Performance Data for Nine Japanese Chemical Companies/Comparison to EU Chemical Companies

The table below shows eleven sets of 2019 performance data for nine Japanese chemical companies.  These companies represent many of the largest publicly-traded chemical companies headquartered in Japan. 

Share price is a recent share price in dollars.  p/e is share price divided by earnings per share.  % yield is the dividend yield.  The price/cash column shows how much an investor is paying for an additional dollar of cash flow.   Lower values are better for the investor.  Roe, gpm, and npm stand for return on equity (roe), gross profit margin (gpm), and net profit margin (npm).  LT debt/eqty% is the company’s long term (LT) debt as percentage of the company equity.  This measurement reflects debt burden – the higher the value, the higher the debt burden.  Sales/empl is the sales revenue per employee (in millions of $).  This value can indicate companies operating more efficiently when values are higher.  Shares are the number of companies shares (in billions).  And revs is the company’s sales revenues (in billions of $).

 

company	share price	p/e	% yield	price/ cash	roe	gpm	npm	LT debt /eqty %	sales/ empl in million $	shares in billion	revs in billion $
asahi kasei	10.95	21.48	2.85	7.02	5.25	31.45	3.63	33	0.474	1.4	20.7
mitsubishi	31	88.7	3.63	13.9	4.2	28	5.7	180	0.458	1.5	33.3
mitsui	25	15.9	3.42	6.1	7	22.2	3.5	58	0.621	0.205	12.9
nitto denko	91.25	29.03	2.65	15.3	7.1	30.52	6.75	3	0.26	0.159	7.1
sekisui	93.35	76.5	3.47	-	9.7	32.12	5.4	22	0.384	0.459	10.5
shin-etsu	182.5	27.24	1.72	17.6	10.99	35.31	19.99	1	0.599	0.417	14.8
sumitomo	20.6	121.2	2.75	9.7	3.2	31.8	1.4	94	0.607	1.7	20.7
toray	6.52	70.46	1.91	5.7	1.3	19.88	0.97	61	0.377	1.6	21.3
tosoh	16.85	13.82	3.18	5.93	7.24	24.44	6.04	4	0.501	0.325	7.6
average	53.1	51.6	2.8	10.2	6.2	28.4	5.9	51	0.476	0.863	16.544

 

In a previous blog, I presented 2019 performance data for fifteen European Union (EU) chemical companies using the same eleven metrices.   Click here to see that data. 

In both the Japanese and EU performance data tables, an average of all companies is shown for each of the eleven sets of performance data.   These averages are provided in the following table.  Also shown in the table are the percentage differences between the Japanese and EU companies for each of  the eleven data sets.

2019 data metric	averages for all japanese companies	averages for all eu companies	% difference
share price	53.1	79.6	33%
p/e	51.6	28.0	-85%
% yield	2.8	3.6	20%
price/cash	10.2	15.8	36%
roe	6.2	9.2	32%
gpm	28.4	28.0	-1%
npm	5.9	5.7	-5%
LT debt /eqty %	50.6	78.9	36%
sales/ empl in million $	0.5	1.0	51%
shares in billion	0.9	0.5	-79%
revs in billion $	16.5	17.4	5%

 

The percentage differences between the Japanese and EU companies for each of  the eleven data sets, I believe, can show some general differences between Japanese and EU chemical company performance.   For example, using % yield (dividend yield) and roe (return on equity) as proxies for owner benefits, the higher average values for the EU companies compared to the Japanese companies suggest better owner benefits provided by EU companies in 2019.  This may help explain a greater average 2019 share price for the EU companies compared to the Japanese companies ($79.60 per share compared to $53.10 per share for the Japanese companies). 

In 2019, Japanese companies had much greater shares outstanding, e.g., about 900 million shares on average compared to 500 million shares outstanding for EU companies.  This could also account for a lower Japanese share price (Japanese share supply is much greater than EU share supply). 

The average price to earnings (p/e) ratio for Japanese companies is much higher compared to EU companies ($51.60 compared to $28.00).  This might suggest that investors are anticipating greater profitability growth for the Japanese companies, perhaps because, in general, greater economic growth is anticipated in Asia. 

The lower long-term debt as a percentage of equity (LT debt/eqty %) for Japanese companies compared to EU companies (50.6% compared to 78.9%) might suggest more conservatism by Japanese company managers compared to EU company managers - the Japanese managers are more concerned about high debt levels.  Lower debt levels for Japanese companies might also be related to the lower  price to cash ratio (price/cash in the table) for Japanese companies.   This ratio (price per share divided by free cash flow per share) might be used to indicate better free cash flow; good free cash flow could reduced the need for long-term debt. 

European companies are getting much higher sales per employee ($1 million per employee compared to $500 thousand).  Various explanations might account for this, e.g., the Japanese society has different approaches and polices towards employment; EU workers are more productive; more automaton is used in the EU; etc. 

And finally, little difference exists for gross profit margins (gpm), net income margins (npm), and average revenues per company.  In these regards, the Japanese and EU chemical companies are similar.