1、 May 7, 2010 Japan: Portfolio Strategy FY3/11 Earnings Preview FY3/10 earnings season in full swing Companies have begun announcing FY3/10 earnings and FY3/11 guidance, with announcements set to peak the week of May 10. 78 companies have registered positive surprises (recurring profits over 10% abov
2、e latest I/B/E/S consensus) against 12 companies with negative surprises (over 10% below) with about 30% of TSE1-listed companies (with fiscal years ending in February or March, including financials) and 40% by market cap having reported. At the beginning of FY3/10, the consensus forecast was for si
3、ngle-digit recurring profit growth for TSE1 firms, but we now expect growth of around 40% yoy as a result of aggressive cost-cutting, a halt in sales declines, a weaker yen, and a dramatic export recovery. FY3/11 forecasts call for strong profit growth The markets focus is now on the FY3/11 earnings
4、 outlook, and our FY3/11 top-down TSE1 recurring profit growth forecast is 36% yoy. This is one of the reasons for our continued tactical positive stance on the market, and our near-term TOPIX target remains 1,150. We expect companies to issue cautious initial guidance, but similar to last fiscal ye
5、ar, we see scope for upward revisions. Sector earnings revisions vs. performance Comparison of our analysts FY3/11 recurring profit forecasts with those of the consensus (I/B/E/S or Shikiho) shows that our analysts are generally more optimistic than the consensus (+5.7% for all industries). Sectors
6、where our analysts forecasts are significantly higher than consensus include Transportation, Trading Companies, Industrial Electronics, Precisions and Energy/Chemicals. Our analysts forecasts are below consensus for Consumer Staples, Communications, and Infrastructure. Hiromi Suzuki +81(3)6437-9955
7、 Goldman Sachs Japan Co., Ltd. Kathy Matsui +81(3)6437-9950 Goldman Sachs Japan Co., Ltd. Christopher Eoyang +81(3)6437-9888 Goldman Sachs Japan Co., Ltd. Tsumugi Akiba +81(3)6437-9966 Goldman Sachs Japan Co., Ltd. Kazunori Tatebe +81(3)6437-9898 Goldman Sachs Japan Co., Ltd. The Goldman Sachs G
8、roup, Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making thei
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10、 GS institutional clients only. The Goldman Sachs Group, Inc. Goldman Sachs Global Economics, Commodities and Strategy ResearchMay 7, 2010 Japan: Portfolio Strategy Goldman Sachs Global Economics, Commodities and Strategy Research 2 FY3/10 results and FY3/11 earnings guidance Reporting schedule Comp
11、anies have begun announcing FY3/10 earnings and FY3/11 guidance, with announcements set to peak the week of May 10. Exhibit 1: Results calendar No. of companies that have reported Cumulative completion rate Source: QUICK, GS Global ECS Research estimates. FY3/10 reporting not yet done: We expect rec
12、urring profit growth to be double original guidance As of April 30, about 30% of TSE1-listed companies (with February or March fiscal year ends, including financials) and about 40% in terms of market cap have reported results. FY3/10 recurring profits reported so far are about 5% above the most rece
13、nt pre-announcement I/B/E/S consensus. 78 companies have registered positive surprises (recurring profits over 10% above pre-announcement consensus) against 12 companies with negative surprises (over 10% below) (see Exhibit 2). 010203040506070809010005010015020025030035040045050004/2704/2804/3005/06
14、05/0705/1005/1105/1205/1305/1405/1705/1805/1905/20AnnouncementCompletion rateMay 7, 2010 Japan: Portfolio Strategy Goldman Sachs Global Economics, Commodities and Strategy Research 3 Exhibit 2: TSE1 FY2009 full-year earnings summary As of April 30, 2010 Notes: Above: below equals the number of compa
15、nies with results more than 10% above previous consensus (positive surprise) versus the number of companies with results more than 10% below (negative surprise). Momentum equals the number of companies with positive surprises minus the number with negative surprises, divided by the total number of c
16、ompanies. This exhibit uses TSE1-listed companies with February or March fiscal year ends. Source: Company data, GS Global ECS Research calculations. Original FY3/10 guidance from TSE1 companies (including financials) called for year-on-year recurring profit growth of 22% or so, but earnings momentu
17、m has continued to improve over the past few months on aggressive cost-cutting, a halt in sales declines, a weaker yen, and a sharper-than-expected recovery in exports. The Shikiho forecast as of April 30 is for 44.9% yoy growth, and our top-down recurring profit forecast is for 41.2% growth (see Ex
18、hibits 3 and 4). # of # of byRprt Cos Mcap Sales RP Sales RPSurprise(aggr.)above :below(10%) *momentum *Surprise(aggr.)above :below(10%) *momentum *Topix 398 28.1% 42.0% -12.4 6.3 9.0 -8.9 -0.4 2 : 1 0.3% 4.9 78 : 12 16.6%Topix (ex-Financials) 372 28.9% 46.3% -12.9 -8.2 9.3 -7.1 -0.4 2 : 1 0.3% 5.0
19、78 : 12 17.7%Air Transportation 1 33.3% 96.8% -11.8 -94938.5 -2.4 -78.1 0.5 0 : 0 0.0% -2.8 0 : 0 0.0%Banks 0 0.0% 0.0% na na na na na 0 : 0 na na 0 : 0 naChemicals 25 23.8% 55.9% -9.3 -12.5 1.7 -43.2 0.3 0 : 0 0.0% 10.6 2 : 0 8.0%Construction 15 16.1% 20.1% -3.8 -4.5 58.0 370.4 -1.3 0 : 0 0.0% 6.0
20、2 : 0 13.3%Electric Appliances 40 29.4% 44.7% -6.4 167.1 14.4 30.9 0.5 1 : 0 2.5% 9.9 18 : 1 42.5%Electric Power stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See Ratings, Coverage groups
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