What a “Komatsu” (trouble)—will Komatsu’s stock price ever stop falling?

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・Komatsu vs. Caterpilla

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Both Komatsu and Caterpillar announced their financial results on the 29th. Although the figures were not particularly poor, both stocks saw sharp declines. Komatsu’s market capitalization fell by 0.58 trillion yen (to 5.65 trillion yen), while Caterpillar’s dropped by 4.48 trillion yen (to 45.07 trillion yen).
Operating profit margins for both companies declined compared to the previous period. Komatsu’s margin fell from 14.5% to 12.10%, driven by an increase in fixed costs.
The intensity of the sell-off in both Caterpillar and Komatsu shares is extraordinary. Given the surge in trading volume for Komatsu on Friday, it is possible that the stock has reached a “selling climax.”
Komatsu’s forward P/E ratio stands at 14x, with a dividend yield of 3.07%.
Caterpillar’s P/E ratio has dropped from a peak of 40x to 22.99x.

The “AI bubble” appears to be bursting; growing caution regarding demand from the AI and data center sectors has weighed on the stock price. Morgan Stanley has lowered its price target for the company from $915 to $675.
As the old market adage goes: “When you think it’s over, it may just be beginning; when you think it’s just beginning, it may already be over.”

・Stocks with a PBR below 1.0x: 596 (among TOPIX constituents)
The number of stocks with a price-to-book ratio (PBR) below 1.0x has risen by 16 from the previous week, reaching 596.
The NT ratio (Nikkei 225/TOPIX) climbed from 15.80x to 15.96x; while the Nikkei 225 rose over the week, the TOPIX declined.
This week, shipping and banking stocks have seen buying interest. Notably, Nippon Yusen (NYK Line) has a PBR of 0.97x, and Ehime Bank sits at 0.997x—both are nearing the 1.0x threshold, potentially reaching it as early as next week. Semiconductor-related stocks look set to face further selling next week. Capital is likely to shift from growth stocks toward value stocks.

・Semiconductor Sector:
In the U.S. market on Friday, semiconductor stocks plummeted, with the semiconductor index falling 7.2%. Intel shares dropped 28.58% from the previous day, while AMD fell 10.8%. Tokyo-listed semiconductor stocks are also likely to see selling pressure this coming Monday.
Kioxia’s latest financial results showed an increase in revenue by 712.9 billion yen and an operating profit increase of 724.7 billion yen, driven by growing demand for data centers supporting generative AI and rising prices for NAND flash memory. The operating profit margin reached an astonishing 80.4%.
Following the earnings announcement—and compounded by the sell-off in U.S. semiconductor stocks—Kioxia’s share price fell 12.3% to 11,805.5 yen.
The stock is trading at a forward P/E ratio of 3.8x, with an EPS of 1,337.9 yen. The company announced a dividend of 30 yen per share—a negligible amount.
Tokyo Electron, by comparison, maintains a dividend payout ratio of 50%.
I might consider buying 100 shares if the price drops below 10,000 yen.

・Brazil: A disappointing outcome
Following the presidential election, incumbent President Lula has been re-elected. The stock market reacted with disappointment, causing the Bovespa Index to crash—down 18.12% for the week—while yields on government bonds rose.

・U.S. Credit Market:
The U.S. Treasury yield curve experienced a “bull steepening,” as medium- and long-term bonds saw increased buying, driving their yields lower. The credit market remained largely unchanged. With U.S. employment data due next week, there is potential for significant movement in interest rates.・Commodities

・India: Listing of Jio Platforms
In its IPO, Jio Platforms—66.4% owned by Reliance, a company that has drawn significant market attention—opened at 1,358 rupees, 21.36% above its offering price. With a market capitalization of 13.18 trillion rupees (approximately 21.75 trillion yen), it now ranks as the second-largest company in the Indian market, trailing only Reliance (15.67 trillion rupees). It is highly likely to be included in market indices, a prospect that has captured the interest of many investors.