Report type: Weekly Strategy
The World Begins to Show Movements as It Anticipates the Resumption of Economic Activities
The economic activities which came to a halt all over the world as a result of the spread of COVID-19 are beginning to show movements as it anticipates a resumption. Following the announcement by Germany’s PM Merkel on 15/4 regarding the approval to reopen small and medium-scale shop businesses of 800 sqm or less from 20/4, on 16/4, U.S. President Trump announced guidelines which will be carried out in three phases based on the judgement of each state governor. As a result, in the Japanese stock market on 17/4, the Nikkei average rose significantly from the closing price of 19,290 points on the previous day to the 19,900 point level. Also, with regard to COVID-19 tests, with the current issue of increasing the number of PCR tests which checks for the presence of the virus in one’s body at the present time, in order to check the number of people who have been infected, there has been increasing attention on the antibody test which checks for a history of infection. If the test comes to fruition in the U.K. and the U.S., there is an emerging plan to have society revive by handing out immunity certificates to those who have the antibody. U.S. pharmaceutical and medical equipment manufacturer Abbott Laboratories (ABT) announced a plan to expand production of the antibody test kit. Although the fact remains that we ought to keep our social distance from others for fear of being infected, the view that having a history of COVID-19 is a benefit for society appears to be a major change.
Even as we move towards the assumption that the spread of COVID-19 will end in the future, we perhaps need to note that gastroenteritis, etc. is likely to spread easily through oral infection via food or water as we approach summer. Also, in the Goldman Sachs’ report on climate change released on 30/9 last year, floods and droughts are said to occur easily with a rise in temperatures, which raised concerns of a change in the pattern of illnesses which follow a worsening of sanitary conditions of water. As long as we do not resolve the problem of risks of climate change, perhaps there will always be a possibility of the reoccurrence of pandemics in different forms. In that sense, Joe Biden, the candidate from the Democratic Party running for the U.S. Presidential Election this fall who places emphasis on environmental policies, deserves attention for supporting the restoration of the Paris Agreement, which is an international framework of global warming countermeasures. Trends in the energy industry and prices of crude oil which are fossil fuels can be said to be inseparable with the problems of climate change risks. Perhaps there is room to review “listed infrastructure funds” which are the subject of investment for solar power.
With the continued increasing pace of the spread of COVID-19 in Japan, on 16/4, the declaration of the state of emergency was extended to apply to the entire country. There appears to be a rise in the situation where people who used to go to their family clinics to have their medicines dispensed conveniently, now have no choice but to buy household medications for fear of being infected at the clinics. The good sales performance of products such as “Nodo Nu-ru Spray” by Kobayashi Pharmaceutical (4967) seems to be a testament to this.
In the 20/4 issue, we will be covering Kurabo Industries (3106), IBIDEN (4062), JTOWER (4485), and Nitori Holdings (984
・Established in 1888. Commonly known as Kurabo, which is its foreign name. Engages in the textiles business, the chemical business, the environmental mechatronics business, the foodstuff and services business and the real estate business. Expands their businesses to Brazil, Indonesia, Thailand and China as well.
・For 3Q (Apr-Dec) results of FY2020/3 announced on 7/2, net sales decreased by 9.1% to 105.724 billion yen compared to the same period the previous year and operating income decreased by 23.6% to 2.959 billion yen. Despite an increase in income and profit in the environmental mechatronics businesses which includes the biomedical field, in addition to the sale of electricity involving biomass power generation and semiconductor cleaning devices, the decrease in sales and income in the other businesses have affected.
・Company revised its full year plan downwards. Due to predictions of a sluggish turn in sales of the textiles business and the foodstuff and services business, net sales is expected to decrease by 8.3% to 144 billion yen (original plan: 150 billion yen) from the previous year and operating income to decrease by 29.1% to 4 billion yen (original plan: 4.6 billion yen). From 16/3, company began sales of the test reagent kit which tests for COVID-19 antibodies for research purposes. The increase in expectations for those who have already been infected and have the antibody to resume work is likely to be beneficial.
・Founded in 1912. Engages in the electronics business involving print circuit boards and package substrates, the ceramics business involving environmental-related, special carbon, fine ceramics and ceramic fibre products, as well as other businesses such as those related to building materials, resin and equipment installation.
・For 3Q (Apr-Dec) results of FY2020/3 announced on 5/2, net sales increased by 1.1% to 216.905 billion yen compared to the same period the previous year and operating income increased by 86.3% to 13.166 billion yen. In their mainstay, the electronics business, due to an increase in demand for IC package substrates used in data centres and a bottoming out of the PC market, net sales increased by 11.4% and operating income increased by 8.5 times.
・For its full year plan, net sales is expected to increase by 3.0% to 300 billion yen compared to the previous year and operating income to increase by 67.7% to 17 billion yen. In the company’s performance last year, net sales to U.S. Intel (INTC) was 62.1 billion yen with a sales distribution ratio of 21.4%. With the announcement of Intel’s 1Q (Jan-Mar) results of FY2020/12 scheduled for 23/4, working and learning from home due to the effects of COVID-19 will cause data traffic to increase, which we can likely expect to raise demand for the company’s products