Japan’s Consumer Price Index (CPI), excluding fresh food, for April exceeded 2% YoY for the first time in seven years. Prime Minister Kishida seems to intend to ride out these high commodity prices by raising wages. However, companies will suffer the double burden of higher wages and higher raw material prices. The Corporate Goods Price Index rose 9.1% YoY in May due to increases in steel, oil and coal. Jefferies analyzes in its June 22 report, “By the end of the year, the CPI may rise above 3.5%, forcing the BOJ to change the policy.”
Therefore, we examined and ranked stocks with a high ratio of operating income to sales (margin), which are considered to be more tolerant of higher consumer prices and wages. The target was 449 stocks of the TOPIX500 constituents, for which QUICK Consensus for the next fiscal year is calculated. The top-ranked stock was Zenkoku Hosho (7164), which is involved in mortgage guarantees.
Looking at the top 30 stocks by industry, the Information & Communication sector had the largest number of stocks, while the Services sector was also notable in the rankings. Among the Information & Communication sector, OBIC (4684) stands out for its high margins. Performance has been strong, and consolidated net income for the fiscal year ending March 31, 2023 is expected to increase 8% from the previous year to JPY47 bn, the 11th consecutive year of record profits and dividend increases. Sales in Cloud-related systems are growing, and it appears that the number of personnel visiting companies for system maintenance and inspections has been reduced.
In the Services sector, USS (4732), a major used car auction company, and other companies were ranked. Used car prices are benefiting from increases in the price of used cars due to a decline in car production caused by a shortage of semiconductors. The limelight may continue to be on stocks that can relatively withstand headwinds of high prices and rising wages.
QUICK Consensus on QUICK Data Factory
https://corporate.quick.co.jp/data-factory/en/product/data009/
