Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Securities analyst covering electronics, precision equipment & robotics, engineering, construction, transport and other sectors for more than 25 years in Japan and 3 years in Korea. Permanent resident of Japan.

Senior Technology Analyst, Japanese Equities

Hitachi Ltd. (6501 JP): Buy into the Pull-Back

Hitachi Ltd. (6501 JP): Assessing Exposure to Ukraine - Buy into the Sell-Off

Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback

Hitachi Ltd. (6501 JP): Positive Trends to Continue

Hitachi Ltd. (6501 JP): Buys Kyoto Robotics, Plans to Sell Hitachi Metals

Hitachi Ltd. (6501): GlobalLogic Acquisition Expensive but Accretive

Hitachi Metals – Limited Upside Despite Bain Capital News But Let’s Find the Offshoot Ideas

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

Restructuring remains positive for Hitachi Ltd.FY Mar-21 results were above guidance, and management is guiding for operating and net profit growth in FY Mar-22.If the company's stake in Hitachi Metals is sold this year as planned, operating profit would probably be reduced by a low single-digit percentage. But this could be offset by the acquisition of GlobalLogic. Hitachi ABB Power Grids and the Railway Systems business are doing well. The cost of train repairs in the UK looks immaterial to earnings.Despite concerns over the cost of acquisitions, Hitachi Ltd.'s financial position is sound. At the end of March, the company had more than ¥1.8 trillion in cash and other financial assets, net financial liabilities amounted to 18% of equity, and free cash flow was positive. At ¥5,406 (Wednesday, May 19, closing price), the shares are selling at 9.5x FY Mar-22 earnings guidance. 39% potential upside to our ¥7,500 share price target.

Restructuring remains positive for Hitachi Ltd.FY Mar-21 results were above guidance, and management is guiding for operating and net profit growth in FY Mar-22.If the company's stake in Hitachi Metals is sold this year as planned, operating profit would probably be reduced by a low single-digit percentage. But this could be offset by the acquisition of GlobalLogic. Hitachi ABB Power Grids and the Railway Systems business are doing well. The cost of train repairs in the UK looks immaterial to earnings.Despite concerns over the cost of acquisitions, Hitachi Ltd.'s financial position is sound. At the end of March, the company had more than ¥1.8 trillion in cash and other financial assets, net financial liabilities amounted to 18% of equity, and free cash flow was positive. At ¥5,406 (Wednesday, May 19, closing price), the shares are selling at 9.5x FY Mar-22 earnings guidance. 39% potential upside to our ¥7,500 share price target.

Hitachi Ltd. (6501 JP): Results Above Guidance, Growth Ahead