Strong dollar base underpins Johnson Electric
Johnson Electric Recommendation: Buy Brokerage: ABN Amro JOHNSON Electric designs and makes micro-motors used in cars, office automation, leisure products, tools and toys.
It has benefited from a strong US dollar because it has a wide dollar revenue base while sourcing in Asia, where currencies have plummeted.
However, a strong yen will not hurt Johnson Electric, whose yen sales receipts more or less match yen-denominated purchases.
It sources 30-40 per cent of purchases from Japan, but the lion's share are made in US dollars. It can rebuff attempts by Japanese suppliers to increase US dollar prices switching to alternative steel suppliers, such as Taiwan or Korea.
Guangdong Kelon Recommendation: Hold Brokerage: Indosuez WI Carr KELON is the mainland's largest maker of refrigerators and is to acquire an air-conditioner business.
WI Carr is sceptical over prospects for the air-conditioning business and sees growing competition in the refrigerator market.
Kelon has lowered its sales targets for the year because the floods in China disrupted distribution lines. To compensate for the slower growth, it is negotiating lower raw material prices and cutting advertising and administration costs.