By Antonbrug
TOKYO (Reuters) – Japanese technology investor SoftBank Group is expected to report quarterly profit of 287 billion yen ($1.87 billion) on Tuesday, boosted by successful listings of portfolio companies, even as a stronger yen dampened foreign currency gains.
Analysts are also looking for signs of new investment momentum, driven by SoftBank’s robust balance sheet and management’s bullish stance on artificial intelligence (AI).
The net profit forecast for July-September is based on the average of four analyst estimates compiled by the London Stock Exchange Group, and compares with a loss of 931 billion yen in the same period last year.
MST analyst David Gibson estimates investment profits of $3.9 billion for the quarter, with the IPOs of two Indian companies – Brainbees Solutions and Ola Electric – generating revenues of $0.9 billion and $1 billion respectively.
A decline of about 10% in the value of the dollar against the yen over the period is expected to weigh on SoftBank’s bottom line.
Analysts are eagerly awaiting SoftBank’s investment plans after founder and CEO Masayoshi Son told an investment summit in Saudi Arabia last month that he was saving tens of billions of dollars for the next big step.
SoftBank’s pace of new investments is already on an upward trend, reaching $1.9 billion in the April-June quarter, up from $0.3 billion in January-March. In early October, SoftBank also participated in the latest funding round for ChatGPT operator OpenAI.
Analysts are particularly interested in SoftBank’s reported efforts to produce AI chips for rival market leader Nvidia, possibly through a partnership between chip designer Arm, in which it has a 90% stake, and recently acquired chipmaker Graphcore.
They note that SoftBank struck a deal with Arm in the most recent quarter to license its intellectual property, worth $43.2 million in revenue, which may be related.
In addition, SoftBank’s healthy financial position makes large-scale investment possible.
The country’s balance sheet is “nearly the strongest in the past five years,” Morningstar analyst Dan Baker wrote in a note, adding that both S&P Global Ratings and Japan Credit Rating Agency upgraded their credit ratings for SoftBank earlier this year.
Although SoftBank announced a $3.4 billion share buyback three months ago, it was significantly lower than what some analysts had called for and leaves plenty of room for further investment, she added.
($1 = 153.3100 yen)
(Reporting by Anton Bridge; Editing by Nicholas Yong)
