SoftBank shares hit record high on AI prospects

[TOKYO] Shares in SoftBank Group jumped more than 13 per cent to a record high on Friday (Aug 8) in a show of investor support for the Japanese technology investor’s AI push after first quarter profit beat expectations.

SoftBank’s share price hit 14,205 yen at the close of morning trading and finished the day up 10.39 per cent at 13,865 yen.

SoftBank has announced a series of mammoth investments this year, including committing US$30 billion to ChatGPT maker OpenAI, as well as leading the financing for Stargate – a US$500 billion data centre project in the US.

The firm beat analysts’ expectations to report a net profit of 421.8 billion yen (S$3.7 billion) for the April-to-June quarter, compared to a loss in the same period a year ago.

Market enthusiasm for AI-related companies also pushed up valuations for its portfolio of listed and unlisted technology companies such that SoftBank’s loan to value ratio improved to 17 per cent at the end of June compared to 18 per cent at the end of March.

The results were “evidence of SoftBank’s quality diversified portfolio, strong underlying fundamentals, thematic/secular tailwinds for its equity holdings, and the resilience of its balance sheet,” Macquarie analyst Paul Golding wrote in a note.

SoftBank was the biggest contributor to gains for Japan’s Topix index, which rose some 1.5 per cent to trade above the 3,000 point mark for the first time in its history. The index closed the day up 1.21 per cent at 3,024.

The jump will provide some relief to SoftBank investors as its shares have traded at a more than 50 per cent discount to the value of its assets over the past five quarters.

“Active investors scooped up SoftBank Group shares to beat the Topix’s gain,” said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

“When the main indexes rise, they need to buy heavyweights that are rising. SoftBank’s strong earnings and the Topix’s gains came at the same time.” REUTERS