Japanese equities: Investors flee Seiko Epson on emerging-market worries

Japanese equities: Investors flee Seiko Epson on emerging-market worries

TOKYO — Seiko Epson shares hit another year-to-date low Monday as concerns about a potential slump in emerging markets overshadowed brisk Southeast Asian sales of printers with high-capacity ink tanks.

     The Japanese printer maker slid 3% to an intraday low of 1,752 yen ($14.60) before ending at 1,764 yen.

     Epson in autumn 2010 rolled out printers with ink tanks nearly 10 times as large as those in its prior models, reducing users’ printing costs. They sold well in Indonesia and other markets, lifting Epson’s profits to a second straight record in fiscal 2014.

     But slowdowns in emerging economies “could darken the outlook for sales momentum,” said Hiroyasu Eguchi at Merrill Lynch Japan Securities.

     Concerns are arising over the printer business in advanced countries as well. Price competition looks set to escalate in North America with U.S. rival Hewlett-Packard going on the offensive. And in Japan, inkjet product shipment volume declined in the April-June quarter from a year earlier, when demand suffered a blow from a sales tax hike.

     Epson expects group net profit to drop 38% to 70 billion yen ($576 million) in fiscal 2015 without the one-time boost from changes to its pension system booked the previous year. When such temporary factors are excluded, the company projects a small profit increase, based on the assumption that printer sales will grow.

     Epson’s projected price-earnings ratio of 9 is far below the average of 15 for the Tokyo Stock Exchange’s first section. Though the stock looks like a bargain based on such indicators, investors seem to be giving it a wide berth due to worries that the company will fall short of guidance.

(Nikkei)

Japanese equities: Investors flee Seiko Epson on emerging-market worries