In today’s briefing:
- Olympus Corp (7733 JP): Started FY23 on a Strong Note Thanks to Favorable Foreign Exchange Rate
- The Time Is Not Far off when the Prime Market Listing Criteria Itself Will Be Questioned
- Sinopharm Group (1099.HK) – Industry Trends Hardly Support High Valuation Expectations
Olympus Corp (7733 JP): Started FY23 on a Strong Note Thanks to Favorable Foreign Exchange Rate
- Olympus Corp (7733 JP) reported double-digit revenue and operating profit growth in Q1FY23, thanks to favorable foreign exchange rate. Adjusting for FX, revenue was flat compared to year-ago period.
- Based on favorable foreign exchange rate, management has raised FY23 revenue and operating profit guidance by 5% and 12% to ¥1,019 billion and ¥231 billion, respectively.
- With more than 85% of total revenue coming from international markets, Olympus should remain a prime beneficiary of Japan’s weak currency.
The Time Is Not Far off when the Prime Market Listing Criteria Itself Will Be Questioned
- For the majority of companies applying the measures, the market capitalization in circulation is less than 10 billion yen, which is the reason for not meeting the listing criteria.
- The only solution to this problem is to raise the stock price, which can only be done either by improving profits or by raising the expectation on the future profits.
- It won’t be long before the time comes when the criteria will be questioned in the first place, whether tradable market capitalization of 10 billion yen is sufficiently liquid investment.
Sinopharm Group (1099.HK) – Industry Trends Hardly Support High Valuation Expectations
- Over the past few years, Sinopharm’s revenue scale has continued to grow, but its gross profit margin declined due to negative policy pressure. Actually, it isn’t a highly profitable business.
- As industry leader, Sinopharm will benefit from the increasing industry concentration and further expand market share. The challenge is Sinopharm will face a situation of increasing revenues without increasing profits.
- For 2022 forecast, revenue YoY growth could be about 5%-7%. Net profit YoY growth could be below 10%., High valuation expectations cannot be supported considering the future industry trend.
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