Japanese Rail Techs Gain; Chiyoda Plunges

Darlington Musarurwa
26 Oct, 2009
New York City

Japanese rail technology companies may benefit from new orders from China as it builds high speed links between Beijing, Shanghai and Guangzhou. Toyota Industries Corp. reviews full year profit forecast. JFE Holdings first half profit eases to 28.7 billion yen. Chiyoda Corp drops on revised outlook.

[R]5:00 AM New York, 7:00 PM Tokyo- Japanese rail technology companies may benefit from new orders from China as it builds high speed links between Beijing and Shanghai and Guangzhou. Toyota Industries Corp. reviews full year profit forecast. JFE Holdings first half profit eases to 28.7 billion yen. Chiyoda Corp drops on revised annual outlook.[/R]

Japanese stocks rose led by Mitsubishi Heavy Industries on speculation Japanese companies are likely to benefit from the Rmb 45 billion earmarked for China’s high-speed railway cars.

Investors cheered better than expected profit forecasts from Toyota Industries Corp. and steelmaker JFE Holdings on the expectations of global economic recovery.

In Tokyo trading Nikkei 225 Stock Average jumped 0.8% or 79.63 to 10,362.62, and the broader Topix Index advanced 1% to 910.72.

In the first section of the Tokyo Stock Exchange 8.8 billion shares valued at 605 billion yen changed hands and in the second section 122 million shares worth 1.5 billion yen were traded.

Of the Nikkei 225 index stocks, 154 rose, 58 dropped, and 13 were unchanged. Mitsubishi Heavy led advancers in the index shares with a rise of 4.9%.

China Rail Service Orders for Japan Likely

Nikkei News reported today that China’s Ministry of Railways has placed orders valued at an estimated Rmb45 billion for high-speed railway cars expected to be built by Chinese train manufacturers, “including a locomotive builder in Qingdao that holds a technology license agreement with Kawasaki Heavy Industries Ltd.”

The report notes that manufacturers will supply trains for lines between Beijing and Guangzhou and between Beijing and Shanghai.

Beijing- Shanghai service will start in 2011, with trains beginning to be delivered beginning of next year.

Trains will be built on Kawasaki Heavy’s technology for Hayate bullet trains that run on Japan’s Tohoku Shinkansen line.

Japanese companies that supply parts such as Hitachi Ltd., Toyo Electric Manufacturing Co., and Nabtesco Corp. are expected to benefit from business with China.

China has budgeted to invest Rmb600 billion and Rmb750 billion annually in railway construction under the overall Rmb 4 trillion stimulus package designed to stimulate the economy.

Toyota Industries Corp. Reviews Forecast

Toyota Industries Corp. on Friday reviewed its full year profit forecast from a loss of 9.5 billion yen to a profit of 200 million yen as net sales projections were increased 1.2% to 627 billion yen from 620 billion yen in the first half ended September 30.

The increase was mainly because of estimated sales increases in the automobile division as a result of the stimulus measures by government.

The company noted, “This upturn results from inventory adjustment and economic stimulus policy in Japan and overseas. The year-end financial forecast is now under consideration.”

JFE Holdings Loss Eases to 28.7 billion yen

JFE Holdings reported today it booked a loss of 28.7 billion yen in the first six months of the year ended September 30 from a profit of 153 billion yen a year ago on high prices of coal and iron ore purchased under the previous contract. The company had earlier projected a 40 billion yen loss.

In the quarter to September, JFE Holdings reported a net profit of 12.8 billion yen from 41.5 billion yen the previous quarter.

The steelmaker produced 13.3 million tons of crude steel in the six months to September.

For the fiscal year ending March, JFE estimates its profit will rise to 24 billion yen on 2.82 trillion yen in sales.

Gainers & Losers

Chiyoda Corp dropped 13% or daily limit of 100 yen to 694 yen after it cut its annual net income outlook by 60% to 2 billion yen but left its revenues estimates unchanged at 320 billion yen. The engineering company also lowered its revenues estimate for the first half by 8.3% to 165 billion yen and expects a net loss of 1.7 billion yen compared to 3 billion yen profit.

JFE Holdings declined 2.2% after reporting profit in the three months to September eased to 24 billion yen from 41.5 billion yen in the June quarter.

Mitsubishi Heavy Industries jumped 4.9% and Kawasaki Heavy Industries gained 4.4% on speculation Japanese companies are likely to benefit from China’s rail service project.

Nippon Express surged 10% to 382 yen after the delivery company lowered its stake in the loss making venture JP Express to 14% from 34%.

Nippon Paper shed 2.4% and Oji Paper dropped 1.7% despite crude oil prices dropping 0.9% to $80.5 per barrel.

Inpex Holdings plunged 1.3% on falling crude oil prices.