Sojitz (2768) High Dividend & Growth Investment Report

① Summary: Is the Stock a Buy Now?

Conclusion of this chapter: Buy on dips when timing allows. The share price stands near its all-time high (¥3,509 at the close on 6 Jun 2025), yet the dividend yield remains attractive at roughly 4.7 %. As Sojitz executes its strategy to reduce resource dependence, accumulating shares below ¥3,300 looks reasonable for long-term income investors.

Bottom line: High yield plus growth capex limits downside. A “long-term income and medium-term capital gains” strategy—collect dividends and add on dips—appears effective.

Note for Overseas Investors: Japanese firms often keep high yields yet are conservative on capital policy. Sojitz’s progressive DPS and commitment to PBR >1× demonstrate a shareholder-friendly stance.

② Company Structure & Brand Strength

Corporate outline

• Founded: 2004 via a merger between Nichimen (textiles) and Nissho Iwai (resources)
• Headquarters: Tokyo
• Listing: TSE Prime (Code 2768)
• Employees: ~4,000; >440 consolidated entities across 50+ countries
• Motto: “New way, New value”
• Culture: Young, fast-moving, field-oriented organization emphasizing quick decisions

Diversified portfolio (7 Divisions)

1. Automotive
2. Aerospace & Social Infrastructure
3. Energy & Healthcare
4. Metals, Resources & Recycling
5. Chemicals
6. Consumer Lifestyle & Agribusiness
7. Retail & Consumer Services

Resource-driven cash is recycled into non-resource and service sectors, balancing resilience and growth.

Key financials

• Revenue: FY2020 ¥1.8 tn → FY2023 ¥2.48 tn
• Net profit: ¥60.8 bn → record ¥111.2 bn
• FY2025E: Revenue ¥2.5 tn; Net profit ¥110.6 bn
• ROE: Stable at 10–14 %

Brand / Culture / Ownership

• Flat, supportive culture; high discretion for young staff (OpenWork reviews)
• Governance pressure from dispersed institutional ownership and activists; outside-director share rising; buy-backs used to support PBR

Note for Overseas Investors: No founding family; shares are mainly held by trust banks and global managers—governance transparency is high, though segment disclosure is less granular than at US peers.

③ Share-price Trend & Market View

Chapter conclusion: Even at all-time highs, with PER ~6.8× and PBR 1.6×, Sojitz still trades at a discount. Progressive dividends and buy-backs underpin the downside, while commodity prices and mid-plan execution drive volatility. Sub-¥3,000 has historically been a classic buying zone.

• Five-year chart: ¥1,300 COVID low → >¥3,500 (Mar-2023) → ¥3,509 now.
• Valuation: FY2025E EPS ¥513.7 → PER 6.8× vs. TOPIX trading-house average 8–9×.
• Major events:
  • May-2023 record profit → sharp rally
  • Oct-2024 guidance cut → –8 % drop
  • May-2025 ¥10 bn buy-back → recovery to highs
• Current range:
  • Resistance: 4 % yield line ≈ ¥4,125
  • Support: around ¥3,000 (dividend floor)

Tip: Annotate earnings surprises and buy-back announcements on charts to reveal behavioral patterns for global readers.

Note: Low multiples reflect partial commodity exposure—monitor iron-ore & coal prices.

④ Growth Potential & Risks: Can It Deliver?

Chapter conclusion: Accelerating investment into non-resource segments should stabilise earnings, yet resource price swings and ramp-up delays remain risks. Maintaining ROE >10 % is key for rerating.

Growth story (Mid-Plan 2026)

• ¥300 bn growth capex; ~70 % allocated to EVs, renewables, healthcare, recycling
• Non-resource profit ratio: 45 % → 60 %
• Projects: EV supply chain, 1.5 GW renewables, ASEAN hospital PPPs, urban-mine recycling

Numerical targets

• FY2025 net profit ¥120 bn
• ROE 12 %
• CROIC >8 %
• Net D/E ≤1.0×

Drivers & risks

⑤ Dividend Strategy: Stability & Upside

Chapter conclusion: Progressive DPS plus agile buy-backs combine high yield with capital efficiency. DPS CAGR ~18 %; cut risk is low while cash generation remains solid.

• 
  Progressive dividend declared since FY2021 (no cuts)
• Buy-backs: ¥20 bn in 2023; ¥10 bn in 2025
• Total return target: 40–50 %

Note: Japanese “progressive” dividends resemble UK practice; always check cash-flow cover.

⑥ PBR & Asset Quality: Still Cheap?

Chapter conclusion: PBR 1.6× (vs. Big-5 average 1.3×) commands a modest premium, but over half of equity sits in liquid hard assets; adjusting for hidden reserves leaves further upside.

Indicative equity breakdown

Efficiency initiatives

• Policy-stock sales: ~¥30 bn in 2023-25
• Real-estate recycling: low-yield assets → Tokyo & global logistics
• ROE 12 % commitment to sustain PBR >1×

Note: Japanese trading houses carry real estate and equities at historical cost—mark-to-market would lower the effective PBR.

⑦ Disclaimer

This report is for general informational purposes only, based on public data and the author’s opinions. It does not constitute investment advice or a solicitation to trade securities. Always make investment decisions at your own risk, consulting licensed professionals where appropriate. Figures are current as of 9 Jun 2025 and may change in the future.

DividendDan (in Japan)

Your Guide to Japan’s High-Yield Stock Opportunities

Hi, I'm DividendDan, a Tokyo-based investor focused on uncovering Japan’s best high-yield and value stocks. I combine local insights, financial analysis, and long-term investment strategies to help global investors find overlooked opportunities in the Japanese market. Whether you're seeking reliable dividend income or hidden value plays, this account is your guide to investing smarter in Japan.