Daily Brief Japan: Mizuho Financial Group, TSE Tokyo Price Index TOPIX, Kondotec Inc and more

In today’s briefing:

Potential Domestic Rate Hike Impacts Highlighted in the BoJ’s Latest Financial System Report
More Companies Will Choose to Go Private Because They Can’t Find an Effective Use for Their Cash
Kondotec (7438): Q3 FY03/24 Update

Potential Domestic Rate Hike Impacts Highlighted in the BoJ’s Latest Financial System Report

The Financial System Report published on April 18th focuses on the key Japanese bank issues, including the prospect of domestic rate hikes
We focus primarily on the key take-aways from the BoJ report, in particular with relation to potential rate hikes; our key picks appear to be better geared than the average
We highlight Resona, Mizuho and Concordia in the bigger caps, with positive views on Suruga, Gunma and Tokyo Kiraboshi in the regional banks

The problem lies in the fact that even with a 10% increase in net profit, ROE only grew by 0.5%. This is due to having too much cash on hand.
TSE has provided an opportunity for companies to develop measures to increase their corporate value. However, not many companies can derive concrete ways to effectively use cash.
Since many companies are expected to take time to find concrete solution to this problem, an increasing number of companies are expected to go private once they have done so.

Kondotec Inc (7438 JP) is a wholesaler of construction materials in the same league as companies such as Okabe Co., Ltd. (TSE PRM: 5959).
In FY03/23, sales amounted to JPY75.4bn (+14.1% YoY), operating profit came to JPY4.4bn (+21.2% YoY), recurring profit was JPY4.6bn, and net income attributable to owners of the parent was JPY2.4bn.
Kondotec Inc. announced changes to its lineup of representative directors (a change of president).

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