1911.T

• General overview of weak yen benefit dynamics

• Weak yen increases the yen-converted value of overseas revenue and profit for Japanese firms with high foreign currency-denominated sales, generally boosting reported results

  • The net impact of weak yen varies by firm based on currency denomination of sales and costs, and the extent of currency hedging

• Company-specific operational updates

  • Sumitomo Forestry: Growing U.S. and Australian housing businesses now contribute 70% of total corporate profit; domestic business is stable, driven by 8,000 custom housing units and expanding rental housing, with wood cycle sustainability initiatives underway
  • Tokyo Ohka Kogyo: Global top-tier market share in photoresist for semiconductor manufacturing; most customers are located outside Japan, with growth expected from expanding generative AI demand
  • Torex Semiconductor: Power IC focused analog semiconductor firm operating a hybrid model of owned manufacturing and external foundry production; has launched a new mid-term management plan focused on becoming a respected semiconductor firm for all stakeholders
  • InSPEC: Manufactures inspection equipment for semiconductor package substrates and flexible substrates; driven by growth in advanced packaging for generative AI, the company hit a record high order volume in the fiscal 2025 April period
  • Komatsu: Global construction and mining equipment manufacturer with 62 global R&D and production facilities delivering consistent product quality; mining equipment is growing, and the company is prioritizing expansion of its after-market business
  • AeroEdge: Specialized manufacturer of titanium-aluminum blades for aircraft engines focused on overseas engine manufacturer clients; has a mid-term goal of entering the aircraft engine MRO market leveraging its core processing and lamination technologies
  • JACCS: Mitsubishi UFJ Financial Group affiliated consumer finance company; expanding presence in ASEAN consumer auto finance and positions overseas business as a core growth driver, prioritizes stable dividend returns to shareholders
  • RIX: Manufacturer-trading firm focused on industrial machinery and factory equipment; targets expanded overseas sales via a new Indian factory, with growing exposure to EV and battery factory related overseas projects

• All firms profiled maintain or expect growing benefit from the current weak yen environment as their global business expands
• InSPEC expects to see growing yen depreciation benefits over the medium term as its overseas sales share increases
• RIX has set a mid-term target of 9.6 billion yen in overseas sales as part of its GP2026 mid-term plan, targeting expansion of weak yen benefits via establishment of an Indian factory
• AeroEdge explicitly quantifies its exchange rate sensitivity: every 1 JPY weakening of the yen against the U.S. dollar boosts annual profit by 19 million yen to 23 million yen, maintaining this expected sensitivity guidance

1. Sumitomo Forestry Co., Ltd. (1911): Overseas sales account for over 60% of total sales, with growth driven by U.S. and Australian housing businesses. No absolute full-period sales figure is provided. 2. Tokyo Ohka Kogyo Co., Ltd. (4186): Total fiscal 2024 December period sales are ~200.9 billion yen, with overseas sales contributing 83.8% (168.35 billion yen equivalent). 3. Torex Semiconductor Ltd. (6616): Foreign currency-denominated sales accounted for 69.4% of total sales in the fiscal 2024 March period, with sales to Asia, Europe, and North America combining for over 60% of total revenue. No absolute total sales figure is provided. 4. InSPEC Inc. (6656): No full absolute sales figure or current overseas revenue percentage is provided; domestic sales still account for a majority share currently. 5. Komatsu Ltd. (6301): Total consolidated fiscal 2025 March period sales are 4.1044 trillion yen, with overseas sales contributing 91% (3.735 trillion yen equivalent), and weak yen added 174.5 billion yen in positive impact to results. 6. AeroEdge Inc. (7409): Most sales are U.S. dollar-denominated, with no absolute full sales figure provided. A 1 JPY weakening of the yen against the USD is expected to boost annual profit by 19 million yen to 23 million yen. 7. JACCS Co., Ltd. (8584): Domestic business accounts for over 80% of operating revenue, with overseas business (ASEAN consumer finance) making up the remaining share. No absolute overseas sales figure is provided. 8. RIX Corporation (7525): Mid-term target total consolidated sales are 60 billion yen, with a target of 9.6 billion yen (16%) from overseas sales. No current actual absolute sales split is provided.

• Sumitomo Forestry faces a dual exposure to exchange rate impacts: weak yen boosts overseas sales and profit, but also increases the cost of imported timber, creating offsetting negative pressure
  • For all firms, high overseas sales does not guarantee strong performance from weak yen: the impact of weak yen depends heavily on the currency denomination of sales and costs, and the extent of any currency hedging
  • Exchange rate volatility beyond expected levels can turn expected weak yen benefits into earnings risks
  • Underlying industry demand conditions (such as semiconductor cycles, aircraft replacement demand, ASEAN credit demand) remain a core driver of performance independent of exchange rate impacts

Q: How does the underlying business model change the impact of a weak yen beyond just a high overseas sales ratio?

A: The impact of weak yen depends on whether sales and costs are denominated in foreign or domestic currency, and how much currency hedging a firm uses. Firms with high foreign currency sales and mostly foreign currency costs see smaller benefits than firms with foreign sales and domestic costs. Investors need to check disclosures of exchange rate sensitivity and expected rates to properly assess risk and benefit.

Q: Why is Komatsu Ltd. considered a classic weak yen benefit stock?

A: Komatsu holds 91% of its total sales overseas, mostly in USD and other foreign currencies from sales to North America, Latin America, Oceania and resource-producing nations. Full year results already included a 174.5 billion yen positive impact from weak yen, which directly lifted reported yen-denominated sales and profit.

Q: What growth drivers are expected to increase weak yen benefits for smaller and growing global players in this group?

A: InSPEC is seeing rapidly growing demand from overseas semiconductor customers for its high-end substrate inspection equipment driven by generative AI growth, so its overseas share will rise over time. RIX is expanding international project business for EV and battery factories, and is opening a new Indian factory to hit its 9.6 billion yen overseas sales target, growing future weak yen exposure.