Horiba, Ltd. and Resonac reached new highs, with expectations for the next fiscal year's performance of December earnings companies to expand.

On November 14, Japanese stocks rose. Semiconductor-related stocks continued to be bought. Recently, I have written many times in this column about the sharp increase in TSMC's October revenue, leading to a strong awareness of the "bottoming out of the semiconductor market leading to expansion in the semiconductor market in the coming years." Laser Tech, Tokyo Electron Ltd. unsponsored ADR, Advantest, Disco, and other top trading stocks are rising.

The extent of confidence in the expectations for revenue expansion in the coming years will determine the upside of stock prices. By mid-November, with just one and a half months left until December earnings, companies will enter the new fiscal year. Companies with expanded earnings for the December earnings of fiscal year 2024 are attracting attention as investment targets.

Horiba, Ltd. (6856) soared significantly, reaching a 4-month high since the peak in July. The company is a December earnings company. It has strengths in performance analysis and measurement devices for semiconductor manufacturing equipment. The company announced an upward revision in operating profit and increased dividends when releasing the financial results for September on the 13th.

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Horiba, Ltd.'s fiscal year ending December 2023 operating profit
1-3 (actual) 10.4 billion yen
4-6 (actual) 7.3 billion yen
7-9 (actual) 10.6 billion yen
10-12 (financial estimates) 14.5 billion yen
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The actual results for the July-September period exceeded those of the April-June period, and furthermore, the October-December period is trending higher. If this trend continues, there are expectations that the performance for the year ending December 2024 will improve. Today's significant rise reflects investor sentiment wanting to buy stocks whose performance is expected to improve for the year ending December 2024.

Here are the operating profits of the semiconductor-related business, extracted separately.

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Operating profit of the semiconductor-related business of Horiba Ltd.
1-3 9.7 billion yen
4-6 8.9 billion yen
7-9 10.1 billion yen
10-12 (Est.) 7.6 billion yen
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The operating profit of the semiconductor-related business from October to December is planned to decrease compared to July to September. However, judging from today's stock price increase, there seems to be a significant upside potential in the semiconductor-related operating profit according to the company's plan. The strong global semiconductor stock popularity seems to be a favorable tailwind for stocks like Horiba Ltd.

Resonac (formerly Showa Denko - 4004) also reached a new high in October. The company is also announcing its earnings for December. Known as a company that strengthened its semiconductor material business through the acquisition of Hitachi Chemical, the company announced its earnings on the 9th. The cumulative operating loss for the 1-9 months period was 4.3 billion yen. Despite the loss, the stock price rose by 10% the next day on the 10th (2600 yen, up 246 yen). Let's also take a look at the quarterly operating profit trend here.

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Resonac's operating profit for the fiscal year ending December 2023.
1-3: A deficit of 9.2 billion yen.
4-6: A deficit of 4 billion yen.
7-9: A profit of 8.9 billion yen.
10-12 (Est.): A deficit of 7.7 billion yen.
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The revenue for the July-September quarter has improved, leading to a surge in stock price. The company expects to return to a deficit in the October-December period, but investors are anticipating higher performance levels. Resonac, which forecasts a deficit for the current fiscal year, has surged to a new high. Without improvement in performance by the end of December 2024, the current stock price movement cannot be explained.

Having the awareness that "the market for semiconductor materials will expand in 2024," I consider the attitude of searching for investment targets to be effective.

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Isuzu (7202) has been significantly increasing in price consecutively. After the earnings report on the 10th, the stock price has risen by as much as 12% in just two days. The announcement of performance upward revision, business restructuring promotion, share buyback, and increased dividends has been well received.

Isuzu has revised upwards its operating profit for the current March period to 200 billion yen (260 billion yen → 280 billion yen).

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Isuzu's upward revision (200 billion yen)
Reasons for the revision compared to the initial forecast
Foreign exchange +210 billion yen
Material costs increased by 180 billion yen.
Sales volume decreased by 230 billion yen.
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Due to the depreciation of the yen, there was an upward revision factor of 210 billion yen. Material costs did not increase as expected, becoming an upward revision factor of 180 billion yen. Since the sales volume did not meet expectations, it became a downward revision factor of 230 billion yen. Overall revenue was revised upwards due to factors such as currency exchange and material cost containment. This is the current situation.

Although truck sales fell short of expectations, profits were revised upwards, dividends increased, and stock prices soared. The stock price trend indicates a strong desire towards "high dividend yield stocks, low PE stock purchases", even though it may be somewhat opportunistic.

Radio NIKKEI commentator Shinichi Kamata

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