2016 All-Japan Research Team: Machinery, No. 1: Katsushi Saito
Institutional Investor Research is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

2016 All-Japan Research Team: Machinery, No. 1: Katsushi Saito

2016-04-tom-johnson-all-japan-research-team-katsushi-saito-small.jpg

Nomura’s Katsushi Saito marks his 20th consecutive appearance on this roster with his first No. 1 showing since 2013, raising his total top finishes to 13.

< The 2016 All-Japan Research Team

2016-04-tom-johnson-all-japan-research-team-katsushi-saito.jpg

Katsushi Saito

Nomura

First-Place Appearances: 13


Total Appearances: 20


Analyst Debut: 1997


Nomura’s Katsushi Saito marks his 20th consecutive appearance on this roster with his first No. 1 showing since 2013, raising his total top finishes to 13. The All-Japan Research Team Hall of Famer claimed second place the past two years, behind Junji Sakurada, who left Mizuho Securities Group for Marshall Wace Asia in June and falls from the ranking. Reporting on nine Japanese machinery stocks, Saito, 50, is “a very experienced analyst who provides good insight and thoughtful research,” offers one fund manager. “He has a deep understanding of his companies’ business models and managements.” Among his top picks is Tokyo-based SMC Corp., a leading manufacturer of automatic control equipment, including pressure control devices and control valves. This long-standing favorite’s profits increased 7.1 percent year over year in the quarter through December, to ¥78.6 billion ($652.4 million), and should hold up “relatively well,” the researcher contends. Main performance drivers include low costs for SMC’s automated pneumatic equipment operations, as well as elevated operating margins — as high as 28 percent forecast for the fiscal year that ended last month, he notes — thanks to management’s control over business expenses. In addition, the manufacturer has been bolstering its sales force outside Japan in an effort to boost its longer-term share of the global market from approximately 34 percent to 50 percent. Finally, he notes, its earnings are “relatively immune” to changes in foreign exchange rates, making the stock “relatively appealing in times of economic and currency uncertainty.” His price objective of ¥35,00 for SMC implies a 31.6 percent possible upside to the stock’s value in mid-March. Saito is bearish, however, on Komatsu, which makes heavy machinery such bulldozers, excavators, forklift trucks and wheel loaders. Despite having what he considers a “strong business model,” the Tokyo-headquartered company is facing slumping demand for its construction and mining equipment in many key markets, particularly in emerging economies and resource-producing countries in Southeast Asia, Australia and elsewhere — resulting in a potential for double-digit declines in operating profit. In February, when Komatsu shares were trading at ¥1,812, he reiterated his reduce rating and lowered his target price from ¥1,880 to ¥1,650; they closed at ¥1,923 in mid-March.



Gift this article