Daily Brief Japan: Japan Post Holdings, TSE Tokyo Price Index TOPIX, Chugai Pharmaceutical and more

In today’s briefing:

Japan Post Holdings (6178.T) – Going Places!
Is Japan’s Culture the Psychology of Managers Who Prefer to Keep Cash on Hand over Higher ROE?
Chugai Pharmaceutical (4519 JP): Ronapreve Killed Joy in 2023; New Products to Drive Growth Ahead

Japan Post Holdings (6178.T) – Going Places!

A company that is geared to Japan’s macro revival with additional micro catalysts.
Ownership of financial companies which are set to benefit from a normalisation of Japanese monetary policy.
The low Price to Book means the company will need to keep up momentum on its capital management plans to stay in the Prime Section of Topix.

While many companies have disclosed enhanced shareholder returns, dividend payout ratio in 30% range and no increase, and 4% increase in total dividends from the previous year, is not enough.
Since DOE remains at just under 3% same as the previous year, few companies allocate enough cash to dividend to reduce Shareholder’s Equity, and consequently ROE is expected to lower.
Cash on hand in September is at all-time high. Behind the ROE, which shows no sign of rising, is the psychology of managers who want to keep cash on hand.

Chugai Pharmaceutical (4519 JP) reported 5% YoY decline in core revenue in 2023, due to the decrease in the supply of COVID-19 treatment Ronapreve to the government.
For 2024, Chugai expects core revenue to decline mainly due to the absence of Ronapreve revenue and decline in Actemra export. However, operating and net profits are expected to increase.
Hemlibra export and new launches such as Vabysmo, Phesgo, Polivy, and Alecensa are expected to drive long-term growth of the company.

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