Tokyo Ohka Kogyo (4186) – Guidance is Looking Conservative After......
Key Points
- Tokyo Ohka Kogyo’s (TOK’s) FY17 guidance is looking conservative after a strong Q1 result, announced after trading on August 3rd. FY17 Q1 OP rose 21.4% YoY on comparable sales growth of 22.2%. TOK achieved 76% of its H1 OP guidance in Q1.
- Favorable earnings were supported by high sales growth by the key products, detailed in the report.
- As announced in May, TOK is changing its term-end to December, which distorts guidance data. Payment in the December quarter of six months of bonuses instead of three negatively affects guidance. While PER valuations remain high, on the assumption that TOK could generate OP of ¥12.0bn on a twelve-month basis, we estimate EV/OP of 9.5x.
Tokyo Ohka Kogyo is mainly engaged in the manufacture and sale of materials for electronics. Along with its subsidiaries and associated companies, Co. operates in two business segments: material and equipment. Material segment is engaged in the manufacture and sale of electronics functional materials and high purity chemicals. Equipment segment is engaged in the manufacture, sale and maintenance of process equipment for liquid crystal display ("LCD") panels and semiconductor manufacturing equipment. As of Dec 31 2017, Co. maintains five plants in Fukushima, Shizuoka, Kumamoto, Tochigi and Saitama, Japan, as well as its logistics center in Kanagawa, Japan.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
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