Asia’s earnings reports haven’t done much to boost market sentiment yet this season, but this week may bring some bright spots. SoftBank Group, due to report on Friday, is expected to return to profit after a record loss hit it hard the previous quarter. Analyst consensus is also predicting year-over-year profit growth at the world’s biggest coal miner, Coal India, at Chinese chipmaker SMIC, and at Nintendo, Nissan and National Australia Bank. And even after Chinese health officials vowed to “un
(Bloomberg) — Asia’s earnings reports haven’t done much to boost market sentiment yet this season, but this week may bring some bright spots. SoftBank Group, due to report on Friday, is expected to return to profit after a record loss hit it hard the previous quarter. Analyst consensus is also predicting year-over-year profit growth at the world’s biggest coal miner, Coal India, at Chinese chipmaker SMIC, and at Nintendo, Nissan and National Australia Bank. And even after Chinese health officials vowed to “unswervingly” stick to a Covid Zero policy over the weekend, traders may be holding on to hopes of a reopening, with Hong Kong-listed Chinese shares rebounding within minutes of opening lower on Monday.
In terms of commentary and outlook, investors will be combing releases for any information on SoftBank’s listing plan for its chipmaking unit Arm Ltd., its exposure to Chinese assets, and SMIC’s measures to address a shortage of semiconductor-making tools. With heightened tensions between the US and China clouding the outlook on everything from chip export controls to Taiwan, all eyes are on whether a potential meeting between US President Joe Biden and Chinese President Xi Jinping at a Group of 20 summit later this month will bring some improvement to their relationship.
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- For more on what’s going on in other regions, see the US Earnings Week Ahead and the EMEA Earnings Week Ahead, and the ESG Stock Watch for a selection of environmental, social and governance themes that may come up on this week’s earnings calls.
Highlights to look for this week:
Monday: Coal India (COAL IN) is likely to report second-quarter results after market close. The world’s biggest coal miner is set to benefit from an energy crisis in Europe that’s boosted global demand and prices of thermal coal. The state-owned company is estimated to report a near 90% surge in net income for the quarter versus a year ago, after monthly production increased by 8.5%-12% during the period. Since Russia’s invasion of Ukraine, the e-auction premium for coal surged to more than 290%, analysts at Motilal Oswal wrote. Investors will be watching for management commentary on coal volumes available for e-auction going forward, as well as guidance on production and sales volumes for the financial year. Other topics of interest are the ongoing negotiations on wages — one of the biggest cost tabs for Coal India — and a likely price hike for coal sold to power producers through long-term agreements. Any plans to invest further into cleaner power will also be of interest to ESG investors.
Tuesday: Nintendo (7974 JP) will report second-quarter earnings after market close. The Kyoto-based video game giant should continue to enjoy a profit windfall from a weaker yen, though slowdown in hardware sales could drag down overall revenue. Yet software sales are expected to be strong thanks to a bigger contribution from high-margin first-party titles, according to Bloomberg Intelligence. That includes family-friendly online shooter Splatoon 3, which had the biggest opening weekend of any Switch title to date in Japan. Regarding the console, Nintendo said the previous quarter that manufacturing bottlenecks had affected sales but it expects to catch up on production from the late summer. Investors will be eager to know if it was able to make good on that promise ahead of the all-important holiday shopping season.
Wednesday: Nissan Motor (7201 JP) is set to report its second-quarter earnings after the bell on Wednesday. It follows larger peer Toyota Motor, which was forced to revise output goals downward on Tuesday as the persistent chip shortage continued to hamper its production. Toyota shares took a pounding despite unveiling a 150 billion yen buyback program. Nissan’s immediate concerns surround how it will reshape its alliance with Renault, which is said to be in the final stages of negotiations. The Japanese carmaker probably won’t tell us much about those plans until an event planned for later in the month, but its quarterly performance may set the mood for what’s to come. Results are likely to reveal how much the weak yen has propped up profit amid higher input costs and an expected charge on exiting Russian operations, according to Bloomberg Intelligence analyst Tatsuo Yoshida, who also sees room for a profit upgrade.
- Higher Rates: National Australia Bank (NAB AU) will announce its second-half and full-year results before market opens. Lenders in Australia and New Zealand are benefiting from tighter central bank policies as borrowing costs for mortgages climb more than deposit rates. NAB is seen to have achieved FY cash profit of about A$7.1 billion, or a growth of 8.4% over FY 2021, according to analysts’ estimates compiled by Bloomberg. Strong Australian lending in September and higher margins are likely to boost NAB’s revenue, though this could be partially offset by cost inflation and a surge in investment costs, according to Bloomberg Intelligence. Australia’s third-largest bank could sustain its 2021 11% ROE through 2023 on improving margins and healthy loan growth. With house prices falling and energy costs increasing, investors will parse banks’ results for signs of stress from borrowers.
Thursday: Semiconductor Manufacturing International Corp. (981 HK) is scheduled to release third-quarter results after market close. Bloomberg consensus estimate shows a 1.6% sequential growth in its third-quarter revenue but it may turn down in the fourth quarter. Comments and measures from the Chinese top chipmaker on how to deal with US curbs are in focus as the Biden administration announced sweeping regulations that limit the sale of semiconductors and chip-making equipment to Chinese customers in October. The US is also exploring further export controls to limit China’s access to some emerging computing technologies, stoking concerns that the industry’s downturn is far from over. In the longer term, SMIC’s revenue could grow 50% slower than the original expectations for 2023-224, according to Bloomberg Intelligence. BI said that nearly half of the firm’s new capacity to be installed by end-2023 is in 28- or smaller nanometer node advanced chip manufacturing, which would require supplies from US tool makers like Lam Research and Applied Materials which could potentially be barred by US restrictions.
Friday: SoftBank Group (9984 JP) is set to announce second-quarter earnings after market close. All eyes are on whether the Tokyo-based conglomerate has been able to course-correct after suffering a record $23.4 billion loss in the preceding three months on a sharp fall in the value of its investment portfolio and foreign currency losses. Bloomberg Intelligence said SoftBank may turn profitable helped by the sale of forward contracts on Alibaba Group Holding, though the outlook for the tech sector, where many of its investments are, remains lackluster. Meanwhile, founder Masayoshi Son has pledged sweeping cost cuts, and the company is said to be shrinking staff at its Vision Fund by at least 30%. Son’s earnings briefing later in the afternoon is usually closely watched, but he won’t be leading the proceedings this time, taking a back seat to focus on the planned listing of chip designer unit Arm.
–With assistance from Saket Sundria.
(Updates lede with market move)
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