Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> announced in-line results, decent forecasts, yet another dividend hike (20 consecutive years of dividend hikes), and in something of a surprise, a big buyback. Smartkarma's resident expert Japan telecoms analyst <a href="https://www.smartkarma.com/profiles/kirk-boodry" target="_blank" data-smartkarma-citation="accounts:1920" rel="noopener">Kirk Boodry</a> discussed the results and the breakdown of KDDI's results in <a href="https://www.smartkarma.com/insights/kddi-q4-20-results-slightly-better-guidance-and-solid-shareholder-returns" target="_blank" data-smartkarma-citation="insights:51467" rel="noopener">KDDI Q4 20 Results: Slightly Better Guidance and Solid Shareholder Returns</a> Friday night. The very sharp move in the share price Friday appears to have anticipated the slight "surprise" to earnings and the forecast. I personally note that the strength in KDDI earnings in the corporate segment will face increasing competition as NTT gets its act together. More below.

KDDI Corp (9433 JP) announced in-line results, decent forecasts, yet another dividend hike (20 consecutive years of dividend hikes), and in something of a surprise, a big buyback. Smartkarma's resident expert Japan telecoms analyst Kirk Boodry discussed the results and the breakdown of KDDI's results in KDDI Q4 20 Results: Slightly Better Guidance and Solid Shareholder Returns Friday night. The very sharp move in the share price Friday appears to have anticipated the slight "surprise" to earnings and the forecast. I personally note that the strength in KDDI earnings in the corporate segment will face increasing competition as NTT gets its act together. More below.

Telco/Internet specialist

Kirk Boodry

Redex Research

KDDI posted results that were largely in-line with consensus forecasts for Q4 and slightly ahead of our forecasts for FY21. As with recent quarters, operations were characterized by relative weakness in consumer offerings but strength in sales to corporates. The company sent a strong message on shareholder returns with the dividend going from ¥120 to ¥ 125 (the 20th straight year of increases) and a ¥150bn share purchase program (both in-line with our expectations). On the aggregate, with all telcos reporting, the incumbents are guiding to financial stability despite regulatory-driven price reductions and a more aggressive investment program by new entrant Rakuten. At 6x EBITDA and 12.5x EPS, KDDI shares look attractive and we remain at Buy.

KDDI posted results that were largely in-line with consensus forecasts for Q4 and slightly ahead of our forecasts for FY21. As with recent quarters, operations were characterized by relative weakness in consumer offerings but strength in sales to corporates. The company sent a strong message on shareholder returns with the dividend going from ¥120 to ¥ 125 (the 20th straight year of increases) and a ¥150bn share purchase program (both in-line with our expectations). On the aggregate, with all telcos reporting, the incumbents are guiding to financial stability despite regulatory-driven price reductions and a more aggressive investment program by new entrant Rakuten. At 6x EBITDA and 12.5x EPS, KDDI shares look attractive and we remain at Buy.

KDDI Q4 20 Results: Slightly Better Guidance and Solid Shareholder Returns

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

NTT posted results and guidance for FY21 ahead of Redex and consensus expectations. One key takeaway is how little mobile price reductions have impacted the company outlook with Q4 mobile revenue growth better than expected and forecast erosion in that segment less than half of what we had been looking for. That was augmented by another quarter of solid results from the fixed-line local businesses and a return to growth for the ICT businesses after six quarters of erosion. The FY21 dividend of ¥110 is in line with expectations and whilst a share buyback was not announced today, a positive outlook on financial progress in FY21 leads us to believe this will come at some point. We remain at Buy.

NTT posted results and guidance for FY21 ahead of Redex and consensus expectations. One key takeaway is how little mobile price reductions have impacted the company outlook with Q4 mobile revenue growth better than expected and forecast erosion in that segment less than half of what we had been looking for. That was augmented by another quarter of solid results from the fixed-line local businesses and a return to growth for the ICT businesses after six quarters of erosion. The FY21 dividend of ¥110 is in line with expectations and whilst a share buyback was not announced today, a positive outlook on financial progress in FY21 leads us to believe this will come at some point. We remain at Buy.

Nippon Telegraph and Telephone: Q4 20 Results/FY21 Guidance – A Return to Sustainable Growth

<a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a>  posted results for Q4 ahead of Redex / consensus expectations with FY21 guidance that is better than our forecasts but worse than consensus. Importantly, the company is targeting flat operating income YoY despite meaningful mobile price reductions as profit growth from Enterprise sales, Distribution, and Internet offset consumer erosion. The only disappointment in the results may be an unchanged dividend and whilst the company did not close the door on increases later in the year, there was not much enthusiasm either. Still, with results and guidance that are largely better than our expectations, we remain at Buy.

Softbank Corp (9434 JP)  posted results for Q4 ahead of Redex / consensus expectations with FY21 guidance that is better than our forecasts but worse than consensus. Importantly, the company is targeting flat operating income YoY despite meaningful mobile price reductions as profit growth from Enterprise sales, Distribution, and Internet offset consumer erosion. The only disappointment in the results may be an unchanged dividend and whilst the company did not close the door on increases later in the year, there was not much enthusiasm either. Still, with results and guidance that are largely better than our expectations, we remain at Buy. 

Softbank Corp Q4 20 Results/FY21 Guidance – Holding the Line on Mobile Pricing Changes

David Blennerhassett

Event-Driven

Last Week in Event SPACE:  Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

Japan

KDDI CORPORATION provides mobile communication services and sells mobile devices.  The Company also is a broadband provider.

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KDDI Corp (9433 JP)

KDDI Results and Yet Another Buyback

KDDI announced in-line earnings, better forecast, and a big buyback, in line with previous years. The company should be buying about 7% of ADV and...

Travis Lundy

KDDI Q4 20 Results: Slightly Better Guidance and Solid Shareholder Returns

KDDI results were in-line and guidance implies growth in other areas can offset consumer mobile erosion. Good report but there may be near-term...

Kirk Boodry

Nippon Telegraph and Telephone: Q4 20 Results/FY21 Guidance – A Return to Sustainable Growth

Q4 results and FY21 guidance were ahead of Redex and consensus forecasts on telework tailwinds and better mobile than expected. No buyback...

Kirk Boodry

Softbank Corp Q4 20 Results/FY21 Guidance – Holding the Line on Mobile Pricing Changes

Softbank Corp says it will maintain profitability despite regulatory-driven mobile price cuts. The dividend will also be unchanged although...

Kirk Boodry

Last Week in Event SPACE: Swire, Hitachi Metal, Jardine, Softbank, Bingo, Japan Asia, Mainstream

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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