reports
- Chris Hoare
Asia Telco Tour Feedback, Improving growth, ROCE and shareholder remun...
We ran our Asia Telco tour last week. This time we met 12 companies in 3 countries (Korea, Japan, Thailand). Telco share prices in all 3 of these countries have been pretty strong recently as telcos continue to benefit from generally positive themes: growth, return on capital and shareholder remuneration are all typically improving.
- Chris Hoare
Japanese Telcos Takeaways from Meetings with the Japanese Telcos + Ra...
We met with all 3 of the incumbent Japanese Telcos & Rakuten in Tokyo this week. Every time we visit we are reminded of how much better the telco industry is in Japan vs other DMs and we continue to be of the view that Japanese incumbents are in a “Golden Age”; ARPU inflection is being held back a little we think by voice weakness post-Covid but is likely to come through over time. The integration of financial services though is a game changer and means SB is the likely medium term “winner” in t...
- Chris Hoare
Japanese Telcos Q3 FY23 review: Gearing up for a strong Q4
Service revenue trend was softer on slower non-mobile this quarter. Collectively, mobile revenue trend (Consumer + Enterprise) maintained its second consecutive of growth and operators are implying a strong Q4. For instance, Softbank is expecting Consumer MSR to rebound this year (at flat YTD); NTT implying a strong Q4 EBIT on cost reductions and streamlining of non-core assets like Real Estate.
- Pelham Smithers
PSA Market Strategy: How Japan Transformed from a Bear Market to a Bul...
In our 2010 Japan Perspective, written close to the nadir of the bear market, we discussed what was wrong with Japan, but also what it was starting to do right. Fourteen years on, the Nikkei 225 - though not yet Topix - has hit a new all-time high. This report looks at how Japan built on those things that were going right, while also starting to address what else needed to be done, and looks at whether more is needed to be done if the market rally is to continue from here.
NVDA NVIDIA CORPORATION
LLY ELI LILLY AND COMPANY
FB FACEBOOK INC. CLASS A
9433 KDDI CORPORATION
6954 FANUC CORPORATION
8001 ITOCHU CORPORATION
6752 PANASONIC CORPORATION
6971 KYOCERA CORPORATION
8031 MITSUI & CO. LTD
4183 MITSUI CHEMICALS INC.
6723 RENESAS ELECTRONICS CORPORATION
6701 NEC CORP.
5401 NIPPON STEEL CORP.
4063 SHIN-ETSU CHEMICAL CO LTD
8035 TOKYO ELECTRON LTD.
6201 TOYOTA INDUSTRIES CORP.
7203 TOYOTA MOTOR CORP.
7270 SUBARU CORP
XOM EXXON MOBIL CORPORATION
MSFT MICROSOFT CORPORATION
AVGO BROADCOM INC.
TXG 10X GENOMICS INC CLASS A
BRK.A BERKSHIRE HATH-A
APPL APPLE INC - APPL - US
9810 NIPPON STEEL TRADING CORP
- Chris Hoare
Japanese Telcos What if Japan introduces Spectrum Auctions? Could it ...
Wireless spectrum is one of the most valuable commodities in the telecoms market. Japanese telcos have previously been issued spectrum for free. But what if it starts to be auctioned? In this note, we use our new proprietary SpectrumHub Global Database to calculate the likely cost of mmWave spectrum in Japan. We also look at the total value of all spectrum held by the incumbents, to address the implications if Japan were to move to auction for all spectrum.
- Chris Hoare
KDDI (Buy, TP: ¥6,600, +40%) KDDI planning a tender offer to take Law...
KDDI plans to launch a ¥500bn (USD 3.37bn) tender offer for Lawson, Japan's third largest convenience franchise. If successful, the move will see KDDI own 50% of Lawson, up from 2.1% today, with the other remaining half owned by Mitsubishi Corporation. On our estimates, the deal is expected to be 3.4% EPS accretive on an annual basis.
- Chris Hoare
- Chris Hoare
KDDI (Buy, TP: ¥6,600, +34%) Q3 23 Quick Take: KPIs moving in the rig...
KDDI reported results today, in line with consensus on revenue and EBIT. Revenue growth slowed primarily driven by lower Energy and roaming revenue (which were known about), partially offset by strength in Enterprise. Mobile KPIs continue to move in the right direction with strong subs growth and sequential ARPU improvement again (yoy trends impacted by a weak Q2 last year).
- Chris Hoare
- Chris Hoare
Japanese Telcos At a MAJOR inflection as Fintech integration drives A...
Something significant has shifted in Japan. The telcos, and especially KDDI and SB Corp are now using their strength in financial services to drive customers towards unlimited offers. The result is likely to be an acceleration of ARPU recovery, and suggests we are at an important inflection point. We lift ARPU forecasts and price targets. SoftBank Corp is our new top pick, PT ¥2,500, from ¥2,200.
- Chris Hoare
- Chris Hoare
- David Lopes
Japanese Telcos Q2 FY23 review: Better all around, driven by ARPU inf...
Japanese telcos delivered better service revenue growth in Q2, driven by an inflection in mobile and non-mobile segments. Mobile performance for KDDI and Softbank were very encouraging, with the former hitting inflection on both mobile revenue (expected) and ARPU growth (earlier than expected) while Softbank witnessed an earlier than expected bottoming of MSR and upgraded its full year ARPU guidance from ¥3,680 to ¥3,720. Across the board, EBITDA trend was also better.
- Chris Hoare
- Chris Hoare
KDDI (Buy, TP: ¥6,500, +46%) Q2 23 Quick Take: Huge beat as ARPU infl...
KDDI has reported a very strong set of Q2 figures, after the market closed, with both KPIs and headline numbers inflecting/strong across all business lines. These numbers can be volatile and Q1 was weaker, but net profit growth was 18%, 11% ahead of consensus.
- Chris Hoare
- David Lopes
Feedback from Meetings with the Japanese Telcos plus Rakuten in Tokyo
We met with all 3 of the incumbent Japanese Telcos & Rakuten in Tokyo last week. We continue to be of the view that Japanese incumbents are in a “Golden Age” with ARPU likely to inflect relatively sharply, Rakuten threat fading fast, capex and opex under control and therefore cash flow growth likely to be ahead of expectations.
- Chris Hoare
Japanese Telcos Q1 FY23 review: Softer quarter; mobile inflection rem...
Japanese telcos reported a slower service revenue growth driven by non-mobile, which was a reflection of lumpiness rather than weakness in fundamentals. Mobile growth continue to be supportive of our V-shape recovery thesis, with declines easing across the board.
- Chris Hoare
KDDI (Buy, TP: ¥6,500, +52%) Q1 23 Quick Take: Weaker driven by roami...
While KDDI reported a weak Q1 due to lower roaming revenue and an accounting charge (previously flagged), however, mobile communications ARPU trend remained encouraging as ARPU decline eased further and improved from -4.4% to -1.5% (NSR at -2.3%).
- Chris Hoare
- David Lopes
- Chris Hoare
- Chris Hoare
KDDI (Buy, TP: ¥6,500, +50%) Q4 22 Quick Take: Mobile and DX to drive...
KDDI reported revenue and EBIT which were 1.9% and 1.2% ahead of expectations respectively. Revenue trended strongly (+ 3.9% YoY) driven by its Business segment while EBIT grew 24.9% YoY off a lower base, despite higher Energy costs.
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