Report type: Weekly Strategy
“The Japan National Football Team’s Success in the World Cup and Buffett’s Purchases of Trading Company Stocks”
The Nikkei average finally exceeded the standstill at around 28,000 points from the 22nd onwards. It has been 37 business days counting from 3/10 where it reversed after marking the low of 25,621 points up to the 25th of this month. The most recent was 41 business days since marking the low of 25,520 points on 20/6 and reversing to increase to mark the high of 29,222 points on 17/8. In terms of “market rhythm”, there may be a need to be wary of the “turnaround point”, which is a point between the end of next week to the following week. Even for stocks that had its stock price perform strongly within the year, there is a possibility of them being sold off due to supply and demand factors, etc., which include tax measures at the end of the year. For next month, there will be the announcement of the U.S. employment statistics for November on the 2nd, and on the 9th the following week, there will soon be the “Major SQ”, which is a Special Quotation calculation involving the final settlement of the index’s futures and options. Prior to that, the EU’s (European Union) embargo on Russian crude oil will begin on the 5th and a price cap is expected to be set, thus there is a possibility that the high level of uncertainty will be unbearable before that.
On the 23rd, the Japan national football team shocked the world by beating the strong German team at the FIFA World Cup (W Cup) Qatar Championship. If it continues to win more after advancing to the Top 16, there may be a chance that the lookout for related stocks will be long lasting. Mizuno (8022) and Asics (7936) are known to be enterprises that created the shoes worn by the national team players. CyberAgent (4751) is the one that operates the TV station “ABEMA”, which livestreams all 64 W Cup matches for free, and Konami Group (9766) is the one developing and retailing the soccer game, “eFootball”. Moreover, those related to sports and games will likely receive lasting attention even after the end of the soccer W Cup as there are plans for events to be held, such as the baseball “World Baseball Classic” in March next year and the “first Olympic Esports Week” in Singapore in June.
Berkshire Hathaway led by renowned investor Warren Buffett made additional stock purchases of 5 major Japanese general trading companies and revealed on the 21st that each of its shareholding ratios had exceeded 6%. In a statement in August 2 years ago, Berkshire explained that they “had intentions of holding Japanese stocks in the long-term”, then mentioned the possibility of increasing its shareholding ratio up to 9.9% depending on the price. Also, it was said that Berkshire is considering issuing global yen bonds totaling 128.5 billion yen over a term of 5-30 years in a bond issuance that is soon to take place. Since 2019, the company has issued debts in yen for 4 years straight, and it is the 2nd time within the year for this year. We gather a solid investment style that aims for mid and long-term price increases while obtaining funds in the low-interest yen and earning profit margins via high dividend yield in that same yen by diversifying its portfolio which tends towards North America and USD. There is a possibility of an increase in Japanese stock purchases aiming for dividends and financing using the Japanese yen where there continues to be a low interest rate environment while the interest rate continues to rise around the world.
In the 28/11 issue, we will be covering Carlit Holdings (4275), CyberAgent (4751), Panasonic Holdings (6752) and Sumitomo (8053).
Carlit Holdings Co., Ltd. (4275) 749 yen (25/11 closing price)
・Obtained manufacturing and retail rights for Carlit Explosives in 1916. Mainly operates chemicals (“chemical agents” involving smoke candles and “chemicals” involving sodium chlorate), bottling (such as beverage bottling for Ito En, etc.), industrial components and engineering services.
・For 1H (Apr-Sep) results of FY2023/3 announced on 31/10, net sales increased by 9.9% to 17.586 billion yen compared to the same period the previous year and operating income increased by 6.3% to 1.164 billion yen. Despite being impacted by skyrocketing raw material prices and energy costs, the chemicals business involving chemicals, electronic materials and ceramic materials, etc. as well as the industrial components business involving semiconductor silicon wafers, etc., was strong.
・For its full year plan, net sales is expected to increase by 3.3% to 35 billion yen compared to the previous year, operating income to decrease by 0.3% to 2.5 billion yen and annual dividend to remain unchanged at 16 yen. The company has a high share in ammonium perchlorate, which becomes rocket propellant. On the 16th, the launch of the first unit of the new rocket type “SLS (space launch system)” in the U.S. was successful, and the lunar exploration project, the “Artemis program” by NASA (The National Aeronautics and Space Administration), which Japan is also cooperating with, officially began. We can likely expect benefits from this.
CyberAgent, Inc. (4751) 1,343 yen (25/11 closing price)
・Established in 1998 as an internet advertisement agency. Expands the “media business” involving the online TV station “ABEMA”, etc., the “game business” involving smartphone games, the “internet advertisement business”, as well as the “investment development business” involving venture capital, etc.
・For FY2022/9 results announced on 26/10, net sales increased by 6.6% to 710.575 billion yen compared to the previous year and operating income decreased by 33.8% to 69.114 billion yen. In the media business, ABEMA’s WAU (number of weekly active users) renewed its record high and had a 35% increase in revenue and a reduction in operating deficit, however, a reactionary fall from a smash hit smartphone game in the previous year in the game business had impacted the profit aspect.
・For its FY2023/9 plan, net sales is expected to increase by 1.3% to 720 billion yen compared to the previous year, operating income to decrease by (42.1-27.7)% to 40-50 billion yen and annual dividend to have 1 yen dividend increase to 15 yen. A reactionary fall from the smash hit “Uma Musume: Pretty Derby” was incorporated. ABEMA is live broadcasting all 64 matches of the “FIFA World Cup Qatar Championship” held in November for free. The Japan VS Germany match broadcast on the 23rd renewed its highest record since the station’s opening by breaking 10 million viewers in a day.
Important Information
This report is prepared and/or distributed by Phillip Securities Research Pte Ltd ("Phillip Securities Research"), which is a holder of a financial adviser’s licence under the Financial Advisers Act, Chapter 110 in Singapore.
By receiving or reading this report, you agree to be bound by the terms and limitations set out below. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.
The information and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this report has been obtained from public sources which Phillip Securities Research believes to be reliable. However, Phillip Securities Research does not make any representation or warranty, express or implied that such information or Research is accurate, complete or appropriate or should be relied upon as such. Any such information or Research contained in this report is subject to change, and Phillip Securities Research shall not have any responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith.
Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this report are as of the date indicated and are subject to change at any time without prior notice. Past performance of any product referred to in this report is not indicative of future results.
This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This report should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgment. The fact that this report has been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this report is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this report involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.
Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this report should take into account existing public information, including any registered prospectus in respect of such product.
Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities), brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have participated in or invested in transactions with the issuer(s) of the securities mentioned in this report, and may have performed services for or solicited business from such issuers. Additionally, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have provided advice or investment services to such companies and investments or related investments, as may be mentioned in this report.
Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an adverse effect on the value, price or income return of the investment.
To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may at any time engage in any of the above activities as set out above or otherwise hold an interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this report. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, which is not reflected in this report, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the issuance of this report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of this report.
The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction.
This report is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The products mentioned in this report may not be suitable for all investors and a person receiving or reading this report should seek advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products.
This report is not intended for distribution, publication to or use by any person in any jurisdiction outside of Singapore or any other jurisdiction as Phillip Securities Research may determine in its absolute discretion.
IMPORTANT DISCLOSURES FOR INCLUDED RESEARCH ANALYSES OR REPORTS OF FOREIGN RESEARCH HOUSE
Where the report contains research analyses or reports from a foreign research house, please note:
