Trading Company, Energy Sector: Trading companies: Sector stance now neutral; our top pick is Sumitomo Corporation

研报英文原文证据摘录

Trading Company, Energy Sector: Trading companies: Sector stance now neutral; our top pick is Sumitomo Corporation

Investment opinions for the trading company sector (May 2026)

Sector stance: Lowered from bullish to neutral (May 29 Report)

➢ Expectations for ROE improvement likely to wane, rerating trend since 2025 winds down

– There was a lack of active capital policy measures aimed at raising ROE (such as reduction of shareholders’ equity and leverage utilization).

We do not expect trading companies’ ROE to improve without large-scale investment that boosts ROE and sustained reduction of

shareholders’ equity.

– We recommend Sumitomo Corporation as our top pick. We expect continued re-rating driven by the sale of Madagascar nickel assets.

– We reiterate our Overweight ratings on Toyota Tsusho and Mitsui & Co., and downgraded Mitsubishi Corporation and Marubeni from

Overweight to Neutral.

➢ We forecast profit growth of 23% in FY2026, 4% in FY2027, and 2% in FY2028 (YoY, based on total net profit for the seven companies)

– Middle East conditions are positive for trading companies’ earnings (high resource prices and increased supply chain-related income

opportunities).

– We expect earnings to rise in 1Q and 2Q FY2026, led by Mitsui & Co. and Mitsubishi Corporation, due to high resource prices and inflation

effect.

– We forecast weighted-average ROE for the seven companies at 13.1% in FY2026, 13.0% in FY2027, and 12.5% in FY2028.

Investment strategies by company

Sumitomo Corporation (8053, OW) Our top pick. We switched our stance on the company’s executives and now assign a premium vs a discount

previously. We anticipate DX synergies after SCSK becomes a wholly owned subsidiary.