In today’s briefing:
- Nikkei 225 Weekly Close
- Zozo – In Line as Reopening Looms
- Omron – Downgrade on Normalising Profitability
- Japanese Yen – Myths and Realities
- KDDI (Buy) – Q3 21 Results Reaction: Slight Beat with Share Buy-Back Sweetener
- Koito – Hit by Material Costs and Unexpected Plan Changes
Nikkei 225 Weekly Close
- This is an update & follow up from a note sent earlier this week called Is the Nikkei 225 the Next Shoe to Drop?
- The weekly close has been below the important level of 26,954
- This latest development suggests further losses over the coming weeks
Zozo – In Line as Reopening Looms
- Zozo results were in line to slightly strong with revenue beating consensus by 3.3% and OP 1.3% higher.
- That slight beat was driven by very aggressive advertising spend however and we expect the recent correction for the stock to continue.
- The question in our mind is whether this will eventually head under ¥1,000 as we previously predicted.
Omron – Downgrade on Normalising Profitability
- Omron reported its 3QFY22 results on 28th January which saw revenues of ¥190.9bn (+5.8% QoQ, +13.4% YoY) and OP of ¥19.2bn.
- The reported results were 0.6% and 17.1% lower than the consensus estimates for revenue and OP respectively.
- This weakness also lead to a downgrade in guidance the size of which was a touch surprising.
Japanese Yen – Myths and Realities
- Yen depreciated about 13% vs Dollar in 12 months to 4 January but has since rebounded about 1% in NEER terms. We expect trade deficit to stabilise in coming months.
- “Safe-Haven” Yen also driven by capital outflows and global sentiment, as proxied by S&P 500. But perception that Yen is funding currency for EM has not held true since mid-2020.
- Our near-term scenario, premised on lower US equities, is of modest Yen NEER appreciation. Monthly seasonality has historically been negligible in February.
KDDI (Buy) – Q3 21 Results Reaction: Slight Beat with Share Buy-Back Sweetener
- Financial beat as enterprise sales grow and consumer mobile pressure stabilizes. A rebound in mobile user growth was a key driver
- The company has raised its FY21 buyback program to a record ¥200bn
- We are raising our target price from ¥4,030 to ¥4,440 and remain at Buy
Koito – Hit by Material Costs and Unexpected Plan Changes
- Koito reported its 3QFY22 results yesterday and saw revenues of ¥199.7bn (+18.3% QoQ, -4.4% YoY) and OP of ¥14.2bn (7.1% OPM up 2.0% points QoQ).
- The reported revenue was 6.5% higher than consensus estimates while operating profit was -9.2% lower creating a mixed picture.
- Margins should normalise over time unlocking upside while underlying demand remains very healthy.
Before it’s here, it’s on Smartkarma
