【Top 5 Trading Companies Earnings Report】Impact of resource prices such as raw materials coal, stock prices fall, but Mr. Buffett is watching? Mitsui & Co. has upwardly revised its financial estimates.

moomooニュース日本株 wrote a column · Nov 8, 2024 16:22

Top 5 Trading CompaniesMarch 25th Fiscal Year 20XX Second Quarter Consolidated Earnings Report (During the April to September period of the 24th year) due to the price decline of raw materials such as coal and metal resources used in steelmaking $Mitsui (8031.JP)$and $Sumitomo (8053.JP)$etc.Three companies experienced a decrease in profit compared to the same period of the previous year. On the other hand, one company saw an increase in profit $Mitsubishi (8058.JP)$due to Lawson's shareholder's equity revaluation gains and partial sale gains from the coal businessOne-time profitContributed. $ITOCHU (8001.JP)$Convenience stores like "FamilyMart" and related to DescenteOne-time profitsecured an increase.

The stock prices of each company have fallen significantly since spring and summer, and whether Warren Buffett-led $Berkshire Hathaway-A (BRK.A.US)$buying spree is under scrutiny, but so far there are no signs of such activity. Berkshire isexpected to invest in Japanese stocks with funds raised in October, and whether it will increase its holdings in trading companies, which have been weak due to falling resources prices, or allocate funds to new investment targets

Of the five companies, the largest decline from the year-to-date high to the current (closing price on the 8th) is Mitsubishi Corporation (-27.6%), and the smallest decline is Itochu Corporation (-5.62%). The remaining three are at levels of around -20%.

The only company to revise its forecast upwards was Mitsui & Co.
１Qでの各社の進捗率が高かったことなどから通期業績の上方修正が期待されていたが、５社のうち上方修正したのは $Mitsui (8031.JP)$solely. The company increased profit from the liquefied natural gas (LNG) business compared to the previous period.減益幅が縮小It seems that the remaining 4 companies have maintained their full-year forecast due to the instability of exchange rates and resource market conditions. However, according to Bloomberg,24年３月期までの３年間はほぼ全社が２Q決算発表時に純利益予想を上方修正していた。商社株は新型コロナ禍後の資源価格上昇の恩恵を受けてきたが、「特需」効果が消える中で成長力が注視されている。

▼2Q業績と通期純利益予想

【Top 5 Trading Companies Earnings Report】Impact of resource prices such as raw materials coal, stock prices fall, but Mr. Buffett is watching? Mitsui & Co. has ...

Expectations for future upward revisions and returns
The average exchange rate assumption for each company is 1 dollarabout 147 yen.There have been significant fluctuations in the yen appreciation this summer, but currently...A one yen change has a significant impact on net profit, with Mitsubishi Corporation and Mitsui & Co. being majorly affected. Whereas, Itochu Corporation and Marubeni seem to be relatively smaller.The sensitivity to the USD/JPY exchange rate varies among companies.

▼Sensitivity to USD/JPY exchange rate for each company and assumed exchange rate(Prepared by moomoo from earnings presentation materials)

Another factor contributing to the positive surprise is the amount of buffer to absorb risks that each company includes in their full-year net profit estimates."Buffer"The amount of " is also mentioned. Itochu is 40 billionyen, Sumitomo Corporation has 20 billion yen, and Marubeni30 billion yenInclude as a buffer in performance forecasts. If market conditions change and risks do not materialize, it could be a positive factor. Mitsubishi Corporation, Sumitomo Corporation, and Marubeni, which are known for having high free cash flows, are particularly expected to have new additional shareholder returns.

Is there limited room for Berkshire to increase its holdings by less than 2%?
$Berkshire Hathaway-A (BRK.A.US)$The current average ownership ratio of the five companies by is.8.33％With a policy of long-term ownership,Ownership ratios can go up to 9.9% at the maximum..There is some room for additional buying, but it is not significant.Due to the market crash in early August, including the Tokyo stock market crash, valuations have dropped significantly, but no additional buying has been confirmed so far.In October, Berkshire just issued a large-scale yen-denominated corporate bond worth a total of 281.8 billion yen.Will they increase their holdings of trading company stocks, orFinancial stocks such as insurance and banks, marine shipping stocksThere are speculations in the market that funds may be redirected to new industries such as etc.

Each company's earnings points and year-to-date stock price movements
◆ $Mitsubishi (8058.JP)$
Net profit for the second quarter isfell below market expectations。
・following Lawson, a subsidiary, becoming a joint management structure with Vroom $KDDI (9433.JP)$122.5 billion yen revaluation gain of shares occurred.
・A profit of 90 billion yen from the sale of two coal mines in Australia occurred.
・Also, gains from the sale of Japan KFC Holdings and the UK's food and beverage manufacturing and sales giant Princess.
Progress rate is the highest among 5 companies at 65%. The outlook for industries like food industry is good, but resources are weak.
From domestic analysts, there were negative views as 'the negative impact of the decline in the market and decrease in quantity of raw coal business was larger than expected.'.

◆ $Mitsui (8031.JP)$
Net profit for the second quarter isfell below market expectations. Chemicals and energy saw an increase, while machinery, infrastructure, and metal resources saw a decrease.
Among 5 companies, only one revised upwards its full-year net profit forecast.
The growth drivers in the second half areLNG, Mobility, Health care, Protein。

◆ $ITOCHU (8001.JP)$

・2Q operating profitBelow market expectations.。
・Fiber businesses such as sportswear Descente are performing well. Descente, especially in China, showed strong performance.

・石井敬太社長は会見で、米大統領選でトランプ前大統領が勝利した場合の影響について「中国製品が米国で遮断されアジアに逆流すれば市況を乱す。脱炭素ビジネスへの支援方針が変わるかどうかも注視しないといけない」と話した。（11月6日付日本経済新聞）

◆ $Sumitomo (8053.JP)$

- 2Q net profitfell below market expectations。

・北米鋼管、豪州石炭の市況下落。北米での建機事業減益。
・欧州での風力発電事業が堅調・ティーガイアTOBによる利益を見込む。
・PBRは1Q中に1倍を超える場面もあったが、再びDivided by 1.Level.
・CEO Sho Ueno explained, "We want to grow by focusing on resources as commodities. Media, real estate, health care, and other areas are not exposed to market conditions, so we want to actively increase our investments and grow to some extent."

◆ $Marubeni (8002.JP)$
Net profit in the second quarter wasfell below market estimates。
・Finance, leasing, and real estate performed well, while the energy, metal, and agriculture businesses deteriorated compared to the same period last year.
Progress rate for the initial financial estimates of net profit is 50%.