Japanese stock report - Daiwa Securities Group
Daiwa Securities up 2.8% in 2 days August 17, 2018 15:00 JST
NEWS BITES - JAPAN
Daiwa Securities Group Inc. (TO:8601), the 2nd largest Securities & commodity futures company by market cap in Japan, extended its gains on Friday, rising an additional JPY6.90 (1.1%) to close at JPY654.0. The shares have lifted JPY17.90 (2.8%) over the past two trading days, compared with the Nikkei 225 Index which rose 66.2 points (0.3%) in the two days for a relative price increase of 2.5%. Cumulative volume in the 2 days was 0.7 times the average 2-day volume of 8 million shares. Its MCap is JPY1,111.8 billion (US$10 billion).
Highlights in today's Report:
SECTION 1 BULLISH SIGNALS
SECTION 2 BEARISH SIGNALS
SECTION 3 PRICE VOLUME DYNAMICS
SECTION 4 RELATED NEWS
SECTION 5 GLOBAL RANKING
SECTION 6 SUMMARY FINANCIALS
SECTION 7 PROFILE
SECTION 1 DAIWA SECURITIES BULLISH SIGNALS
+ The present value of JPY1,000 (PV1000) invested one year ago in Daiwa Securities is JPY1,155, comprising a capital gain of JPY106 and dividend reinvested of JPY49.
|Nikkei 225 Index||999||986||1,130|
+ The present value of JPY1,000 (PV1000) invested twenty years ago in Daiwa Securities is JPY1,828, including a capital gain of JPY530 and dividend reinvested of JPY298.
+ 20 years Multiplier in JPY = 1.828x
+ Compound Annual Growth Rate (CAGR) in JPY = 3.1%
Present Value of USD1,000 invested 20 years ago:
+ The present value of USD1,000 (PV1000) invested twenty years ago in Daiwa Securities is $US2,425, including a capital gain of $US1,029 and dividend reinvested of $US396.
+ 20 years ago USD 1 equalled JPY 147.0588
+ 20 years Multiplier in USD = 2.425x
+ Compound Annual Growth Rate (CAGR) in USD = 4.5%
Aug 17, 2018: USD 1 equals JPY 110.88
High Performance Indicators and rank of Daiwa Securities in the Japan market:
|Description||Value||Rank In Market|
|Today's Trading Turnover||JPY2.4 billion (US$21.5 million)||In Top 4%|
|EBITDA Margin %||25||In Top 6%|
|Price/MAP50||1.01||In Top Quartile|
+ The relative yield of Daiwa Securities, defined by its yield of 4.3%, divided by average yield of dividend yielding stocks in the Nikkei 225 Index of 2.5% is 172.6%. This suggests Daiwa Securities stock is undervalued in dividend yield terms.
+ Net profit margin has averaged 17.3% in the last 3 years. This is considered superior and suggests a high margin of safety.
+ As per the Du Pont analysis, Return on Equity [ROE] of 9.4% is better than sector average of 8.7%. ROE is computed as net profit margin of 16.2% times asset turnover [sales/assets] of 0.03 times leverage factor [total assets/shareholders' equity] of 16.5.
Quarterly Trend in Revenue, Net Profit and Net Profit Margin:
+ Net Profit margin is positive and has seen consecutive rises in recent quarters. [All figures in %]
|Qtr-ended||Revenue Growth||Net Profit Growth||Net Profit Margin|
|Mar 18 [Q4]||-||-||19.7|
|Dec 17 [Q3]||8.1||-28.9||11.9|
1.3 Undervaluation [compared with sector average]:
+ Dividend yield of 4.3% [2.6%].
SECTION 2 DAIWA SECURITIES BEARISH SIGNALS
+ The price decreased 1.6% in the last month.
Low Performance Indicators and rank of Daiwa Securities in the Japan market:
|Description||Value||Rank In Market|
|Total Debt to Equity||7.8||In Bottom 1%|
|Return on Assets [ROA] %||0.5||In Bottom 5%|
|Return on Capital Employed [ROCE] %||3.7||In Bottom Quartile|
|Price to Sales||1.6||In Bottom Quartile|
+ Total Liabilities/EBITDA of 110.9 which compares unfavourably with the Joseph Piotroski benchmark of 5.
2.3 Overvaluation [compared with sector average]:
+ Return on Assets 0.5% [0.7%].
+ Return on Capital Employed 3.7% [6.0%].
SECTION 3 DAIWA SECURITIES PRICE VOLUME DYNAMICS
+ Volume: there were 3,640,000 shares worth JPY2.4 billion (US$21.5 million) traded today. In the past week, volume was 0.7 times average and the shares were up 0.5%. The volume was 0.5 times the average daily trading volume of 8 million shares.
+ Daiwa Securities is at a discount of 17.5% to its 12-month high of JPY792.94 on January 24. It is also at a premium of 14.9% to the 12-month low of JPY569.22 on September 08, 2017.
3.2 Turnover Rate & Turnover Period:
+ The turnover rate in the 12 months to date was 122.03% (or a turnover period of 9 months). This average length of ownership of the stock at 0.8 times the average holding period of 1 year 4 days for stocks in the Nikkei 225 Index suggests a larger number of speculators on the share register, making it less safe for long-term investors.
3.3 Moving Annual Return (Past 5 years)
Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in Daiwa Securities would have produced a return of 15.3%.
|TO:8601||Close (JPY)||Dividends (JPY)||Capital Gain / (Loss) %||% Yield||Annual Return %|
|1 Yr ago||591.46||26||7.3||4.7||12.0|
|2 Yrs ago||551.38||17||(36.8)||1.9||(34.8)|
|3 Yrs ago||871.9||30||10.6||3.8||14.4|
|4 Yrs ago||788.49||34||5.7||4.6||10.3|
Close 5 years ago JPY746.0
3.4 Beta & Alpha:
+ Beta: the Beta of Daiwa Securities stock is 1.1. A Beta greater than 1 suggests this is a high risk, high return stock with volatility greater than that of the market.
+ Alpha: the Alpha of the stock is -5.4. The actual return of 8.52% fell short of the expected return of 14.0%, reflecting underperformance.
+ Daiwa Securities Group Inc. (TO:8601), decreased JPY37.58 (or 5.4%) year-to-date (YTD) in 2018 to close at JPY654.0 today. Compared with the Nikkei 225 Index which has fallen 2.2% YTD, this is a relative price change of -3.3%.
SECTION 4 DAIWA SECURITIES RELATED NEWS
4.1 American Depository Receipts
+ Daiwa Securities ADR lifts 2.8% on high volume
Daiwa Securities Group Inc. (OT:DSEEY), the International Depository Receipt (IDR) market's 8th largest Diversified financial services company by market cap, has lifted 16.0c (2.8%) from its last trading session of August 15 to close at $US5.91. Compared with the Bank of New York Mellon Composite ADR Index which rose 1.0 points (0.7%) in the day, the relative price increase was 2.1%. The rise has been propped up by high volume of 2.1 times the average daily volume of 40,916 ADRs. Its MCap is $US10 billion.
4.2 Other News
+ BSS/News Bites:
Daiwa Securities Group Inc. is placed 1264/3455 in BSS News Bites' ranking of Japan performers in the past year, a percentile ranking of 64.
+ Vanguard Total World Stock ETF 2588:
The stock was one of 2588 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 506,000 shares in the period May 31, 2018 to Jun 30, 2018 worth $US-322,751,784 at an estimated Volume Weighted Average Price (VWAP) of $US637.8494. As at Jun 30, 2018, the Vanguard Total World Stock ETF held 0 shares worth $US0 or 506,000% by value of the ETF's portfolio [Ranked 2120 out of 2588 by value and 276 out of 308 for Japan].
SECTION 5 DAIWA SECURITIES GLOBAL RANKING
Global Rank [out of 47,645 stocks] and Rank of Daiwa Securities in the Asia Region [out of 22,904 stocks]
|Description||Value||Global Rank||In Asia Region|
|Total Assets (US$)||190.6B||346||76|
|Net Profit (US$)||996.8M||1,128||330|
|Return on Equity %||9.4||14,644||7,899|
|Net Profit Margin %||16.2||7,439||3,414|
|Price to Book||0.9||11,427||6,904|
|PV$1000 (1Year) US$*||1,154||11,781||5,079|
|US$* Change (1Year) %||8.7||12,522||5,502|
* 1 year ago USD 1 = JPY 109.42
Aug 17, 2018: USD 1 equals JPY 110.88
SECTION 6 DAIWA SECURITIES SUMMARY FINANCIALS
6.1 Dividend History
+ Trailing 12 months dividend has deteriorated from JPY34.0 in 2014 to JPY28.0 in 2018.
6.2 Financials Summary (Past 3 years)
|Year ended||Mar 2018||Mar 2017||Mar 2016|
|Sales (USD B)||6.4||5.6||5.9|
|Pretax (USD B)||1.4||1.3||1.5|
+ Sales were up 15.6% from US$5.6 billion in 2017 to US$6.4 billion in 2018.
+ Net profit was up 6.3% from US$939.5 million in 2017 to US$998.3 million in 2018.
SECTION 7 DAIWA SECURITIES PROFILE
Daiwa Securities Group Inc. is a Japan-based security company engaged in the securities, investment, financing and service businesses. The Company, comprised of 46 consolidated subsidiaries and six associated companies, is engaged in the trading and brokerage of securities and derivatives, as well as the the underwriting, sale, offering and private offering of securities. It is also involved in the investment trust, information service, real estate leasing, venture capital, financing and clerical service businesses. The Company has operations in both domestic and overseas financial markets, including Japan, North America, Europe, Asia and Oceania. Daiwa Securities Group has a global network.
7.2 Top Management
The chairman is Takashi Hibino, the chief executive officer is Seiji Nakata and the chief financial officer is Mikita Komatsu.
7.3 Issued Capital
Based on 1,700,000,000 issued shares the market capitalisation is JPY1,111.8 billion (US$10 billion).
Contact: 81 35 55 51 11 1
Physical Address: 1-9-1 Marunouchi Chiyoda-ku Tokyo, 100-6751 Japan
State/Province/Country: TKY, Japan
Country of Incorporation: Japan
Exchange: Tokyo Stock Exchange
TO:8601; TYO:8601; T:8601; JP:8601; 8601.T
Daiwa Securities Group Inc