―Amidst a series of downward revisions, a pick-up of attractive stocks expected to return to record highs after a long period of lull―
The April-December financial results announcement season for companies with March financial results that have been hit by a storm of downward revisions has come to an end. Between January 4 and February 16, when the financial results for the third quarter were announced, 352 companies made downward revisions to their ordinary profit or profit before tax for the full year ending March 2011. This is an increase of more than 70% compared to the same period last year. Many companies, mainly in the manufacturing industry, have lowered their full-year forecasts one after another due to factors such as the slowdown in the global economy, persistently high raw material prices, and revisions to exchange rate assumptions. On the other hand, only 327 companies, down 30% from the same period last year, made upward revisions in the face of such headwinds.
Among the companies that have announced upward revisions to their earnings this time, we will pay attention to the “great revival” stocks that are expected to set new record highs for the first time in several years. Companies with long intervals between record high profits can be said to have escaped long-term stagnation in profit growth, and are expected to return to a growth path. Among these, we searched for high profit recovery & value stocks that are expected to be undervalued in terms of indices and can be expected to progress in stock price corrections.
● Profits decreased for the first time in two quarters in the October-December period
A total of 2,313 companies that announced financial results for the April-December period by the 17th showed the total ordinary income (profit before tax for US GAAP and international accounting standards) for the October-December period, which is the actual results for the most recent three months. decreased by about 13% compared to the same period last year. It will be the first time in two quarters that profits have decreased. By industry, there was a decline in demand due to the economic slowdown, as well as chemicals, pulp/paper, and electric power, which were impacted by soaring raw material and fuel costs, as well as oil wholesalers, whose profits were squeezed by a decrease in inventory valuation gains due to the decline in crude oil prices. Declining earnings are conspicuous in electrical equipment and other products.
On the other hand, profits increased in wholesale, including trading companies, which continued to benefit from high resource prices, and in non-manufacturing industries such as railroads, buses, air transportation, and services, which benefited from the relaxation of restrictions on movement due to the coronavirus pandemic and the government’s tourism promotion policy “National Travel Assistance.” Many companies have secured , and some have decided to revise their full-year plans upwards.
Predominance of value stocks due to long-term U.S. interest rate hikes
The domestic stock market is currently dominated by value stocks against the backdrop of rising interest rates in the United States. Both the US consumer price index (CPI) and the wholesale price index (PPI) for January announced last week exceeded market expectations, and US long-term interest rates rose due to the speculation that monetary tightening would continue. In response to this, it is taking over the flow of the US stock market, which has fallen mainly in growth stocks.
Under these circumstances, among the companies that are expected to post record high profits for the first time in more than 6 years by upwardly revising their ordinary profit or profit before tax forecasts for the full year ending March 2011, the stock price index is undervalued. I listed 6 brands in .
Aisanko will improve profitability by acquiring fuel pumps, returning to the highest profit route
Aisan Industry <7283> [東証Ｐ]is a Toyota-affiliated auto parts manufacturer with strengths in engine control technology.In the fuel pump module last year, Denso <6902> [東証Ｐ]By taking over the business from the company, it became the top company with a 40% share of the world market. On the other hand, as a new field, the company is actively investing in the development of battery cell cases and voltage converters for electrification. In the April-December period, sales and profits increased by double digits due to the increase in sales volume including the transfer of the fuel pump business, the effect of the weaker yen, and the progress of measures to improve profitability, absorbing the surge in raw material prices. In response to this, the full-year ordinary profit forecast has been revised upward to the highest profit forecast for the first time in eight years. In terms of indicators, the expected PER is in the 6x range and the PBR is around 0.5x, which is only about half of the company’s dissolution value.
Marubun’s profit rebounds to record highs for the first time in 22 years, and the dividend also increases significantly
Marubun Electronics Trading Company <7537> [東証Ｐ]announced on January 31 that ordinary income for the fiscal year ending March 2023 is likely to reach 7 billion yen (up 70.5% year-on-year). We revised the previous forecast of 5 billion yen significantly upward, and set out a plan to renew the record high profit for the first time in 22 years. Inquiries for semiconductors and electronic components for consumer and industrial equipment are strong, and sales of medical equipment and laser equipment are also strong. The foreign exchange gain of more than 2.5 billion yen recorded in the third quarter also boosts profits. In addition, the company has set a dividend payout ratio target of 40% or more from this term, and has increased the annual dividend from 45 yen to 67 yen. The stock price continues to chase upwards, reaching a high for the first time in about 15 years and seven months on the 16th, but the expected PER is around 8 times and the dividend yield is around 5%, which is still very attractive.
●Shibaura’s semiconductor front-end process equipment performed extremely well, recording the highest profit for the first time in 18 years
Shibaura Mechatronics <6590> [東証Ｐ]has revised its ordinary income forecast for the fiscal year ending March 31, 2023 upward from the previous forecast of 7.2 billion yen to 9.6 billion yen (up 96.8% year-on-year), reflecting its recent strong performance. showed the prospect of updating the The year-end lump-sum dividend plan is 510 yen, an increase of 120 yen from the previous year. The company’s current performance is strong, centering on sales of semiconductor front-end process equipment. We are capturing firm capital investment demand for logic foundries, power devices, and wafers. The stock price recovered to its highest level in about 17 years in response to the favorable financial results, but while the dividend yield is at a high level of the upper 3% range, the expected PER remains at around 8 times, and it seems that the price can be expected to rise further.
● KNTCT is successful in non-travel sector initiatives, and further upside is in sight
KNT-CT Holdings, a major travel agency <9726> [東証Ｓ]In the fiscal year ended March 2010, the company posted a current account deficit for three consecutive years due to the prolonged corona disaster, but in the fiscal year ended March 2011, it turned around and recorded a profit of 4 billion yen at the beginning of the fiscal year. 100 million yen, the highest profit forecast for the first time in eight years. Due to the 7th and 8th waves of the spread of new coronavirus infections, sales fell short of the plan, but the BPO business expanded, including the operation of tourist facilities, tourism promotion, and contracting of new corona-related operations, and the business structure Reducing SG&A expenses through reforms will also boost profits. The revised full-year plan is below the results for the April-December quarter (9.045 billion yen), suggesting that there may be further increases.
Weds has plenty of room to rise with low PER, low PBR, and high dividends
Weds <7551> [東証Ｓ]is a major wholesaler of automotive parts and accessories, with a focus on aluminum wheels. In addition to its functions as a trading company, it also has an aspect as a manufacturer, and is known as a pioneer of custom wheels. In the October-December period, the most recent three months, as new car sales gradually recovered, sales increased mainly for aluminum wheels. Recorded. Along with the strong performance, the company has revised upward its full-year ordinary profit forecast to the highest profit forecast for the first time in nine years, and has also revised the dividend upward. The stock price has remained in the high range since last year, but the expected PER is around 7 times, the PBR is around 0.7 times, and the dividend yield is in the 4% range.
Ritsurinsen posted record profits for the first time in six years due to expansion of shipping and recovery of hotels
Kuribayashi merchant ship <9171> [東証Ｓ]is a shipping company with main routes between Hokkaido and Tokyo and Osaka. Centered on the domestic shipping business, which mainly transports newsprint, it also develops hotel business and real estate leasing business in Hokkaido. In the April-December quarter, the transportation volume of paper products decreased, but the market conditions for general merchandise, which is a focus area, were strong, and fuel oil prices stabilized, leading to a significant increase in profits in the shipping business. In addition, in the hotel business, we captured accommodation demand by continuing to support nationwide travel and renovating sauna facilities, and ordinary income increased 4.6 times from the same period of the previous year to 2,534 million yen. At the same time, the company’s forecast for the same profit for the full year was increased to the highest level for the first time in six years. There is still a lot of room for upside due to the low price.
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