Economic commentator Tomio Sugimura
“Investment Strategies for Overcoming Extreme Heat, Typhoons, and Summer Drought!”
- Japan Stands Out as a Promising Investment Destination
In addition to the summer holidays, Japan’s high school baseball season is in full swing, resulting in a decrease in the number of investors due to the Obon holidays. Furthermore, the country is currently facing a heat wave and two typhoons (No. 6 and No. 7), which have weakened market power. At the same time, the banking sector is grappling with negative news, such as the introduction of an additional tax rate of 40% for banks in Italy whose profits in 2022 have increased by 3% or more compared to the previous year.
Over on Wall Street, loan defaults in the commercial real estate sector, particularly in offices and hotels, have become a major concern. In Japan, bankruptcies related to interest-free and unsecured loans in response to the COVID-19 crisis are rapidly increasing. More companies are opting to close down as the repayment deadlines draw near. However, this is not expected to have a significant impact on mega banks.
On the flip side, while there are reports of a decline in the global manufacturing industry, Japan is the exception. Capital investment for FY2023 is projected to surpass 100 trillion yen, reaching an all-time high. The shift away from deflation and changes in corporate behavior have led to a resurgence of manufacturing in Japan, enticing companies to establish new factories.
The impact is also evident in the tourism industry. Inbound consumption from April to June this year has reached 1,205.2 billion yen, recovering to 95% of the levels seen during the same period in 2019. However, the number of foreign visitors to Japan is only at 69% of its peak, with a possible explanation being an increase in spending and prolonged stays.
On August 10, the Chinese government lifted the ban on group travel to Japan. In 2019, 9.59 million Chinese tourists visited Japan. All eyes are now on whether a similar influx will occur. Despite the tourism industry facing a severe labor shortage, there is a need to enhance the value of tourism services and raise wages to secure skilled workers.
Overall, the Japanese economy is performing well, with listed companies on track to see a 20% increase in net profit during the April-June period. Rising prices and a weaker yen are contributing factors. However, as cautioned repeatedly, it is crucial to remain cautious during this season that is susceptible to economic fluctuations. Therefore, adopting an effective investment strategy focused on high-performing stocks and prominent themes is recommended.
An Overseas Value: Domestic Used Cars Reach 200 Million Yen!
Are there any specific brands worth paying attention to? Firstly, Apple International, a company specializing in buying and exporting used cars, is witnessing an increase in shipments to Thailand and Malaysia. Recently, at an auction in England, a Nissan Motor Co., Ltd. “Skyline GT-R” was reportedly sold for approximately 200 million yen, highlighting the popularity of domestic used cars.
Next, targeting stocks with a price-to-book ratio (PBR) of 1x continues to be a favorable strategy. INPEX, with a PBR of 0.65x, is projected to pay a dividend of JPY74 in FY2023 (compared to JPY62 in the previous fiscal year). The company plans to repurchase 80 million shares, equivalent to 6.12% of the total issued shares, with an upper limit of 100 billion yen.
Kawasaki Steamer, with a PBR of 0.77, exhibits a PER of 10 times and presents an incredible lag. The company is currently repurchasing 11,676,000 shares, which accounts for 4.70% of the total number of shares issued, with an upper limit of 60 billion yen. Additionally, the attractive September interim dividend provides a yield of 4%.
Furthermore, Aoyama Zaisan Networks, which shows promising signs of development, plans to pay a dividend of 41 yen for the fiscal year ending in December 2023 (compared to 35 yen in the previous fiscal year). Other notable stocks include Honda, strong in India, System F・C・C, and Seimitsu Musashi Industry, among others.
Pacific Industrial, with a PER of 8.6 times and a PBR of 0.55 times, lags behind, while Toyota Motor Corporation plays a pivotal role in the company’s electric vehicle strategy. Their main product, tire valves, along with Honda-related parts manufacturers, are worth keeping an eye on with regards to stock prices. Let’s aim high together.
Diary: August 10, 2023
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Economic commentator Tomio Sugimura
“Investment tactics to overcome extreme heat, typhoons, and summer drought!”
● Japan’s current position stands out in developed countries!
At this time of year, in addition to the summer holidays, high school baseball is in full swing, and the number of investors decreases due to the Obon holidays. In addition, there is a heat wave and a typhoon (No. 6 and No. 7). Market power is waning. In addition, the banking sector receives a series of negative information, such as the introduction of an additional tax rate of 40% (Italy) for banks whose profits in 2022 have increased by 3% or more compared to 2021.
On Wall Street, the problem of default on loans for commercial real estate (offices, hotels) has come to the fore, and bankruptcies related to zero (interest-free, unsecured) loans are said to be in response to the corona crisis is increasing rapidly in Japan. An increasing number of companies decide to close when the deadline for repayment approaches. However, I think the impact on mega banks will be small.
On the other hand, there are reports of a fall in the manufacturing industry worldwide, but Japan is the only exception. Capital investment (nominal) in FY2023 is expected to exceed 100 trillion yen, an all-time high. Break out of deflation → Changes in corporate behavior have led to the return of manufacturing to Japan and the rush to build new factories.
The impact in is also great. Inbound consumption for April to June this year was 1,205.2 billion yen, recovering to 95% of the same period in 2019. The number of foreign visitors to Japan is 5.92 million, just 69% of the peak. This difference is probably due to an increase in use (30% increase) and an extension to the length of stay (9 days → 14 days).
On August 10, the Chinese government lifted the ban on group travel to Japan. In 2019, 9.59 million Chinese visited. We will keep an eye on news related to influx to see if it repeats that. Although the tourism industry is facing a serious labor shortage, there is a need to add value to tourism services and raise wages to secure human resources.
In any case, the Japanese economy is doing well, and the net profit of listed companies in the April-June period is on pace to increase by 20%. Penetration of price rises and a weaker yen are tailwinds. However, as I have noted time and time again, it is easy to fall into the “summer drought” situation during this season. rocked by a future. That is why he insists that the strategy of focusing on high performing stocks, emphasizing a theme, is effective.
● A value of 200 million yen overseas for a domestic used car!
Is there a specific brand name? First, Apple International, which buys and exports used cars <2788> [東証Ｓ]in. Shipments to Thailand and Malaysia are increasing. The other day, at an auction in England, Nissan Motor Co., Ltd. <7201> [東証Ｐ]The “Skyline GT-R” was said to have sold for around 200 million yen. Domestic used cars are popular.
Next, we will continue to aim for 1x PBR stocks. INPEX with 0.65x PBR <1605> [東証Ｐ]Against a backdrop of strong performance, the company plans to pay a dividend of JPY74 in FY12/23 (JPY62 in FY12/23). The company will buy back 80 million shares (6.12% of the number of issued shares) with an upper limit of 100 billion yen.
Kawasaki steamer <9107> [東証Ｐ]He has a PBR of 0.77. The PER is 10 times and the lag is amazing. After all, 11,676,000 shares (4.70% of the number of shares issued), and the upper limit of 60 billion yen are being repurchased. At this time, the September interim dividend (4% yield) is also attractive.
In addition, Aoyama Zaisan Networks, which is full of signs of development, will pay a dividend of 41 yen for the fiscal year ending December 2023 (35 yen in the previous fiscal year). <8929> [東証Ｓ]Honda strong in India <7267> [東証Ｐ]System F・C・C <7296> [東証Ｐ]Seimitsu Musashi Industry <7220> [東証Ｐ]can be noticed etc.
Pacific Industrial <7250> [東証Ｐ]behind with a PER of 8.6 times and a PBR of 0.55 times, and Toyota Motor Corporation <7203> [東証Ｐ]plays a key role in the company’s EV (electric vehicle) strategy. The main product is tire valves. They seem to be well aware of the stock price as well as Honda-related parts manufacturers and Toyota. Let’s go high.
August 10, 2023 Diary
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