In today’s briefing:
- Japan Post Bank – It’s like a Closed End Mutual Fund More Than Ever
- EQD | The Nikkei Can Go Higher From Here
- Guidebook for Raising P/B Published, but Still Much Work to Be Done to Achieve Goals
- Ohba (9765 Jp) – Pushing Forward to Break Record for Consecutive Years of Operating Profit Growth
Japan Post Bank – It’s like a Closed End Mutual Fund More Than Ever
- Japan Post Bank (7182 JP) saw its net profit surge from non-recurring gains, which was from the sale of stocks.
- The company’s cost of funds worsened more than the improvement in its yields, and we believe this remains an issue related to hedging costs.
- Unrealized gains on foreign bonds remains significantly higher now than a year ago and this may again be the driver for earnings, but still with very low ROA.
EQD | The Nikkei Can Go Higher From Here
- The Nikkei 225 INDEX has been rallying a bit last week and closed the week up. A rebound from the previous downtrend is underway.
- A temporary bottom may have been established in May, it is not clear if the index is about to go lower or higher, but our pattern model readings suggests higher.
- If the index continues to rally, the first major resistance area will be around 40k.
Guidebook for Raising P/B Published, but Still Much Work to Be Done to Achieve Goals
- Few companies have disclosed their cost of capital, so TSE provided specific indicators for this purpose. On the other hand, allergies to cost of capital disclosure are persistent in companies.
- It is a concern that many companies still have more fixed remuneration than variable remuneration for compensation incentives, which are a mechanism for achieving capital profitability goals like ROE.
- Engagement with overseas investors can be effective, but there are challenges, such as the existence of passive funds and companies with small market capitalizations that are not eligible for investment.
Ohba (9765 Jp) – Pushing Forward to Break Record for Consecutive Years of Operating Profit Growth
- OHBA (hereafter referred to as “the Company”) has achieved 12 consecutive years of operating profit growth through FY2023/5, and is on track to stretch this streak to 13 consecutive years in FY2024/5, having posted a 20.1% YoY increase in operating profit for cumulative 3Q FY2024/5.
- The Company has secured orders for a number of landmark construction projects from both the public and private sectors, including basic policy formulation and master plan preparation work associated with the optimization of Japan Self-Defense Force facilities, Kumamoto JASM/TSMC (Taiwan Semiconductor Manufacturing Company) Phase 1 plant, Sony Semiconductor Solutions Corporation plant, among others.
- It has been able to capitalize on the robust macro environment, partly supported by the continued rise in technician prices for design work outsourcing
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