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  • manicdevlin manicdevlin Aug 22, 2009 12:26 PM Flag

    Goldman Sachs Sees Japan Profits Rising 73% Next Year

    Aug. 21 (Bloomberg) -- Japanese non-financial companies are forecast to post a 73 percent surge in pretax earnings next year, buoyed by cost cuts, a weaker yen and rising demand, said Kathy Matsui, chief equity strategist at Goldman Sachs Group Inc.

    “People are going to be surprised at how sharp the recovery will be,” Matsui said in a phone interview.

    Rising profits could help the benchmark Topix index rise to 1,000 by the end of 2009, a 4.3 percent increase from yesterday’s close, and advance an additional 10 percent in 2010, according to Matsui. The gauge fell 1.2 percent to 947.34 at the close of trade on the Tokyo stock exchange. It has gained 10 percent this year.

    Goldman’s estimates equate to 48.9 yen in earnings per share for the Topix in the financial year ending March 2011, placing the benchmark at 19.4 times estimated earnings. The brokerage also reversed its forecast among all industries to a 23.3 percent increase in pretax profits this year from a 15 percent decline.

    “Our forecasts for both the March 2010 and March 2011 financial years exceed consensus estimates largely due to our expectations of stronger global growth, continued restructuring benefits, and a weaker yen,” Matsui wrote in a report titled “Back in Black.”

    The strategist recommended investors consider companies with conservative forecasts that could revise higher when reporting half-year results. These included Toyota Motor Corp., the world’s top automaker, Nidec Corp., the largest maker of disk-drive motors, and Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line.

    “We believe that as interim results approach in November, upward revisions will emerge, and this will be a catalyst for the market to resume an uptrend toward year-end,” Matsui wrote in a report.

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