M IdeaJapan Equity Strategy | JapanReview of F3/24 3Q Results Companies on the TSE Prime Market have reported F3/24 3Q results. While the results confirmed healthy corporate earnings with a 20% YoY rise in RP, skewing toward certain industries stood out too. Total value of buyback programs established in F3/24 set a new all-time high amid TSE’s market reforms. Morgan Stanley MUFG Securities Co., Ltd.+Ukyo HaraguchiQuantitative Strategist Ukyo.Haraguchi@morganstanleymufg.com +81 3 6836-8925 Makoto FurukawaQuantitative Strategist Makoto.Furukawa@morganstanleymufg.com +81 3 6836-8923 Sho NakazawaEquity Strategist Sho.Nakazawa@morganstanleymufg.com +81 3 6836-8926 Kanji Ohi, CFAQuantitative Strategist Kanji.Ohi@morganstanleymufg.com +81 3 6836-8924 We see the following shortfall risks for future corporate earnings Yen appreciation (yen depreciation (appreciation) is a positive (negative) factor for Japan’s overall corporate earnings) Weakening of the external environment, particularly Chinese and US economies Renewed inflation and delays passing along higher costs to prices.Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Key TakeawaysAt the all-industry level, F3/24 1-3Q (Apr-Dec) results were increases (YoY) of 5.3% in sales, 19.7% in RP, and 24.2% in NP.While announcements confirmed healthy corporate earnings, large contributions from utilities (electricity/gas) and transport equipment industries stood out. The ratios of above/below consensus results were roughly the same at 50%. Multiple cases of missing consensus by firms in industries with high exposure to China. We forecast increases (YoY) of 4.0% in sales and 17.2% in RP in F3/24 and 2.7% in sales and 7.0% in RP in F3/25 (consensus estimates).Total value of buyback programs set in F3/24 was an all-time high ¥9.4trn. Despite record-high stock prices, firms are actively conducting shareholder return. February 20, 2024 12:29 PM GMTM Idea2F3/24 1-3Q (Apr-Dec) results In 1-3Q (Apr-Dec) results for companies listed on the TSE Prime Market with March fiscal years, the all-industry level had increases (YoY) of 5.3% in sales, 19.7% in RP, and 24.2% in NP.Forex effect contributed positively on yen depreciation in ...
