No Surprise in Kikkoman's Results; Shares Overvalued With Valuations Twice of the Sector
Narrow-moat Kikkoman’s third-quarter sales and profits are in line with our expectation and the company’s internal targets. It has maintained its full-year guidance. We have marginally adjusted our assumptions, which do not affect our fair value estimate of JPY 4,000 implying a 27% downside. Kikkoman’s shares are trading at 38 times P/E and 20 times EV/EBITDA in 2019, more than twice the multiples of the Topix food sector. We suspect that either the market has priced in unrealistic growth or the...Kikkoman is a holding company engaged in the manufacture and sale of soy sauce and food products. Domestic Foods Manufacturing and Sales segment manufactures soy sauce, foods products, beverages and liquor including soy sauce, Tsuyu (soy sauce soup base), seasoning mixes, Del Monte seasonings and beverages, soy milk beverages and wines in the domestic market. Domestic Others segment is engaged in the biochemical, chemical and logistics businesses. Overseas Foods Manufacturing and Sales segment offers soy sauce, Del Monte products and healthy foods in overseas markets. Overseas Foods Wholesales segment is engaged in the purchase and sale of oriental foods in domestic and overseas markets.
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