
together with an alternative shareholder election for cash, should be put
forward to FJV shareholders. On 12 August 2025, the Boards of FJV and the
Company announced that they had entered into a set of non-binding Heads of
Terms for the proposed combination of the Company with FJV, pursuant to a
scheme of reconstruction of FJV under section 110 of the Insolvency Act 1986.
Expected Benefits
• Lower ongoing charges: The new management fee structure and economies of
scale will reduce ongoing charges of the Company.
• Lower management fees: Subject to completion of the combination, AVI has
agreed to reduce its management fee to a competitive tiered fee rate and will
continue to reinvest 25% of the fee into shares of the Company.
• Greater Scale: Shareholders will benefit from a more liquid, larger fund.
The enlarged Company is also expected to have increased capability to take
influential positions in companies where AVI has identified a significant
opportunity to unlock value through AVI's active engagement process.
Expected Timing
General meetings of FJV and the Company are expected to be convened later in
2025 with the transaction becoming effective by no later than the end of
November 2025.
Completion will be conditional upon, inter alia, approval from the
shareholders of both FJV and the Company, tax clearance and Financial Conduct
Authority approval.
Closing Remarks
Your Board continues to have full confidence in the investment thesis and in
the ability of the Investment Manager to execute it. However, wanting to lead
by example, your Company stands by its commitment, outlined in the original
Prospectus, to offer Shareholders the opportunity to exit at close to NAV
regularly. The rationale behind including this clause was to ensure that, if
the original investment thesis did not generate the expected returns, or if
circumstances had changed to make Japan unattractive, Shareholders would not
be penalised for wishing to exit.
I am very pleased to note that, since the IPO, neither of the scenarios has
materialised. Both the Board and the Investment Manager firmly believe that
the opportunities are now more attractive than they were when the Company was
launched in 2018. Nevertheless, we intend to offer shareholders a redemption
opportunity in the fourth quarter of this year.
The Board would like to thank Shareholders for their continued trust and
support. As always, if you have any queries, please do not hesitate to contact
me personally (norman.crighton@ajot.co.uk) or speak to our broker, Singer
Capital Markets, to arrange a meeting.
Norman Crighton
Chairman
16 September 2025
INVESTMENT MANAGER'S REPORT
"We look forward to continuing to uncover opportunities in the
under-researched small to mid-cap market, with a focus on overcapitalised
high-quality companies with scope for improvement through our constructive
engagement."
Joe Bauernfreund, Portfolio Manager
Over the six-month period to 30 June 2025 ("the Period") and despite turbulent
global markets, AVI Japan Opportunity Trust has delivered +5.2% outperformance
vs the benchmark, and +11.7% in absolute returns (in GBP).
Encouragingly, performance was driven by meaningful engagement successes, such
as Kurabo Industries' disclosure of plans to close down its largest and least
profitable textiles factory and TSI Holdings' sale of real estate equal to 30%
of its market cap in January 2025. In addition, we continue to see evidence of
Japan's burgeoning market for corporate control, with Tecnos Japan receiving a
tender offer at a 39% premium to the undisturbed share price.
The Annual General Meeting (AGM) season in June 2025 has proved particularly
fruitful. Leveraging our strong relationships with investee companies and our
proven expertise in exercising voting rights and shareholder proposals
effectively, the team submitted shareholder resolutions to three companies
this season. Notably, one of two AVI shareholder proposals at Eiken Chemical
successfully passed, which was a partial amendment to the articles of
incorporation to allow the dividend to be determined by resolution of a
general meeting of shareholders, in addition to a resolution of the Board of
Directors. This shareholder proposal was passed with 73% approval, exceeding
the 66% super majority required. The other proposal requesting share buybacks
did not pass, with 38% approval. The 2025 AGM season saw a record high 52
companies receive proposals from "activist" investors, up from 46 in 2024.
As corporate reform in Japan continues unabated, it was announced that the
Tokyo Stock Exchange ("TSE") is set to make investor relations systems
mandatory for listed companies to facilitate relationship building with
shareholders and prospective investors. The TSE had recently mandated timely
English disclosure for both qualitative and quantitative information. In late
June 2025, it was also reported that the TSE is planning to introduce new
rules to enhance the protection of minority shareholders amid a surge in
management buyouts.
During the Period, the team launched public campaigns for both Rohto
Pharmaceuticals and Wacom. AVI's recommended framework for lifting Rohto's
valuations are encompassed in a 100-page report, "Awakening Rohto
(https://www.assetvalueinvestors.com/campaign/awakening-rohto/) ", available
for viewing on our website. Each of AVI's 17 key suggestions are detailed,
ranging from business segment restructuring to improved dialogue with
shareholders. Similarly, AVI's "Draw Wacom's Future
(https://www.assetvalueinvestors.com/campaign/draw-wacoms-future/) " report
highlights 13 recommendations for the company, focusing on operational issues
as well as capital consciousness.
Outside of the headline engagement successes which drove the portfolio's main
contributors (further details below), the portfolio benefited from numerous
but no less important positive outcomes from the team's engagement efforts.
Across the portfolio we saw galvanising of corporate governance structures and
procedures, unwinding of cross-shareholdings, more clarity around financial
targets, new Mid-Term Plans announced (some for the first time), and an
increased focus on capital policy and shareholder return. A clear illustration
of this was Wacom, Maruzen Showa, Takuma, Raito Kogyo, Araya, Mitsubishi
Logistics, Kurabo and Kokuyo all announcing new share buyback programs.
Across the AJOT portfolio, AVI made several large ownership declarations. At
the time of writing, AJOT holds more than 5% of the voting rights in seven
names, which account for 45% of NAV. When combined with AVI's holdings across
other funds, some of which are invested in the same names as AJOT, AVI holds
more than 5% of the voting rights in 11 AJOT portfolio names, which account
for 76% of NAV.
Having added 13 new names to the portfolio in 2024, so far this year we have
added five additional names to the portfolio. We continued to engage
extensively with portfolio companies, attending 80 meetings during the Period
with 22 companies, while also sending six letters and seven presentations.
Each of these meetings and letters focused on our core engagement areas of
capital efficiency, operational improvements, corporate governance and
shareholder communication.
At the time of writing, net gearing stood at 8.2%.
Portfolio Trading Activity
With the team identifying plenty of new opportunities, annualised turnover was
67% over the Period, which was elevated by the privatisation of Tecnos Japan,
discussed further below. Annualised turnover since inception is 41%. We exited
8 positions entirely and five new companies entered the portfolio during the
Period.
The team has several high-conviction ideas in the pipeline, and we look
forward to continuing to uncover opportunities in the under-researched small
to mid-cap market, with a focus on overcapitalised high-quality companies with
scope for improvement through our constructive engagement. Management
receptiveness to engagement in dialogue with shareholders remains an important
consideration, and we are willing to move onto more promising opportunities if
we view further engagement as being unlikely to yield results in a timely
manner.
Sales
The largest sale over the Period was Beenos, the former largest position in
the portfolio, which we fully exited in May 2025 following the tender offer
announced in December 2024, which represented a +19% premium to the
undisturbed share price. We initiated our position in Beenos in January 2024,
generating an ROI of +127% and IRR of +113% in JPY over the holding period.
Takuma was the second largest sale during the Period, as in June 2025 we
exited the position we had held since April 2023. Our investment in Takuma
generated an ROI of +33% for an IRR of +19% in JPY.
Other sales included exits in Araya Industrial and Tecnos Japan, which
received a tender offer at a +39% premium to the undisturbed share price, as
well as Aichi Corp, Nihon Kohden, Jade Group and A-One Seimitsu.
Purchases
The largest purchase during the Period was Rohto Pharmaceutical, as we built
the holding to be a top 10 position in the portfolio from initiation in
September 2024. As mentioned, during the Period, we published a 100-page
report, "Awakening Rohto
(https://www.assetvalueinvestors.com/campaign/awakening-rohto/) ", available
for viewing on our website.
The next largest purchase was in Raito Kogyo, the number one market leader in
the specialist construction market, a position we initiated in March 2024 and
which has to date achieved an ROI of +24% for an IRR of +44% in JPY.
We also added to our position in Wacom, as we launched a public campaign,
"Draw Wacom's Future
(https://www.assetvalueinvestors.com/campaign/draw-wacoms-future/) " in May
2025, a comprehensive multi-year strategy that encompasses 13 key
recommendations, focusing on operational issues as well as capital
consciousness.
Other notable purchases to the portfolio during the Period were Synchro Food,
Mitsubishi Logistics and Kokuyo. We also added to several other established
positions such as Atsugi, TSI Holdings and Broadmedia, in which AVI now holds
a combined +28% of the voting rights across all AVI funds.
Contributors and Detractors
Kurabo Industries (3106)
Kurabo Industries ("Kurabo"), a conglomerate with a diverse collection of
business segments, was the largest contributor, with a +33% share price total
return during the Period adding +306bps to performance in GBP.
Kurabo was originally established as a textile manufacturer, however, it has
diversified its operations over the years to include chemicals, advanced
technology, food and services, and real estate. Kurabo has a history of stable
revenues and has doubled its operating margin in recent years.
Much of our engagement with the company has focused on encouraging management
to direct resources towards the high-quality chemicals and advanced technology
segments, and away from the unprofitable textiles business. Pleasingly, in
March 2025, Kurabo announced plans in line with our recommendations, to close
down its largest and most unprofitable textile factory, the Anjo Plant, by 30
June 2025.
During May 2025, Kurabo implemented many of AVI's suggestions into its annual
results and Mid-Term-Plan. Highlights include introducing a 10% Return on
Equity target for 2027, a ¥20 billion buyback, a 4% Dividend on Equity
target, committing to reducing cross-shareholdings to 20% of net assets by
2027 and committing to sell underutilised real estate. Operating profit
guidance for FY26 is down -22% year-on-year, partly due to the one-off cost
associated with shutting down the unprofitable textile factory.
In June 2025, Kurabo announced the introduction of stock-based compensation
plans for the company's directors. This positive step will help to ensure
alignment of management actions with shareholders' best interests. At the AGM
held in June 2025 the CEO saw his approval rating decline by -13% relative to
the prior year. Additionally, the company continued its 12-month share buyback
plan announced last November to buy back 7.3% of shares, with 48,700 shares
repurchased in June 2025 and the plan now 63% complete.
Kurabo Industries was added to the portfolio in January 2024 and is now the
largest holding, accounting for 12.5% of AJOT's NAV, with the investment
already generating a +70% ROI, for an IRR of +85% to period-end (in JPY).
TSI Holdings (3608)
TSI Holdings, an apparel holding company, achieved a share price total return
of +14% over the Period, adding +218bps to performance in GBP as the second
largest contributor.
TSI Holdings is an apparel holding company with a diversified collection of
brands including Pearly Gates, HUF, and Margaret Howell. Our investment thesis
was predicated on valuation of their real estate assets, investment securities
and net cash exceeding the market cap at the time of investment, as well as
their diversified brand portfolio and diminishing founding family influence.
Encouragingly, in line with our suggestions, in April 2024 the company
announced a mid-term plan focusing on improving EBIT margin as well as
optimising non-operating assets to improve capital efficiency.
In line with that announcement, in mid-January 2025, TSI Holdings announced
the sale of its former HQ building for a value equal to 30% of the market cap.
The share price responded positively to the disclosure, rising +30% in the
subsequent day of trading.
Following this, in April 2025 TSI Holdings released its full-year earnings
results. Despite forecasting record EBIT for FY2025, the share price fell -10%
in the following trading day, as the market was left disappointed by the lack
of a buyback announcement. We note, however, that the company remains
committed to continuing to the already announced two-year buyback programme
equal to c.13% of current market cap.
Post the Period end, TSI Holdings announced the acquisition of Daytona
International, a Japanese online/offline fashion retailer focusing on casual,
sports and outdoor styles. Daytona will be made a wholly owned subsidiary at
the cost of ¥28.3 billion, significantly reducing the company's pre-deal net
cash pile of ¥30.7 billion. At the same time, the company announced a 6.4%
buyback programme (shares to be retired) which was positively received by the
market.
Added to the portfolio in July 2022, TSI Holdings accounted for 11.5% of the
portfolio at period-end as the second-largest holding. To period-end, our
investment has generated an ROI of +97% for an IRR of +48% in JPY.
Tecnos Japan (3666)
Tecnos Japan, an IT services company, was the third largest contributor during
the Period, adding +142bps to performance in GBP with a share price total
return of +33%. The company is engaged in the business of providing
information technology services, especially the installation of Enterprise
Resource Planning (ERP) systems. Our investment thesis was built on the
track-record of high-quality earnings under the digitalisation trends in
Japan, with revenue growing steadily and operating margins consistently in the
low double digits, in addition to the overcapitalised balance sheet that had
net financial value equal to c.35% of the market cap.
During the Period, Tecnos Japan was the recipient of a tender offer bid by Ant
Capital Partners at a price of ¥1,155 per share, representing a +39% premium
to the undisturbed closing price on 4 February 2025. As per the regulatory
news service announcement on 4 February 2025, AVI signed a tender agreement
with Ant Capital Partners Co., Ltd. ("the Offeror") for AVI funds' combined
10% stake in Tecnos Japan.
As the largest holder of voting rights in Tecnos Japan, AVI engaged
extensively with the company's board on ways to enhance corporate value and
returns to shareholders. Tecnos Japan serves as another example of how AJOT's
concentrated portfolio of asset-backed Japanese small-caps can benefit from
AVI's active engagement strategy against a backdrop of rapidly increasing
corporate activity in Japan.
Tecnos Japan held a position in the portfolio from April 2024 to exit in March
2025, with the investment generating a +62% ROI for a +109% IRR (in JPY).
Rohto Pharmaceutical (4527)
Over the Period, Rohto Pharmaceutical ("Rohto"), the largest skincare and
eyedrop manufacturing company in Japan, was the largest detractor, reducing
performance by -121bps in GBP as its shares returned -23%.
Despite Rohto's top market share in skincare and eye-drop manufacturing in
Japan, the company trades at a significant discount to peers. AVI believes
that Rohto's undervaluation is explained by management's apparent lack of
focus on its core businesses, misleading IR communication, and lower
allocation to shareholder returns than its peers. Specifically, management
needs to reallocate its R&D spending from low-profit business areas such
as the prescription drug business and regenerative medicine business, towards
its high-value, high market share product lines, such as skin care products.
In April 2025, we published a 100-page report, "Awakening Rohto
(https://www.assetvalueinvestors.com/campaign/awakening-rohto/) ", outlining
17 constructive suggestions to enhance corporate value, ranging from business
segment restructuring to improved dialogue with shareholders.
During May 2025, Rohto announced its full-year earnings to 31 March 2025, and
despite strong Q4 headline numbers of revenue growing +19% year-on-year and
EBIT growing +39% year-on-year, the company failed to meet its original annual
guidance. In a positive move and in line with our suggestions, Rohto announced
its first mid-term plan, which indicated management now views the core
skincare and eye-drops businesses as long-term growth drivers.
Added to the portfolio in September 2024, Rohto Pharmaceutical accounted for
6.2% of AJOT's NAV at period-end as a top 10 holding. We see significant
upside to the current share price, and to month-end, our investment has
returned an ROI of -12% for an IRR of -43% (in JPY).
Konishi (4956)
Konishi, the manufacturer of the number one adhesive brand in Japan, 'Bond',
was the second largest detractor over the Period, reducing performance by
-61bps in GBP as its shares returned -13%.
In late April 2025, the company announced its full-year earnings results, with
sales growing by +2.2% year-on-year, while EBIT increased modestly by +3.5% in
line with previous guidance. In terms of guidance for the next financial year,
EBIT is projected to increase by just +0.2% year-on-year as revenue is
forecast to rise +4.5%.
Konishi's top market share in construction adhesives has allowed it to
steadily grow revenue at +2.5% CAGR over the last 15 years, while nearly
doubling its operating margin from 4.3% to 7.8% in FY2025. With more than 4%
of the voting rights held across AVI funds, we continue to engage with the
company
on suggestions to address the undervaluation.
AJOT has held a position in Konishi since inception, with the company now
accounting for 3.3% of AJOT's NAV at period-end. The investment to date has
generated an ROI of +65% for an IRR of +12% in JPY.
Aoyama Zaisan Networks (8929)
Aoyama Zaisan Networks ("AZN"), a wealth management consultancy, was the third
largest detractor over the Period, with its -4% share price total return
reducing performance by -41bps in GBP.
AZN specialises in providing wealth management consulting services across
areas such as property, succession planning, corporate finance and strategic
management of individual assets. AZN is set to benefit from the ageing
Japanese population as the need for inheritance and business succession
consulting is on the rise.
At the time we initiated our investment (March 2024), AZN's stock price had
been flat for the previous five years, despite operating income that had
continued to grow steadily and non-operating assets that had expanded to c.47%
of its market cap as of the end of December 2023.
In early February 2025, AZN disclosed its full-year FY2024 earnings, with
revenue rising +26% year-on-year as EBIT grew +7% year-on-year. Guidance from
the company forecasts +10% year-on-year EBIT growth in FY2025. In May 2025,
the company announced its FY2025 Q1 earnings, with EBIT falling -9%
year-on-year, although revenue grew +24% year-on-year. Historically, AZN has
produced somewhat volatile results on a quarterly basis, and the company has
not changed its full-year annual guidance.
Since initiating our position in AZN, the investment has generated an ROI of
+34% for an IRR of +75% in JPY. We anticipate unlocking substantial upside to
the current share price through our constructive engagement initiatives with
management. At period-end, AZN accounted for 6.4% of AJOT's NAV as the eighth
largest holding.
Outlook
The portfolio performed positively over the Period, achieving a +11.7% return,
compared to the benchmark, the MSCI Japan Small Cap Index, which returned
+6.5% (both in GBP). In local currency terms, the portfolio achieved a total
return over the Period of +12.3%, with Yen weakness less of a headwind to
sterling-based returns than in prior years since AJOT's inception. Overall,
the portfolio trades at an attractive average EV/EBIT of 7.2x, with net cash
and listed securities covering 51% of the market cap at period-end.
Japan's equity market is undergoing a notable transformation, supported by
foreign capital, structural reforms, and a renewed commitment to shareholder
value. Early signs of progress are now becoming tangible, opening-up a broad
array of attractive investment opportunities. Our strategy remains
disciplined: we continue to build a focused portfolio of 15 to 25
high-conviction positions, guided by selectivity and long-term potential.
Joe Bauernfreund
Asset Value Investors
16 September 2025
INVESTMENT PORTFOLIO
As at 30 June 2025
Company Stock Exchange Identifier % of net assets Cost Equity Exposure % of investee company NFV / Market capitalisation(1) EV/EBIT(1)
£'000 £'000
Kurabo Industries TSE: 3106 12.5% 18,216 29,300 4.3% 64.8% 4.3
TSI Holdings TSE: 3608 11.6% 16,484 27,014 6.3% 91.4% 2.9
Raito Kogyo TSE: 1926 9.2% 18,099 21,411 3.3% 36.9% 6.3
Atsugi TSE: 3529 7.9% 13,426 18,583 17.0% 106.5%
Wacom TSE: 6727 7.7% 19,032 17,979 3.8% 14.8% 7.7
Eiken Chemical TSE: 4549 7.4% 15,029 17,391 4.2% 14.8% 19.9
Broadmedia TSE: 4347 7.2% 14,762 16,921 23.9% 43.8% 10.5
Aoyama Zaisan Networks TSE: 8929 6.4% 12,909 14,932 6.5% 10.6% 11.3
Rohto Pharmaceutical TSE: 4527 6.2% 18,194 14,479 0.6% 12.0% 10.6
Sharingtechnology TSE: 3989 5.9% 11,710 13,898 11.1% 15.0% 10.1
Top ten investments 82.0% 157,861 191,908
Synchro Food TSE: 3963 4.6% 9,815 10,668 12.9% 30.8% 10.3
Mitsubishi Logistics TSE: 9301 4.0% 8,962 9,260 0.4% 198.8%
DTS TSE: 9682 3.4% 5,063 7,932 0.7% 15.5% 12.2
Konishi TSE: 4956 3.3% 7,324 7,793 2.0% 43.3% 4.0
Maruzen Showa Unyu TSE: 9068 2.8% 5,626 6,526 0.9% 20.7% 7.4
Kokuyo TSE: 7984 2.2% 4,589 5,216 0.3% 63.1% 5.8
Shin Etsu Polymer TSE: 7970 1.9% 3,669 4,532 0.6% 32.8% 7.1
Wakamoto Pharmaceutical TSE: 4512 1.9% 4,519 4,374 8.1% 80.2%
SK Kaken TSE: 4628 1.3% 4,746 3,077 0.5% 91.7% 0.8
Helios Techno Holding TSE: 6927 0.8% 1,949 1,913 1.9% 79.6% 3.7
Total Investments 108.2% 214,123 253,199
Other net current assets less current liabilities (8.2%) (19,101)
Net assets 100.0% 234,098
(1) Estimates provided by AVI. Please refer to the Glossary in the full Half
Year Report.
LEI: 894500IJ5QQD7FPT3J73
FURTHER INFORMATION
AVI Japan Opportunity Trust Plc's Half Year Report for the period ended 30
June 2025 will be available today on www.ajot.co.uk (http://www.ajot.co.uk) .
It will also be submitted shortly in full unedited text to the Financial
Conduct Authority's National Storage Mechanism and will be available for
inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) in accordance with
DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
ENDS
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