Report type: Weekly Strategy
”Bitcoin Turmoil, Power Supply Composition Ratio Review, Revised Banking Law”
As mentioned in the 6th May, 2021 issue of this Weekly Report, there is a phase in Bitcoin price trends that affect the stock market. On 19/5, the price of Bitcoin in terms of USD temporarily dropped 28.5% to $30,681 from the previous day’s close following the announcement of new regulations in China, and on the same day, the US Dow Jones Industrial Average dropped more than 500 points from the previous day’s close. Although the closing price of Bitcoin recovered to $37,000 at the end of the day, and the closing price of the NY Dow recovered to 164 points lower than the previous day, headwinds continued the following day on the 20th, as it was reported that the US administration’s tax reform is scheduled to include a reporting requirement to tax authorities for remittances of crypto assets of $10,000 or more. It is therefore important to continue to pay attention to the cyclical ups and downs associated with the coming half-life of mining rewards every four years.
As for investing in Japanese stocks, it is important to note that Tesla’s stock price and the price of Bitcoin have become increasingly correlated since the purchase of Bitcoin by US electric vehicle (EV) maker Tesla (TSLA), and that sales of Tesla’s EVs in the Chinese market, which had been a driving force behind Tesla’s growth, had fallen sharply in April from the previous month. Panasonic (6752), which supplies Tesla with lithium-ion batteries for EVs, Sumitomo Metal Mining (5713), which supplies Panasonic with cathode materials for batteries, and Nippon Denko (5563), which is contracted by Sumitomo Metal Mining to manufacture some of its cathode materials, could be affected if the “Tesla risk” materializes.
On 18/5, the IEA (International Energy Agency) released a report aiming to reduce greenhouse gas emissions to virtually zero by 2050. While the report is said to be used as a reference document for “COP26”, which is scheduled to be held in Scotland this coming November, the IEA had stated that, in order to achieve real zero emissions, nearly 90% of electricity must be produced from renewable energy sources and most of the rest from nuclear power by 2050. It further states that annual global energy investment needs to be raised from the current $2 trillion to $5 trillion by 2030. In the run-up to COP26, discussions on the revision of the power supply composition ratio for 2030 are becoming more and more active in Japan. The share of nuclear power generation in Japan’s power source mix fell to 4% last year, and the debate over nuclear power generation is likely to have a major impact not only on the Japanese stock market but also on the political situation.
In addition, on 19/5, the revised Banking Act was enacted, which will allow banks to engage in temporary staffing, system sales, data analysis, and advertising, and is expected to come into effect in November. Restrictions on the maximum amount of investment in business companies will also be relaxed, and this is expected to open up a whole new world of profit opportunities for banks. A full-fledged correction in the level of regional bank stocks, which have been routinely left undervalued as low PBR (price-to-book ratio) stocks, can therefore be expected.
In the 24/5 issue, we will be covering Taisei Corp (1801), MRT Inc (6034), Komatsu Ltd (6301), and Kawasaki Heavy Industries (7012).
・After Kihachiro Okura founded the Okura Gumi Shokai in 1873, the company’s predecessor, the Nippon Doboku Co., Ltd, was spun off and established in 1887. One of the largest general contractors, engaging in civil engineering, building works, development, and other businesses.
・For FY2021/3 results announced on 14/5, net sales decreased by 15.5% to 1.4801 trillion yen compared to the previous year, and operating income decreased by 22.2% to 130.516 billion yen. Amid sluggish private-sector capital investment and construction investment, the postponement of construction starts and the suspension of construction work due to Covid-19 had impacted revenue negatively, and the deterioration of profit margins in the civil engineering and development businesses had led to a decline in profit.
・For FY2022/3 plan, net sales is expected to increase by 10.8% to 1.64 trillion yen compared to the previous year, and operating income to decrease by 31.0% to 90.0 billion yen. Reason for the forecasted decrease in profit is that the busy season related to the Olympic Games has passed, and the number of large-scale construction projects before completion will decrease as a result. In addition to the development of concrete technology that uses calcium carbonate to trap CO2, subsidiary Taisei Rotec is also planning to test and install a self-healing asphalt coating, which is being jointly researched with Aizawa Concrete in Hokkaido, in the current fiscal year.
・Established in 2000 as a mutual aid organization of doctors at the University of Tokyo Hospital. Company develops a medical information platform business for physicians focusing on the introduction of part-time and full-time physicians via the Internet.
・For 1Q (Jan-Mar) results of FY2020/12 announced on 14/5, net sales decreased by 8.3% to 531 million yen compared to the same period the previous year, and operating income turned into a loss of 63 million yen from a profit of 23 million yen in the same period of the previous year. The operating loss was affected by a 10.6% YoY increase in SG&A expenses due to an increase in human resources to secure medical personnel for the Covid-19 vaccine.
・For FY2021/12 plan, net sales is expected to increase by 9.3-17.1% to 2.8-3.0 billion yen compared to the previous year, and operating income to range from minus 35.7% – plus 2.1% to 170-270 million yen. Vaccination of the elderly with the Covid-19 vaccine is now in full swing in many areas, and the opening of large-scale vaccination centers for the Covid-19 vaccine is scheduled for 24/5 in Tokyo and Osaka. Company is responding to an increase in job offers from medical institutions and local governments by dispatching potential nurses, preparing activity manuals, and providing vaccination training.
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:
