Sojitz Corp.

The positive outlook reflects our expectation that Sojitz's net profit will continue to grow. It also factors in our belief that the company will adhere to a conservative fiscal policy. We therefore see at least a one-in-three chance of upgrading the company in the coming year or two. We may upgrade the company if we believe its adjusted capital looks more likely to stay on an improvement track in the coming two to three years, at levels exceeding the amount of risk-based capital required under our 'BBB' stress scenario. This could occur if Sojitz lifts net profit above ¥75 billion and keeps steadily pushing it toward ¥100 billion, while curbing risk asset growth. We may revise the outlook downward to

...The uptrend of Sojitz's net profit is likely to continue, underpinned by a stronger business portfolio.We expect recent growth investments by Japan-based general trading and investment company (GTIC) Sojitz Corp. to boost profit in the next couple of years by at least Ñ6 billion annually. Such investments include a paper production business in Vietnam and coking coal business in Australia. Over the past two to three years, its net profit has risen year after year, thanks to successful efforts to strengthen its business base. It has focused on strategic areas such as the automotive- and aircraft-related fields and infrastructure. Higher resource prices have also benefitted the company. Sojitz logged a net profit of Ñ70.4 billion in fiscal 2018 (ended March 31, 2019). Compared with peers, the company is small and deals with fewer customers; profit contributions from each investment are also limited. Nevertheless, we think net profit is likely to continue on the path toward Ñ100 billion. This...

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