Sojitz Corp.

The company is rapidly increasing new investment (about ¥500 billion for three years ending fiscal 2023). The proportion of businesses exposed to market fluctuations has risen in recent years. The company's adjusted capital lags significantly behind its peers. The stable outlook reflects our expectation that Sojitz's capital adequacy will likely remain stable at 115%-125% of that required under our 'BBB' stress scenario for the next year or two. This should occur if its net profit remains high at about ¥90 billion in the next one to two years and, at the same time, it retains its policy to maintain financial soundness from fiscal 2024. We may consider lowering our rating on Sojitz in either of the following scenarios: Its return

...The company will likely generate net profit of about Ñ90 billion annually over the next one to two years. We expect Japan-based general trading and investment company (GTIC) Sojitz Corp. to see a significant decrease in profit from metals, mineral resources, and recycling business in fiscal 2023 (ending March 31, 2024), because of weaker coal prices. The business accounted for about 50% of net profit in fiscal 2022. Meanwhile, the company's infrastructure and health care business and retail and consumer services business, both of which it has strengthened in recent years, will likely grow profits, supporting the company's overall profit. These two businesses are the main drivers of the company's nonresource business portfolio. Earnings from the nonresource business portfolio are highly stable. We consider the risk of the company recording significant losses to be limited, as its business portfolio is diversified with no significant concentration in large investment projects. We believe...

Full Report