As Asian companies begin reporting full-year earnings, we highlight ten that seem poised to deliver disappointments — or positive surprises.
There were some consistent themes emerging as we looked at earnings in Asia.
In Japan, Abenomics were front and center along with a reduced consumption tax, which spurred demand. In China, the story was all about the economic slowdown and the fall off in demand for commodities that affected companies tied to metals and mining.
As we do each year, we selected ten companies that we expect to fall into one or the other of these two camps, based on SmartEstimate and Predicted Surprise data. We have summarized that data and the facts behind it for each of the ten companies below, for your reference. Historically, our selections have demonstrated an accuracy rate of about 90% in the region, giving investors an edge when it comes to positioning themselves ahead of these earnings announcements. To take a look at how we did last year, click here.
When the Asian earnings season wraps up, we’ll report back on how the companies fared.
Here is the list of Asian companies that we believe are poised to deliver surprises of one kind or another – pleasant or not so upbeat — when they report 2013 earnings, along with some analyst views:
TOP POSITIVE SURPRISE FORECASTS:
1. Alps Electric Company (6770.T) is benefiting from a diversified client base and weak yen.
2. Seiko Epson (6724.T) saw a spike in demand during the holiday season as consumers rewarded the company for its innovative personal printers.
3. NGK Insulators Ltd. (5333.T) experienced increased demand for its ceramics, used to reduce emissions as global standards get stricter.
4. Hon Hai Precision Industry Co. Ltd. (2317.TW) saw strong holiday sales and benefited from a strong Apple iPad product cycle.
5. TOTO Ltd. (5332.TO) took advantage of the lower consumption/sales tax environment in Japan to boost sales of its toilet and kitchen products.
TOP NEGATIVE SURPRISE FORECASTS:
1. Orient Overseas (International) Ltd. (0316.HK) earnings may hurt from a slowdown in Chinese manufacturing and hence a fall in shipping demand.
2. FLSmidth & Co. (FLS.CO) suffers from a drop off in demand for commodities, excessive capital expenditures and hence rising debt and interest rates.
3. China Foods Limited (0506.HK) may see earnings decline from the new wine business and falling margin from an increasingly competitive market.
4. Zhaojin Mining Industry Co. Ltd. (1818.HK) saw falling gold prices erode margins while experiencing higher costs and spending more on capital expenditures.
5. Zoomlion Heavy Industry Science and Technology Development Co. (000157.SZ) is providing infrastructure and mining equipment in a slowing economy in China and falling spending.
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