Japan Markets ViewTop Scoring Stocks with Positive Earnings – Inbound, Steel, General Electric

 

[QUICK Market Eyes] The earnings season for the fiscal year ending March 31, 2023 is almost over. Analysts’ earnings forecasts are also changing in response to corporate announcements. QUICK Consensus DI (as of the end of April 2023), which shows the direction of analysts’ earnings forecasts for major companies, improved 4 points from the previous month (-33) to -29 on an all-industry basis, including the financial industry. Although it has remained at a low level, this is the first month-on-month improvement in eight months since August 2022.

 

Looking at the DIs by industry, of the 16 industries covered in the calculation, four posted positive DIs, while 12 recorded negative DIs. The DI for the manufacturing sector rose by 8 points from the previous month to -33. This sector saw its second consecutive monthly increase, albeit at a low level. Of the eight manufacturing industries, the DI for Iron and Steel fell from +40 to +25, but all of the other seven industries saw an increase.

 

The DI for the non-manufacturing sector declined by 6 points from the previous month to -30, the fifth consecutive month of deterioration. The DIs for Construction, Real Estate, and Retail Trade industries deteriorated, while those for Banks, Other Financing Business, Wholesale Trade, and Information & Communication improved.

 

In order to determine earnings results taking into account the stock price trends of individual stocks, stocks of the companies that announced full-year earnings results in the past month are listed from the top in terms of the Financial Results Score. It is a reference index score statistically calculated by QUICK using artificial intelligence (AI). The score is a measurement of the extent of the impact that earnings results and revisions disclosed by companies have on stock prices.

 

The Financial Results Score is arrived at by taking major revenue items such as sales figures and classifying them based on comparisons with (1) the results from the previous term, (2) the latest company forecasts, and (3) market forecasts (as per the QUICK Consensus). Next, similar patterns in past cases are sought out, and stock price trends are confirmed. Of the 214 stocks with the Financial Results Score of +2 or higher, 113 were in the manufacturing sector, and 101 were in the non-manufacturing sector, slightly more in the manufacturing sector.

 

 

As for the top-scoring stocks, those ranked in the non-manufacturing sector were stocks benefited from the economic reopening and inbound tourism (foreign visitors to Japan), including Japan Airport Terminal (9706), FUJI KYUKO (9010), HIDAY HIDAKA (7611), and Kyushu Railway (9142, JR Kyushu).

 

In the manufacturing sector, steelmakers such as Kobe Steel (5406) and KYOEI STEEL (5440) topped the list, recognized for their improved profitability due to recovering steel demand in China and price hikes. General electric appliances companies, such as Panasonic Holdings (6752) and NEC (6701), also ranked high.

 

Panasonic Holdings is expected to see growth in its automotive battery business and a recovery in its performance in China. Meanwhile, NEC announced on April 28 that it expects adjusted net profit (under International Financial Reporting Standards: IFRS), excluding acquisition-related expenses, to increase by 1% to JPY140 bn in the fiscal year ending March 31, 2024. The company’s forecast anticipates higher profits in each segment, mainly in network services and global business segments. NEC’s stock price has been at a high level since the beginning of the year due to the expected improvement in profitability.

 

(Reported on May 18)

 

 

QUICK Consensus DI on QUICK Data Factory
https://corporate.quick.co.jp/data-factory/en/product/data031/

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