In today’s briefing:
- Tokyo Electron (8035 JP): Saved from Disaster by China
- Japan Post Bank – JPY234bn in Gains More than Offsets Cratering Net Interest Income
- Kaken Pharmaceutical (4521 JP): Q1 Revenue Is Flat; Profit Falls; Bleak Outlook for FY24
- Nidec (6594 JP): Favorable Margin Trends
- Sanyo Trading (3176) – Well-Positioned for Sustainable Growth
- WILLs (4482) – Highest Quarterly Customer Acquisition in Two Years
Tokyo Electron (8035 JP): Saved from Disaster by China
- Thanks to strong demand from China, 1Q results at Tokyo Electron (TEL) were just bad, not horrible. Operating profit was down 30% YoY on a 17% decline in sales.
- 1H guidance implies that 2Q will also be weak. Full-year FY Mar-24 guidance implies an unlikely 50% sequential increase in net profit, putting the shares on 32x projected EPS.
- A return to peak EPS next fiscal year would drop the P/E ratio to 21x, which used to be the top of TEL’s P/E range. Sell.
Japan Post Bank – JPY234bn in Gains More than Offsets Cratering Net Interest Income
- Results show dramatically lower NIM, net interest income, but stock gains in spades
- The only way to analyze 7182 is to have a view on its stock, bonds, investment gains
- Unrealized gains more than doubled to JPY472bn: fire-power remains, but is it valuable?
Kaken Pharmaceutical (4521 JP): Q1 Revenue Is Flat; Profit Falls; Bleak Outlook for FY24
- Kaken Pharmaceutical (4521 JP) reported muted operating performance for Q1FY24. Revenue was flat compared to year-ago quarter, while operating profit declined 19% YoY. Net profit decreased 14% YoY.
- The company has reiterated FY24 guidance of flat revenue and 5% YoY decline in operating profit. However, net profit is expected to increase 23% YoY in FY24 on low base.
- Kaken is not expected to see any immediate respite as the contribution from the new products will not compensate for the revenue loss from its top selling products.
Nidec (6594 JP): Favorable Margin Trends
- EV motors are out of the red, profits on appliance, commercial and industrial products are up, and the yen is much weaker than management’s forecast assumes.
- Despite economic uncertainty, achieving FY Mar-24 profit guidance should not be difficult.
- Operating margin trends are generally positive and valuations not too high for longer-term investors. Buy into current pull-back.
Sanyo Trading (3176) – Well-Positioned for Sustainable Growth
- Businessdiversificationpayingoff–Q1-3FY9/2023resultsshowed double-digit growth for sales at 15.3% YoY and OP at 26.8% YoY, despite high hurdles YoY.
- The Machinery & Industrial Products segment continues to be the core earnings driver, contributing approximately 60% of total operating profit, and growing segmental profits by 71.4% YoY.
- A rebound in industrial material-related products due to Japanese auto production recovery and the contribution of Scrum Inc., consolidated in February 2022 boosted profits.
WILLs (4482) – Highest Quarterly Customer Acquisition in Two Years
- Positive development over new customer acquisition – WILLs’ positive execution resulted in the net acquisition of five new customers for its Premium Benefits Service during Q2 FY12/2023, the highest level for two years.
- Positive thematic tailwinds are a combination of digital transformation needs as well as improving share trading liquidity for listed entities, and the company remains well positioned to cater to this in our view.
- WILLs also made significant progress in growing its Advertising business, generating positive segmental profits from losses in the previous year.
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