Sojitz Corp.

The stable outlook reflects our expectation that Sojitz's capital adequacy will likely remain stable at 110%-120% 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 ¥100 billion in the next one to two years and, at the same time, it retains its policy to maintain financial soundness. We may consider lowering our rating on Sojitz in either of the following scenarios: Its return on risk-weighted assets (RORA)--defined as the ratio of pretax net income to risk assets (risk-based capital) that reflects required capital levels under our 'BBB' stress scenario--drops to a percentage in the lower teens and remains there; or Its capital adequacy falls

...The company will likely generate net profit of about Ñ100 billion annually over the next one to two years. We expect Japan-based general trading and investment company (GTIC) Sojitz Corp. to see a decline in profit from metals, mineral resources, and recycling business in fiscal 2024 (ending March 31, 2025), because of weaker coal prices. The business accounted for about 40% of net profit in fiscal 2023. Meanwhile, the company's energy solution and health care, retail and consumer service, and automotive which it has strengthened in recent years, will likely support the company's overall profit. Earnings from nonresource businesses, particularly energy solution and health care and retail and consumer service, are 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 the volatility of Sojitz's overall profits will remain somewhat high. This...

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