2016 All-Japan Research Team: Beverages, Food & Tobacco, No. 1: Naomi Takagi
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2016 All-Japan Research Team: Beverages, Food & Tobacco, No. 1: Naomi Takagi


Capturing her sixth top finish since 2010 — and fifth No. 1 appearance in a row — is Naomi Takagi of UBS.

< The 2016 All-Japan Research Team


Naomi Takagi


First-Place Appearances: 6

Total Appearances: 9

Analyst Debut: 2008

Capturing her sixth top finish since 2010 — and fifth No. 1 appearance in a row — Naomi Takagi of UBS “is simply very thoughtful” and “excellent at producing very timely updates on stocks,” one fund manager affirms. The analyst’s coverage universe encompasses 17 domestic names, and for the year ahead she is optimistic about the food producers subsector, forecasting that although profit growth for the group might slow after an initial spike from higher prices settles, it should be bolstered by rising sales, an easing of material cost increases and ongoing restructuring — if those price levels can be sustained. “The market fears that inflation will end and deflation will spread, but we do not anticipate deflation to take hold,” says Takagi, 48. “Food price inflation was initially triggered by higher costs stemming from a cheaper yen, but we think it was essentially driven by higher demand. Demand has not fallen even after price hikes, boosting management confidence in new price structures and increasing their emphasis on profit.” Even so, a further shift in the yen’s valuation could warrant a reevalution of that position, the researcher cautions. Although “we do not expect these [companies] to fall back on price cuts as an easy solution,” she adds, “the recent excessive yen appreciation would heighten price reduction pressure from the retailers and could jeopardize this assumption.” Two Takagi favorites on this theme are Tokyo-based Ajinomoto Co., whose products range from beverages and packaged foods to pharmaceuticals and specialty chemicals; and Meiji Holdings Co., a dairy goods, health foods and pharma maker. Preferred since August 2014, Meiji is best positioned to avoid deflation, she believes, and should deliver double-digit gains thanks to higher revenue and structural reform. By mid-March its shares had soared 107.8 percent, on a split-adjusted basis, to ¥8,800, compared with the domestic sector’s 28.7 percent gain. She assigns Meiji a price objective of ¥12,000. Ajinomoto is appealing for its increasingly globalized and more balanced operations, which improve the producer’s resilience, the analyst advises. “Acquisition synergies should really kick in from here,” she explains, “and we see room for growth in terms of products and regions, demonstrating its ability to withstand changes in the operating climate.” From mid-June — when Takagi began urging clients to buy — through mid-March, the stock climbed 6.7 percent, to ¥2,718.50, outperforming its peers by 8.1 percentage points. She projects a further rise to ¥3,400.

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