When the BoJ raised rates in March, it had been 17 years since it had last done so, though the world was very different then. While the July rate hike was unlikely to move the economic needle, the question now is what else might follow the subsequent financial market maelstrom. Pelham Smithers discusses the outlook for Japan’s macro environment, what new fiscal policies the new PM might introduce, how the BoJ might react and the all-important trend in corporate earnings. This then leads us to...
The Japanese stock market is in an interesting phase where the Bank of Japan is supporting the bond market rather than the stock market. While this phase lasts, the dollar should remain above ¥120/$ and perhaps strengthen further against the yen. This report looks at what this phase might mean for the Japanese stock market as a whole, and for stock selection. The PSA Focus List has also been updated.
Ferrotec's share price does not reflect its strong earnings. Admittedly, even though Semiconductor Equipment products are enjoying above-plan demand / orders, FY22 OP will likely see continued transportation / material costs pressures and rising depreciation. However, we have raised our FY23 OP slightly as steady sales growth should act to absorb costs.
Ferrotec (6890 JT) - High-margin OPM products doing well and FY21 strength in semis should continue into FY22 given semi shortage while in the Electronics Device division, the Power Semis which are losing money right now become profitable from FY22.
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
William Nestuk is both excited about Ferrotec’s plans for expansion and circumspect about the consequent rise in company debt as it hastens down the growth path. Valuations for Ferrotec continue to look low (FY18e EV/OP 5x) relative to semiconductor (EV/OP 8x) or niche machinery-plays (EV/OP 12x). There are a lot of moving parts here and William guides us through, happy to note that overall, the company is chasing down structural profit improvement.
Valuations at Ferrotec continue to be low relative to semiconductor or niche machinery plays. Our May 2017 update, One of the Cheapest SPE-Related Plays, stressed the EV then of ¥58bil produced EV/OP and PER on our FY17 numbers (which proved 5% too low) of 6.9x and 13.4x. At that time, we forecast OP for FY17 and FY18 would reach “at least†¥8.0bil and ¥9.5bil, hurdles easily cleared despite being 8~9% above consensus. EV since has only edged up to ¥65bil despite better visibility on med...
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