Japan's Galapagos effect on market caps

Japan’s Galapagos effect on market caps

Japan’s electronics giants market caps are remarkably low

General Electric’s market cap is about 13 times higher that of Hitachi

Some of Japan’s electrical corporations have remarkably low market capitalizations: General Electric has 1.6 x more sales than Hitachi, but has 13.3 x the market capitalization. Philips has 1/3 x Hitachi’s sales, but has 2.2 times higher market cap.

Low market values do not help big recent public share offerings:
Hitachi raising YEN 250.7 Billion (US$ 2.8 Billion),
Toshiba raising YEN 298.7 Billion (US$ 3.3 Billion), and
NEC raising YEN 115.5 Billion (US$ 1.3 Billion).

Low valuations increase the pressure for change in Japan’s electrical sector, and the SANYO-Panasonic merger is an indication of changes to come.

In the “post-Galapagos committee” we are working with some of Japan’s brightest leaders on understanding the reasons and on how to drive this change.

Benchmarking Japan’s electrical companies – Philips= 1/3 x Hitachi’s sales and 2.2 x Hitachi’s market cap:

revenues vs market cap for Japan's electrical corporations - absolute

GE= 1.6 x Hitachi’s sales and 13.3 x Hitachi’s market cap

revenues vs market cap for Japan's electrical corporations - relative

More in our report on Japan’s electrical industries.

Japan electronics industries – mono zukuri

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