“A Sharp Rise in the Nikkei Average and the Age of Level 3 Autonomous Driving”

20th November, 2020

The Nikkei average, which rose to the 24,300 point level on 6/11, exceeded the high price of 24,448 points in Oct 2018 at the beginning of the week on 9/11 to become a high price that was last seen in 1992, then rose even more at one go to the high price of 25,587 points on 12/11. A sharp rise of 2,639 points played out in 8 business days since the low of 22,948 points on 31/10. With there being a couple of reasons for the rise, such as growing expectations towards the early supply of the COVID-19 vaccine as well as concerns beforehand on the prolongment of the conclusion of the U.S. presidential election being dispelled, we would like to examine the things suggested by these market movements to the future investment strategies of investors.

Firstly, based on technical analysis in terms of the chart, the bull market which started from the Nikkei average’s low (6,994 points in Oct 2018) since the bankruptcy of the Lehman Brothers in 2008, is suggested to have a greater possibility to continue in the long-term, and even if it eventually becomes a decreasing trend, we can perhaps say that the risk of it staying at a level of under 20,000 points for a long time has decreased. Next, based on a fundamentals analysis which focuses on the net asset value of corporations comprising the Nikkei average, the weighted average P/B ratio (price-to-book ratio) of the Nikkei average, which is a weighted average of market capitalisation, etc., was 1.17 times at the closing price on 12/11, and a net asset value equivalent to a weighted average P/B ratio of 1.0 would work out to be an approximate of 21,812 points. With the exception of Mar-May this year where the market was ravaged due to it being caught up in the COVID-19 pandemic, attention is likely on the fact that the Nikkei average tends to stop falling near the weighted average P/B ratio of 1.0 times. Also, based on the past 3 years, since the snap election of the House of Representatives was held in 2017, there was a time in Jan 2018 where the weighted average P/B ratio rose to around 1.4 times. If we apply this to the net asset value on 12/11, it would be possible for it to exceed 30,000 points, however, in the mid and long-term, perhaps we can expect a permissible range of the weighted average P/B ratio up to about 1.3 times. 

On 11/11, Honda Motor (7267) announced that they were the world’s first to obtain the designation of the type demanded by level 3 autonomous driving from the Japanese Ministry of Land, Infrastructure, Transport and Tourism. “LEGEND”, the first luxury sedan to be equipped with it, is planned to go on sale by March 2021. In level 3, although there is a need for the driver to immediately take over in case it falls into a situation outside of its design, normally, there is no need for the driver to pay attention to their surroundings during automatic driving, and also enables them to carry out other tasks. This seems to be a perfect chance to allow us to experience an evolution in the times. From the perspective of investment strategy, perhaps we can say that there is a big opportunity for corporations involved with technology development, such as the “in-vehicle image sensor”, which captures images by converting light to electric signals, the “millimetre wave radar”, which measures distance using low frequency radio waves, and “LiDAR”, which measures distance based on laser reflection, etc.

In the 16/11 issue, we will be covering Nisshinbo Holdings (3105), Komeda Holdings (3543), Maxell Holdings (6810), and Chino (6850).



  •  Nisshinbo Holdings Inc. (3105)        720 yen (13/11 closing price)

・Established in 1907. Is a conglomerate comprised of wireless and communications, micro devices, brakes, precision devices, chemicals, fibres, real estate and other business segments. They are aiming to be an “environment and energy company”.
・For 9M (Jan-Sep) results of FY2020/12 announced on 12/11, net sales decreased by 10.5% to 335.977 billion yen compared to the same period the previous year and operating income saw an expansion in deficit from (589) million yen the same period the previous year to (696) million yen. It was affected by the slump in demand due to the COVID-19 catastrophe. On the other hand, net income increased by 45.2% to 5.924 billion yen due to investment securities, gain on sale of fixed assets and revenue from subsidies.
・For its full year plan, net sales is expected to decrease by 9.4% to 462 billion yen compared to the previous year and operating income to fall into the red from 6.4 billion yen the previous year to (4) billion yen. In addition to their subsidiary, JRC Mobility, buying out 2 German in-vehicle equipment development companies in end April this year, they presented the technology of simultaneously detecting 3D positional information and speed information by combining the data from camera images and millimetre wave radar at the home appliance and IT fair, “CEATEC”. It appears that preparations for the age of autonomous car driving are progressing smoothly.



  • Komeda Holdings Co., Ltd. (3543)       1,862 yen (13/11 closing price)

・Originated from the opening of a coffee shop in Nagoya in 1968. Expands the FC business nationwide by owning the brands “Komeda’s Coffee” in addition to “Okagean”, “Yawaraka Shirocoppe”, “Komeda’s Stand” and “Bakery Ademok”.
・For 1H (Mar-Aug) results of FY2021/2 announced on 14/10, sales revenue decreased by 12.1% to 13.479 billion yen compared to the same period the previous year and operating income decreased by 38.9% to 2.404 billion yen. Despite growth in takeaway sales including deliveries in their stores, the COVID-19 catastrophe influenced the decrease in revenue. Impairment loss involving some directly managed stores and sales support to FC member stores influenced the decrease in profit.
・For its full year plan, sales revenue is expected to decrease by 11.6% to 27.6 billion yen compared to the previous year and operating income to decrease by 32.3% to 5.33 billion yen. For wholesale sales for existing FC member stores compared to the same period the previous year, although it decreased by 19.0% in the first half (1H), an improvement in business performance was indicated with the 1.0% increase in the single month of September and the 1.6% increase in the single month of October. For a total of 896 stores at the end of August this year, the company is aiming to build a system of 1,000 stores. They are predicting an accelerated speed of advancement by aiming for 50 stores in Taiwan by 2022.


  •  Maxell Holdings, Ltd. (6810)       1,147 yen (13/11 closing price)

・Established in 1966. After becoming a wholly-owned subsidiary of Hitachi (6501) in 2010, they were relisted in 2014 and went independent from Hitachi Group. Mainly carries out the manufacture and retail of energy, industrial parts and materials as well as electric appliances and consumer products.
・For 1H (Apr-Sep) results of FY2021/3 announced on 29/10, net sales decreased by 13.5% to 63.64 billion yen compared to the same period the previous year and operating income increased by 17.8% to 827 million yen. A decrease in revenue in products for the automobile market, consumer products and projectors influenced the overall decrease in sales, whereas a reduction in the range of deficit such as in projectors and the decrease in fixed expenses contributed to an increase in operating income.
・Company revised their FY2021/3 full year plan. Although net sales is expected to decrease by 5.0% to 133.3 billion yen compared to the previous year (original plan 140 billion yen), operating income was raised from (137) million yen the previous year to 1.5 billion yen (original plan 500 million yen). Despite the impact on sales from the COVID-19 catastrophe to continue, they are predicting effects from their plan to decrease the cost price in each section. Since the company has high efficiency in energy that is hard to burn, they are predicting a mass production of small-sized coin type products in the “solid-state battery”, which is said to be the first choice in next-gen batteries.


  • Chino Corporation (6850)                 1,401 yen (13/11 closing price)

・A measurement instruments manufacturer which was originally Chino Seisakusho founded in 1913. Manages the manufacture and retail of measurement control devices, instrumentation systems and sensors, etc. Accounts for a high share domestically and overseas in the fields of fuel cell evaluation testing and infrared ray measurement.
・For 1H (Apr-Sep) results of FY2021/3 announced on 11/11, net sales increased by 2.5% to 9.314 billion yen compared to the same period the previous year and operating income decreased by 13.1% to 9.9 million yen. Although the increase in demand for body surface temperature checkers and body surface temperature heat generation monitoring cameras as a COVID-19 countermeasure contributed to an increase in revenue, the decrease in orders received from major clients such as for automobile and electronic components, etc. have affected.
・For its full year plan, net sales is expected to decrease by 1.9% to 20.2 billion yen compared to the previous year and operating income to decrease by 14.3% to 880 million yen. With a sense of reality in the development of the COVID-19 vaccine, attention is on the company’s temperature measurement devices due to ultra-low temperature control required for its transportation. Also, HACCP, which involves means of managing causes of health damages, such as food poisoning, etc. from F&B outlets and foodstuff factories, is planned to be made mandatory from June 2021. The company is currently reinforcing their suggestions involving hygiene control systems.


【Disclaimer and Notes relating to this report】

Issuer of this report:  Phillip Securities Japan, Ltd.    4-2 Nihonbashi Kabutocho, Chuo-ku, Tokyo 103-0026

TEL: 03-3666-2101 URL: http://www.phillip.co.jp/


Authors of this report:

Phillip Securities Research Department 

Kazuhiro Sasaki, Certified International Investment Analyst(CIIA®), Chartered Member of The Securities Analysts Association of Japan (CMA®)


This material is intended for information purpose and does not constitute a solicitation for sale related to financial products.  Phillip Securities receives consideration based on contracts with brokerage firms that provide the reports.  The contents described in this document convey the opinions of the writers as a reference for investment decisions, and Phillip Securities does not guarantee its accuracy and completeness.  Please make final investment decisions at your own discretion.  In addition, Phillip Securities shall not assume liability for any loss or damage arising from usage of part or all of this material.  All rights of this material belong to Phillip Securities and any reproduction, transfer or reprint without permission is prohibited.


<Notification based on the Japan Securities Dealers Association Self-Regulatory Rules [Rules concerning handling of analyst reports dated 25th Jan, 2002]>

There is no serious conflict of interest between the analysts who wrote the reports and the corresponding companies.