SoftBank's Quarterly Profit Report

By Anton Bridge

TOKYO (Reuters) – Japanese technology investor SoftBank Group is expected to report a 287 billion yen ($1.87 billion) quarterly profit on Tuesday, boosted by successful portfolio company listings, despite a stronger yen dampening foreign currency-denominated gains.

Analysts are watching 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 from the London Stock Exchange Group, comparing favorably with a loss of 931 billion yen in the same period last year.

MST analyst David Gibson estimates an investment gain of $3.9 billion for the quarter, driven in part by two Indian company IPOs: Brainbees Solutions and Ola Electric, expected to generate income of $0.9 billion and $1 billion, respectively.

However, a drop of around 10% in the dollar's value versus the yen is anticipated to weigh on SoftBank's bottom line.

Analysts eagerly await SoftBank's investment plans following Founder and CEO Masayoshi Son's comments at an investment summit in Saudi Arabia last month, where he indicated he was saving tens of billions of dollars for the next big move.

The pace of SoftBank's new investments is trending upward, 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 efforts to manufacture AI chips to rival market leader Nvidia, potentially through collaboration between Arm, which it holds a 90% stake in, and recently acquired chip manufacturer Graphcore.

SoftBank made a deal with Arm to license its intellectual property in the latest quarter, worth $43.2 million in revenue, which may be related.

Additionally, SoftBank's strong financial position enables large-scale investment opportunities. Morningstar analyst Dan Baker noted that its balance sheet is nearing its strongest point in five years. Both S&P Global Ratings and the Japan Credit Rating Agency upgraded SoftBank's credit ratings earlier this year.

Although SoftBank announced a $3.4 billion share buyback three months ago, it was significantly below analyst expectations, leaving room for further investments.

($1 = 153.3100 yen)