Daily BriefsJapan

Japan: Nikkei 225, Rakuten Inc, Mizuho Financial Group, Seria Co Ltd, Sumitomo Mitsui Financial Group, Nissan Chemical Industries, Japan Airport Terminal Co and more

In today’s briefing:

  • Nikkei Add Target Met – 30,200 Hurdle
  • Rakuten Internet Services: Getting Back to Growth
  • Mizuho Financial Group (8411 JP):  Defying the Skeptics
  • Japan’s Governance: TSE Market Reorganization Update and 100 Yen Shop Industry Reorganization: Seria
  • SMFG (8316 JP): Disciplined Numbers
  • Japan’s Governance: Update on Medium-Term Management Plan: Nissan Chemical
  • Japan’s Governance: Equity Finance Update: Japan Airport Terminal (9706)

Nikkei Add Target Met – 30,200 Hurdle

By Thomas Schroeder

  • Nikkei met our 29,200 long zone to add to our 27,050 long. Pivot support at 28,800. 
  • Macro correction from February to August is viewed as a bullish platform. Rising wedge is the near term driver. 
  • 30,200 is the hurdle to clear to provide fuel for a rise to our 31,000 December target. 2022 macro target remains at 32,500.

Rakuten Internet Services: Getting Back to Growth

By Oshadhi Kumarasiri

  • Despite the steady growth of Rakuten Ichiba, the Internet Services segment’s overall profitability followed a declining trend due to investments in early stage businesses.
  • However, the burden on the segment’s profitability from these early stage investments is quickly dissipating alongside the growth in cross use of Rakuten Inc (4755 JP)’s e-commerce platforms.
  • In addition, the the JV with Japan Post is also starting to improve the efficiency of logistics operations, resulting in quarterly cost savings in the range of ¥3.0-4.0bn.

Mizuho Financial Group (8411 JP):  Defying the Skeptics

By J. Brian Waterhouse

  • 1H FY3/2022 consolidated net profits of ¥385.65 billion were not only +78.9% YoY but were also the highest 1st half consolidated net profits produced by the group in 7 years.
  • Key drivers of the much-improved results included better net interest and fee income, lower GAE expenses and much-reduced credit costs.
  • MHFG trails all six of its peers in terms of YoY price performance; MHFG remains mired in computer systems-related issues that do nothing to enhance its reputation for operational reliability.

Japan’s Governance: TSE Market Reorganization Update and 100 Yen Shop Industry Reorganization: Seria

By Aki Matsumoto

  • I would like to think once again about why Seria chose the Standard Market instead of the Prime Market from the corporate governance perspective.
  • Seria’s thoughts on the impact of Cando (2698) becoming a subsidiary of Aeon (8267) were explained at the analyst meeting on November 12.
  • I would like to take a fresh look at the environment surrounding the 100 yen store industry.

SMFG (8316 JP): Disciplined Numbers

By J. Brian Waterhouse

  • Interim FY3/2022 results for SMFG (8316 JP) were good, with improvement in core earnings in both 1Q and 2Q, together with a sharp reduction in credit costs, driving the results.
  • Consolidated net profits of ¥456.06 billion were not only up +68.8% over 1H FY3/2021 but represented 76% of SMFG’s original full-year guidance.
  • FY guidance is raised from ¥600 billion to ¥670 billion.  The dividend has been raised from ¥190ps to ¥210ps.  SMFG has announced a ¥100bn share buyback.

Japan’s Governance: Update on Medium-Term Management Plan: Nissan Chemical

By Aki Matsumoto

  • The current medium-term management plan was explained in the second quarter financial results and at the analyst meeting, so I would like to discuss it.
  • I believe that clarifying the difference between planned and actual figures for each major product not only increases transparency for investors but also clarifies business issues.
  • In order to communicate with investors, it is desired to set reasonable MTP and numerical targets and disclose relevant information of the design of a business portfolio for new growth.

Japan’s Governance: Equity Finance Update: Japan Airport Terminal (9706)

By Aki Matsumoto

  • In March, Japan Airport Terminal raised 56.5 billion yen through equity financing. I attended an analyst meeting and would like to share my thoughts on the company.
  • JAT will start investing in the next fiscal year, and balance sheet is expected to expand. If operating cash flow doesn’t grow, equity finance is likely to be taken out.
  • ROE isn’t included in the numerical targets. Considering the fact that treasury stock was sold in the equity financing, the management has distanced itself from focusing on shareholder interests.

Before it’s here, it’s on Smartkarma