Comparable to Shichixiong! With the strong rise of Japan's “Seven Samurai”, who will once again set off an investment frenzy?

Futu News ·  Apr 2 19:16

Since this year, the Japanese market has set a number of records: the Nikkei 225 Index broke the 34-year record of gains; at the same time, the Bank of Japan announced an increase in the benchmark interest rate and YCC (yield curve control) policy, ending the last era of negative interest rates in the world.

As the Japanese stock market continues to reach record highs, the Japanese stock “Seven Samurai” (Seven Samurai) is also gradually entering the eyes of global investors.

The “Seven Samurai” concept for Japanese stocks was proposed by Goldman Sachs Japanese stock strategist Bruce Kirk, drawing on the US stock “Magnificent Seven” (Magnificent Seven). He believes that this is a group of Japanese stocks comparable to the “Big Seven” of technology that drives the rise in US stocks.

The Japanese stock “Seven Samurai” includes one of the five major trading companies favored by stock god Buffett$Mitsubishi (8058.JP)$, automobile manufacturers$Toyota Motor (TM.US)$und$SUBARU CORP Unsponsored ADR (FUJHY.US)$, and four semiconductor companies$Screen Holdings (7735.JP)$,$Advantest (6857.JP)$,$Disco (6146.JP)$und$Tokyo Electron (8035.JP)$. Judging from the increase during the year, the performance of the Japanese stock “Seven Samurai” is no less than that of the top seven US stocks.

Analysts said that unlike the big seven US stocks, which are all concentrated in the technology industry, these companies represent different sectors of the Japanese industry and the cutting-edge technology industry. From auto giants to semiconductor upstarts, the “Seven Samurai” can not only survive, but also survive. They are thriving and becoming a key force on the global stage.

So what is the origin of these companies? And what keeps its stock price going strong?

Toyota — a global car giant

Everyone is familiar with Toyota.

Established in 1937 by Kiichiro Toyota, Toyota Motor Corporation is one of the world's largest automobile manufacturers. It is in a leading position in hybrid technology. Popular models such as the Corolla and RAV4 are popular models that are popular in mainland Japan, Europe, America, and China. Toyota is one of the companies with the highest sales volume of automobiles in the world, and has now been the top seller in the world for four consecutive years.

Since last year, the Japanese stock market began to rise sharply, completely breaking through the high position during the bubble economy, drawing attention from investors around the world. Among them, a Japanese company with the highest listing value in history —$Toyota Motor (7203.JP)$It has been one of the companies that has boosted the Nikkei Index the most by making loud noise and reaching new highs over and over again. The company has accumulated a cumulative increase of over 100% since 2023.

Mitsubishi Corporation - one of the five largest trading companies in Japan

In Japan, a trading company refers to a large multinational company integrating trade, industry, finance, and information, and$Mitsubishi (8058.JP)$,$Mitsui (8031.JP)$,$ITOCHU (8001.JP)$,$Sumitomo (8053.JP)$,$Marubeni (8002.JP)$It is one of Japan's five famous trading companies. The consortium of these five major trading companies controls close to 99% of Japan's large manufacturing companies and trading companies.

It can be said that these five companies have taken control of the lifeblood of various industries in Japan. Among the five trading companies, the largest company is “Mitsubishi Corporation.”

Mitsubishi Corporation is a comprehensive Japanese trading company founded in 1950 and headquartered in Tokyo.

Mitsubishi Corporation's business covers various fields, including energy, metals, machinery, chemicals, food, agriculture, infrastructure, life sciences, logistics, real estate, and finance. It is worth noting that the predecessor of Mitsubishi Corporation was one of Japan's top three large lords, the Mitsubishi zaibol.

Since 2023, the cumulative increase of Mitsubishi Corporation has exceeded 141%. Notably, in February, Mitsubishi Corporation also announced that the company would spend 500 billion yen (about US$3.37 billion) to repurchase up to 10% of the shares. This is Mitsubishi Corporation's largest repurchase plan since 2016.

Subaru — a “technical” Japanese car company

Compared to the “two fields and one production” in Japanese car companies, a “broom broom”$Subaru (7270.JP)$It seems quite low-key, and has even been classified as a “niche” brand in the eyes of many people.

Subaru is a branch of Fuji Heavy Industries Co., Ltd. (FHI) specializing in automobile manufacturing. It was founded in 1953. It initially mainly produced automobiles, but also manufactured aircraft and various engines. It is a manufacturer that produces various types of multi-purpose transportation equipment.

Subaru is also a very distinctive brand among Japanese cars. It has unique technology, especially a horizontal to horizontal engine and a full-time four-wheel drive system.

It is worth noting that currently, Subaru's largest shareholder is Toyota. In 2020, Subaru announced that Toyota Motor, its largest external shareholder, officially purchased additional Subaru shares, increasing its shares from 16.8% to 20%. As a result, Toyota officially controls Subaru, and future Subaru's profit and loss results and sales will be included in Toyota Motor's financial reports.

Source: Subaru official website

Subaru ushered in a strong rise in the 2023 market through the strong performance of fuel models.

On March 8, Subaru announced that its consolidated net profit for the fiscal year ending March 2024 (IFRS) is likely to increase 70% over the previous fiscal year to reach 340 billion yen, an increase of 20 billion yen over the previous forecast of 320 billion yen; sales are expected to increase 23% to 4.65 trillion yen; and revenue is expected to increase 68% to 450 billion yen, exceeding the previous forecast of 30 billion yen.

The sustainability of SUBARU's profitability has received attention. Subaru's operating profit for each vehicle sold in fiscal year 2022 (ending March 2023) surpassed that of Toyota, ranking first among the 7 largest companies in Japan, and widened the gap of about 200,000 yen with Mazda and Suzuki, which are similar in size.

Subaru's operating profit for each four-wheeler sold in FY2022 was 2.5 times that of FY2021, reaching approximately 314,000 yen, surpassing Toyota (309,000 yen).

Subaru is a company in the industry whose performance is easily affected by exchange rates. Because more than half of Subaru's sales come from the US, thanks to the depreciation of the yen exchange rate, the company's profits have also increased quite a bit.

Source: Subaru official website

Screen Holdings——Wafer Cleaning Equipment Faucet

$Screen Holdings (7735.JP)$It is the world's leading manufacturer of cleaning equipment. DIENCE was founded in 1943 and introduced semiconductor equipment manufacturing in 1975. Benefiting from the take-off of the semiconductor industry in Japan in the 1980s, it developed rapidly in the field of semiconductor cleaning equipment, and successfully developed the world's first rotating chip cleaning system in 1983.

DNS has a comprehensive range of cleaning equipment products, leading advanced cleaning equipment technology, and has occupied the world's number one position in the field of single-piece cleaning equipment, batch cleaning equipment, and rotary cleaning equipment for many years in a row.

The global semiconductor cleaning equipment market is highly concentrated, and Japan's Screen family accounts for nearly half of the market. The four companies Screen, TEL (Tokyo Electronics), LAM (Fanlin Semiconductor), and SEMES (Samsung Semiconductor) have a combined market share of over 90%. Among them, Screen (DIENCE) accounts for 45.1% of the global semiconductor cleaning equipment market.

Judging from the stock price trend chart, under the rise of the AI wave, Screen has accumulated a cumulative increase of nearly 346% since 2023, making it one of the biggest rising stocks in Japan.

Advantest - the leader in semiconductor testing equipment

$Advantest (6857.JP)$It is a major semiconductor test equipment manufacturer in the world, and has launched the first semiconductor test equipment in Japan and the world many times. According to SEMI, as of 2022, Edwin's market share in the global SoC and memory chip test equipment markets was 56.06% and 46.58%, respectively, and the overall market share remained around 50% from 2011 to 2022.

As investment in Japan has also hit semiconductors, Advantest's cumulative increase since 2023 has exceeded 200%, and the Q1 increase alone has reached 42%.

Currently, the Edwin Test has become one of the three major weighted stocks in the Nikkei 225 Index.

Source: Nikkei official website

Tokyo Electronics - Japan's largest semiconductor manufacturing equipment provider

$Tokyo Electron (8035.JP)$Established in 1963, it is the largest semiconductor manufacturing equipment provider in Japan and the third largest in the world, engaged in the development and production of semiconductor manufacturing equipment and flat panel display manufacturing equipment.

Tokyo Electronics is a comprehensive semiconductor equipment supplier. Judging from the competitive landscape, TEL has the first or second largest market share among the four main types of process equipment (film deposition, etching, gluing, and cleaning). Furthermore, these four categories of products account for about 90% of TEL's total revenue. As a result, TEL's overall revenue will grow steadily as demand for semiconductor chips grows.

Since 2023, thanks to the boom in Nvidia and artificial intelligence, Tokyo Electronics' stock price has soared by more than 200%, becoming the third-largest company in Japan by market capitalization, surpassing mainstream companies such as the Sony Group, and also the second-most weighted stock in the Nikkei 225 Index. Since the 2008 low, the company's cumulative increase has reached an astonishing 43 times.

DISCO - Global semiconductor equipment materials giant

Global semiconductor equipment materials giant Japan$Disco (6146.JP)$Established in 1937, it has focused on the field of “Kiru (cut), Kezuru (mill), and Migaku (throw)” for many years, forming a product layout with perfect semiconductor cutting, grinding, and polishing equipment materials, and an important process flow throughout the semiconductor process. With the product's advantages in accuracy, performance, and stability, its thinning grinding machine and its consumables have seriously caused market consequences of oligopoly.

Judging from stock price trends, this company is also one of the big winners of this AI wave, with a cumulative increase of over 353% since 2023.

According to the Guangfa Securities Research Report, the company's equipment continues to expand vertically with “cutting, grinding, and throwing” as the core. The main products are divided into three categories: cutting machines, grinding machines, and polishing machines. They are widely used in various processes of semiconductor manufacturing, covering various aspects such as silicon wafer preparation, front-end wafer preparation, and post-packaging testing. At the same time, the company also sells supporting processing tools, which can provide complete industry solutions.

Although the overall market size of a scriber/thinner is smaller than that of other semiconductor devices, since the quality of chip cutting directly affects the quality of the package and the performance of the device, most semiconductor manufacturers will not rashly change equipment suppliers in this process, and downstream customers are extremely sticky.

According to EET China, currently the top 3 companies in the global dicer market are DISCO, Tokyo Seimitsu, and ADT (acquired by Optronics). Among them, DISCO has the largest market share, accounting for about 70%.

According to QYResearch, global thinning machine equipment companies include Disco, Tokyo Seimitsu, G&N, etc., and the top three global manufacturers account for 85% of the market share. Among them, Disco enjoys a reputation in the industry for its excellent product performance and satisfactory service, and has almost monopolized the slimming machine market. Taken together, Disco has a monopoly of nearly 2/3 of the global dicer/thinner market and is an absolute invisible champion.

Nomura Orient International Securities said that the Japanese stock market continued to strengthen in 2023, and its strong performance was mainly due to the gradual exit of the Japanese economy from deflation; improvements in corporate governance; and the increasing attractiveness of Japan as a diversification target for investment in Asia. This fundamental advantage will not change anytime soon in 2024.

Looking ahead to 2024, analysts believe that Japan's semiconductor industry has three major investment opportunities: 1) generative artificial intelligence; 2) the Chinese market; and 3) intelligent vehicle electrification. Generative AI layout companies include LaserTec, Advantest, and Disco; Chinese market-related layout companies include TEL, SCREEN, etc.; automotive electrification and intelligent layout companies include Sony, Renesas, and Rohm. Investors are also advised to pay attention to the impact of yen appreciation, the new NISA, and the East Stock Exchange to increase shareholder return policies.


Cow friends,

The Big Seven US Stock Companies vs. the Seven Samurai in Japanese Stocks,

Which company would you most like to include in your pocket?

Welcome to leave your favorite company in the comment area~


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