In today’s briefing:
- Shimano (7309) | Shifts Gears with Upbeat Guidance
- Customers Flocking to Donki for Both Discounted Daily Necessities and Tourist Toys
- Global FX & Economics: Yen-maggedon
- Matsui Securities (8628 JP): Q1 FY03/25 flash update
- Companies Without Engagement Opportunities Lack a Sense of Urgency to Solve Problems
- Simplex Holdings (4373 JP) – Long Term Growth Scenario Remains Intact
- Mitsubishi Research Institut (3636 JP): Q3 FY09/24 flash update
- 4Q Follow-Up – Japan System Techniques (4323 JP)
- Strike (6196 JP): Q3 FY09/24 flash update
- Naigai Trans Line (9384 JP): 1H FY12/24 flash update
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Shimano (7309) | Shifts Gears with Upbeat Guidance
- Shimano’s Q2 results exceeded expectations with revenue and operating profit significantly beating estimates despite a YoY decline.
- Full-Year revenue and operating profit guidance were revised upward, reflecting improved performance and aligning with analyst consensus.
- Our estimate for FY25 was significantly raised; despite full valuations, further recovery and potential shareholder returns offer continued bullish outlook.
Customers Flocking to Donki for Both Discounted Daily Necessities and Tourist Toys
- Inflation is encouraging customers to seek out discount chains, led by PPI’s Don Quijote.
- Backed by expansion of private brand lines and more food lines, as well as higher sales to tourists, PPI has been posting record results.
- There continues to be high expectations for further growth at home and abroad.
Global FX & Economics: Yen-maggedon
- Historical analysis suggests that previous lows in yen or highs in dollar yen may be difficult to recapture after significant technical damage.
- The yen strength is influenced by wide US minus Japan real policy rate differentials, skewing historical results in a more yen bearish direction.
- Expectations for the upcoming BOJ meeting include a 15 basis point rate hike and a halving of bond purchases, leading to dispersion of views among investors on the timing of rate hikes.
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Matsui Securities (8628 JP): Q1 FY03/25 flash update
- Net operating revenue: JPY9.4bn (+14.8% YoY; -5.0% QoQ), Operating profit: JPY4.2bn (+17.8% YoY; -2.8% QoQ).
- Total commissions: JPY5.2bn (+7.6% YoY; -16.7% QoQ), Brokerage commissions: JPY4.9bn (+7.2% YoY; -17.4% QoQ).
- SG&A expenses: JPY5.2bn (+12.4% YoY; -6.7% QoQ), Personnel expenses: JPY976mn (+12.2% YoY; +4.8% QoQ).
Companies Without Engagement Opportunities Lack a Sense of Urgency to Solve Problems
- Companies that have increased their valuations over the past year are those with higher valuations and have further increased their ROE and ROA, resulting in even higher valuations.
- The difference between the characteristics of companies whose valuations increased and those whose valuations did not change over the past year is the foreign ownership ratio.
- Companies with low foreign ownership have less access to overseas investors’ suggestions for solving individual company problems, which is why they are slow to act to improve capital profitability.
Simplex Holdings (4373 JP) – Long Term Growth Scenario Remains Intact
- Q1FY3/25 results indicated a slow start for earnings, despite a robust profile for sales growth at 16.5% YoY and both quarterly orders and backlog at record highs.
- The key takeaways are: 1) although reported OP fell 4.8% YoY, underlying OP growth was 4.6% YoY when restating for one-time expenses for a new office, 2) quality of earnings remains sound despite cases of project cost overruns, and 3) the sustained strong outlook for orders provides high earnings visibility.
- We believe that the direction of travel remains positive for earnings growth, given strong order visibility and as the company’s operations continue to scale.
Mitsubishi Research Institut (3636 JP): Q3 FY09/24 flash update
- Adoption of new revenue recognition standards increased FY09/22 revenue by JPY2.6bn, operating profit by JPY1.0bn, and reduced order backlog by JPY11.2bn.
- FY09/23 revenue decreased by 6.8% YoY to JPY90.3bn, with operating profit down 15.8% YoY to JPY7.1bn.
- Revised FY09/24 forecast predicts revenue of JPY116.0bn (-5.0% YoY) and operating profit of JPY7.5bn (-13.7% YoY).
4Q Follow-Up – Japan System Techniques (4323 JP)
- Japan System Techniques Co., Ltd. (hereafter, the “Company”) posted an increase of sales and profits in all four business segments for FY2024/3.
- In particular, operating profit of the Medical Big Data business and the Global business in total, increased sharply by 49.5% YoY.
- Net sales saw an increase for 13 consecutive years, and ordinary profit for 9 consecutive years with a record high, leading to 17.8% of ROE.
Strike (6196 JP): Q3 FY09/24 flash update
- Revenue increased 45.3% YoY to JPY13.3bn, driven by a rise in deals closed and large-scale projects.
- Cost of revenue grew 51.1% YoY to JPY4.7bn, influenced by higher incentive salaries and personnel costs.
- SG&A expenses rose 16.6% YoY to JPY3.6bn due to increased rent expenses from headquarters expansion in March 2023.
Naigai Trans Line (9384 JP): 1H FY12/24 flash update
- Sales rose to JPY17.2bn (+6.1% YoY), driven by strong overseas subsidiaries and a weaker yen.
- Operating profit decreased to JPY1.9bn (-15.3% YoY) due to increased SG&A expenses and reduced high GPM LCL export cargo.
- Overseas segment sales grew to JPY6.0bn (+30.2% YoY), with solid warehouse operations in India and South Korea.