reports
- Shanshan Wei
- CFA
Cyclical recovery in construction and mining spending benefits Komatsu...
Excluding the one-off expense of transferring its villa management business, no-moat Komatsu’s third-quarter results for sales and recurring operating income beat our forecast by 6% and 20%, respectively, thanks to the recovery of the construction and mining activities in the Americas. We raise our fair value estimate to JPY 3,700 from JPY 3,500 as we revise up our earnings assumption over the next two years on the back of strong mining demand. We retain our 10-year average operating margin fo...
- Shanshan Wei
- CFA
Cyclical Recovery Lifts Komatsu's 2Q Earnings; Raising FVE to JPY 3,50...
No-moat Komatsu’s robust second-quarter results, with sales and operating income beating our forecast by more than 9% and 25%, respectively, don’t change our long-term view on the name. Although the cyclical sales rebound in both construction and mining was faster than our expectation, our longer-term growth rate assumptions remain intact as our team view expects commodity prices to soften from fiscal 2018. Although Komatsu has only a 6% sales contribution from China, its overall earnings ar...
- Shanshan Wei
- CFA
Cyclical recovery in construction spending benefits Komatsu, but produ...
Although we previously noted our belief that no-moat Komatsu’s guidance for fiscal 2017 (financial year ending March 2018) was conservative, its first-quarter operating income still exceeded our estimate by more than 40%, thanks to the stronger demand from mining and construction activities in Asia, along with an improved geographic mix. Although the 83% year-over-year increase in operating income was from a low base, considering the duration of construction and mining projects, as well as the...
- Shanshan Wei
- CFA
Komatsu Reports Strong Recovery in Construction and Mining Business; R...
Although we previously noted our belief that no-moat Komatsu’s guidance for fiscal 2017 (financial year ending March 2018) was conservative, its first-quarter operating income still exceeded our estimate by more than 40%, thanks to the stronger demand from mining and construction activities in Asia, along with an improved geographic mix. Although the 83% year-over-year increase in operating income was from a low base, considering the duration of construction and mining projects, as well as the...
- Shanshan Wei
- CFA
Komatsu's Better-Than-Expected 4Q Lifts FVE to JPY 2,500
No-moat Komatsu’s fourth-quarter earnings beat our and market consensus expectations with revenue and operating income surging 19% and 25%, respectively. However, we only raise our fair value estimate slightly to JPY 2,500 from JPY 2,400, as we have already factored in 20%-plus top-line growth for fiscal 2017 (ending March 2018), driven by the consolidation of Joy Global (renamed Komatsu Mining) as well as a recovery in global construction and mining activity. We think the positive catalysts a...
- Shanshan Wei
- CFA
Transferring Coverage of Komatsu With JPY 2,400 FVE and Wide Moat Rati...
With the transfer of coverage on Komatsu to a new analyst, we reassess our fair value estimate and raise it to JPY 2,400, implying a forward P/E of 17 times, an enterprise value/EBITDA multiple of 9 times, and free cash flow yield of 5.6% to estimated fiscal 2017 (financial year ending March 2018) earnings and cash flow. We assume Komatsu’s organic top-line growth in local-currency terms will accelerate to around 5.5% on average over the next five years, rebounding from a 1% contraction over ...
- Shanshan Wei
- CFA
Cyclical recovery in construction spending benefits Komatsu, but produ...
Komatsu posted in-line third-quarter earnings with revenue down 10% and operating income down 23% year over year, mainly caused by the strong Japanese yen. However, the operating margin improved to 10.0% from 8.4% in the second quarter, thanks to lower fixed costs and higher contributions from emerging countries such as Indonesia. Komatsu revised up its projection of nonconsolidated business to reflect better sales in China and the CIS region, but maintained its guidance on consolidated base fo...
- John Hu
Komatsu Reported In Line Third-Quarter Result, Fair Value Estimate Und...
Komatsu posted in line third-quarter earnings with revenue down 10% and operating income down 23% year over year. While the strong Japanese yen had a negative impact on the company’s sales and operating income, the operating margin improved to 10.0% from 8.4% in the second quarter, thanks to lower fixed costs and higher contributions from emerging countries such as Indonesia. Komatsu revised up its projection of nonconsolidated business to reflect better sales in China and the CIS region, but ...
- John Hu
Komatsu’s 1H 2017 Result Slightly Missed; Core Construction Equipmen...
No-moat Komatsu’s first-half result was shy of our expectations, with cumulative net income making up 39% of our full-year estimate, mainly owing to one-off inventory charges of JPY 5 billion and conversion loss of JPY 11 billion from the stronger Japanese yen. Net income fell 42.4% year on year to JPY 37.5 billion, while revenue declined 11% year on year to JPY 796 billion.  Persistent demand weakness from emerging markets was mainly in line with our assumptions. Still, we maintain our curre...
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