Another year wasted
Sun Corporation’s share price has nearly doubled since may 2024. Unfortunately, this surge has little to do with the company’s underlying business performance. The increase can be attributed to two main factors.
First, Sun’s share price is closely tied to that of Cellebrite, its largest asset, which alone is worth much more than Sun’s entire market capitalization. During this period, CLBT’s share price rose by 57%. Second, in 2024, True Wind Capital - the sponsor of Cellebrite’s SPAC - launched a tender offer and acquired approximately 19% of Sun’s outstanding shares at ¥5,500, representing a 50% premium to the pre-announcement trading price. These two developments largely explain the doubling of Sun’s share price over the past year. The following chart shows the strong correlation between Sun and CLBT during 2025:
Medium Term Plan
In 2025, Sun’s management released a new Medium-term Management Plan. This provides a timely opportunity to revisit the previous plan, published in May 2022, and assess the company’s actual performance against its stated goals.
Sun’s management significantly underperformed relative to its own targets, missing revenue by 20% and operating margin by 1260 bps!
Furthermore, the company’s 2023–2025 Medium-Term Plan allocated ¥20–40 billion over three years toward R&D, capital investment, M&A, and shareholder returns. So, how did they perform against these targets?
According to our calculation, R&D spending has remained flat at roughly ¥1 billion per year, with no meaningful increase. Capital expenditures totaled only about ¥1 billion for the entire period, including the $5 million acquisition of Malaysian company EK Tech in 2023. Shareholder returns through dividends and buybacks amounted to ¥6.6 billion. In total, that’s approximately ¥10 billion - far short of the lower bound of the ¥20–40 billion presented to investors.
Now, in its newly released Medium-term Plan, management has earmarked ¥12.5 billion for M&A and capital investments. Given Sun’s lack of a track record in executing value-accretive acquisitions, it’s hard to believe this capital will generate returns above the company’s cost of capital. Which raises a more fundamental question: what is Sun’s cost of capital, and does management even know it?
Failure to Implement Japan’s Corporate Governance Code
Under Principle 5.2 of Japan’s Corporate Governance Code, company management is required to formulate and disclose clear business strategies and plans. This includes identifying the company’s cost of capital and providing a transparent, rational explanation for how management resources are allocated - through a regular review of the business portfolio and investment decisions.
The Tokyo Stock Exchange is actively monitoring compliance with this principle and has introduced a public “name-and-shame” list identifying companies that fail to disclose in line with the “Action to Implement Management that is Conscious of Cost of Capital and Stock Price” initiative. Sun is among the 12% of companies on the Standard Market that have merely stated such disclosure is “under consideration.” This is hardly a badge of honor.
In addition, Principle 1.4 of the Code addresses cross-shareholdings. It requires companies to disclose their policy on holding such shares, including a commitment to reducing them where appropriate. Boards are expected to annually assess each holding’s strategic relevance and whether it generates returns in excess of the company’s cost of capital - and to disclose the results. We have asked management to distribute the shares of Cellebrite as dividend in kind to shareholder. To date, Sun’s management has failed to offer any serious justification for continuing to hold shares in Cellebrite and it does not consider holding CLBT's shares to be "Cross-shareholding". Their only disclosure is a generic statement claiming that such holdings are intended to enhance medium- to long-term corporate value through stronger relationships with investees. According to our calculations, Sun accounts for only about 1% of the global sales of Cellebrite through a non-exclusive reseller agreement in Japan.
Why has management failed to provide a clear explanation for its continued holding of Cellebrite shares? What is the economic rationale? If the investment is truly strategic, where is the supporting analysis - quantifying synergies, returns, or business impact? If not, why does Sun continue to tie up a huge amount of capital in a passive financial asset while its own business underperforms?
Management has failed to grow the top line of the company
The three charts below present quarterly sales by segment since 2020 (converting the period of the "new management"). For the Global Data Solutions segment, figures reflect results after the deconsolidation of Cellebrite. All amounts are in billions of yen. Sun's management performance is self-explanatory.
A few important points to keep in mind:
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While Sun’s Global Data Solution sales - which essentially represent Sun selling Cellebrite’s products in Japan - are flat, Cellebrite’s global sales grew by 50% over the same period, which means that Sun is significantly underperforming in selling CLBT's products.
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In 2023, Sun acquired a Malaysian company, which is now reported under the IT segment and contributed also to the sales increase
In summary, management had yet another year to demonstrate their ability to create value for shareholders - and once again, they have failed. As a result, we will be voting against their reappointment and urge fellow shareholders to do the same.
We call on shareholders to hold the board accountable for their lack of action and entrenchment.
"Another Year, Wasted"
From behind the mountain, the sun rises bright,
Shares doubled, a bloom in morning light.
But not from roots in Sun’s old ground—
The light belongs to Cellebrite.
A golden letter floats in sky,
True Wind whispers, bidders fly.
They bought their stake, and hope was sold,
While those inside stayed quiet and cold.
New promises drawn in ink and plan,
Three more years they proudly scan.
Yet old words rot, goals unmet—
A fruitless tree, in silence set.
They vowed to spend, but half was done,
No R&D, no rising sun.
A small ship bought in a foreign bay,
And to shareholders, excuses lay
They speak not of rules they’re bound to heed,
Not even the cost their business needs.
Their name now noted on the exchange’s list,
Yet still they say, “We’ll think on this.”
They clutch Cellebrite with quiet hand,
No strategy, no stated plan.
“Long-term value,” they softly cry,
Yet sell just one percent—why?
Their products stall, their growth stands still,
While others rise and climb the hill.
No blossoms bloom on homegrown trees,
They bask in glory that is not theirs.
Shareholders, let your voices ring,
Bring winds of change, let conscience sting.
Cut down the rot, the hollow bark—
Let’s plant new roots and strike the spark.
