McDonald's, Komori, Fanuc: Three Kaisha Shikiho Stock Picks

Includes: FANUF, MCD
by: Bob Schneider

The Kaisha Shikiho, issued quarterly by Toyo Keizai, is considered by some to be Japan's investment bible. This thick, paperback-size publication covers all of Japan's public companies, over 3,700 in number. It's like Value Line but has a much wider readership -- Toyo Keizai says Shikiho has a 70% share of Japan's investment periodicals market.

Indeed, you will often see the most recent version on the desks of both brokers and small investors. Wahei Takeda, perhaps Japan's largest individual shareholder, is said to read Shikiho as his main information source for investing. In the US, investors know the English-language edition as the Japan Company Handbook, which appears about a month after the Japanese edition (Toyo says the English version includes any subsequent earnings revisions).

Prior to the release of the summer issue today, the publisher ran a number of "preview" articles for subscribers of its online magazine. While of course there's no guarantee that its comments and earnings forecasts will prove accurate, the mere fact that so many investors read them might be worth considering, especially for stocks with large individual ownership.

Here are selected comments from the Shikiho on three stocks that caught our eye:

McDonald's (2702) (NYSE:MCD)

As in the US, McDonald's Japan is doing nicely. A revamped breakfast menu, new products like the MegaMac, and 24-hour outlets should push same-store sales up 8% for the fiscal year ending December. The company has embarked on an aggressive store-closing program, and eliminating losses from these operations will give a nice fillip to profits. The company is also remodeling its 200-store base to include "one-seaters" that will make its outlets more attractive to lone diners. Shikiho is raising its net income forecast for calendar 2007 to 6.2 billion yen, a big jump from the 1.5 billion earned in 2006.

MCD 1-yr chart


Komori Corp. (6349)

The printing press equipment maker should benefit from increased sales in China, and overall higher unit sales will help operating profit. The company's official recurring profit estimate, based on a conservative exchange rate, is flat. But Shikiho expects a 10% advance for recurring profit to 18.5 billion yen for the year ending March 2008, as well as a higher dividend.

Fanuc (6954) (OTCPK:FANUF)

This leading factory automation and robotics maker should benefit from the recovery of capital investment in the auto industry. Numerical control units are expected to be a core strength. The company continues to benefit from its skills in producing servo motors, and it plans to reduce delivery times. Interest income should be helped by higher rates. Shikiho thinks the company's estimates of slight growth in revenue and flat operating profits are conservative. It forecasts an 8.7% rise in net income to 116 billion yen for the year ending March 2008.

FANUF 1-yr chart


Note: This article was co-written by Chako Ando.

Disclosure: none

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