Japanese stock report - Nippon Telegraph and Telephone

JAP

UPDATE: Nippon Telegraph and Telephone decreases, issued 3 new patents April 20, 2018 15:00 JST

NEWS BITES - JAPAN

Nippon Telegraph and Telephone Corp. (TO:9432), the largest Information & communication company by market cap in Japan, has decreased JPY4.0 (0.1%) from its last trading session of April 19 to close at JPY5,169.0. Compared with the Nikkei 225 Index which fell 28.9 points (0.1%) in the day, the relative price increase was 0.1%. The volume was 0.7 times the average daily trading volume of 3.5 million shares.

NIPPON TELEGRAPH AND TELEPHONE ISSUED 3 NEW PATENTS IN THE WEEK OF APRIL 17, 2018

Nippon Telegraph and Telephone (9432) has been issued 3 new patents by the USPTO and EPO.

THE PAST FIVE YEARS

Nippon Telegraph and Telephone advances 142% in 5 years

Nippon Telegraph and Telephone Corp. (TO:9432), has advanced JPY3,033.34 (or 142.0%) in the past five years to close at JPY5,169.0. Compared with the Nikkei 225 Index which has risen 66.4% over the same period, this is a relative price increase of 75.6%.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Overbought/Bearish/Resistance Signals

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators, A positive finish to 2017

SECTION 3 PRICE VOLUME DYNAMICS

Technicals, Moving Annual Return, Beta & Alpha, Turnover Rate & Turnover Period

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, Annual Report for the year ended March 31, 2017 (year-on-year comparisons with previous corresponding period)-, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 PATENTS

SECTION 8 STOCK BUZZ

SECTION 1 NIPPON TELEGRAPH AND TELEPHONE BEARISH SIGNALS

1.1 Fundamentals:

+ Net profit margin has averaged 7.5% in the last 3 years. This is lower than the sector average of 8.1% and suggests a low margin of safety.

1.2 Overvaluation [compared with sector average]:

+ Return on Assets 5% [5.7%].

1.3 Technicals:

+ In the last three months the stock has hit a new 52-week low once.

1.4 Overbought/Bearish/Resistance Signals:

+ The Relative Strength Index (RSI) of 70.3 has penetrated the overbought line of 70, suggesting the price gain of 3.8% in the last 14 days is unusually high.

SECTION 2 NIPPON TELEGRAPH AND TELEPHONE BULLISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 2.9%, divided by average yield of dividend yielding stocks in the Nikkei 225 Index of 2.9% is 100.3%. This suggests the stock is undervalued in dividend yield terms.

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.5. Compared with the rest of the market the stock is undervalued.

+ Total Liabilities/EBITDA of 3.2 is comfortably below the Joseph Piotroski benchmark of 5.

+ Interest cover defined by EBIT/I is 41.5 times. This indicates it is less leveraged.

+ As per the Du Pont analysis, Return on Equity of 14.6% is better than sector average of 12.8%. This is computed as net profit margin of 9.3% times asset turnover [sales/assets] of 0.54 times leverage factor [total assets/shareholders' equity] of 2.3.

2.2 Undervaluation [compared with sector average]:

+ Price/Sales of 0.9 [1.4]. We estimate Nippon Telegraph and Telephone stock is trading at a current year Price/Sales of 0.9 and a forward year Price/Sales of 0.9.

+ Price to Book of 1.8 [4.3]. We estimate Nippon Telegraph and Telephone stock is trading at a current year Price to Book of 1.9 and a forward year Price to Book of 2.1.

+ Return on Equity 14.6% [12.8%].

+ Dividend yield of 2.9% [2.3%].

+ Price to EBITDA of 3.6 [8.1].

2.3 Technicals:

+ The present value of JPY1,000 (PV1000) invested one year ago in Nippon Telegraph and Telephone is JPY1,150, comprising a capital gain of JPY117 and dividend reinvested of JPY34.

PV10001-week1-month1-year
9432.TO1,0191,0571,150
Nikkei 225 Index1,0181,0471,202

+ The present value of JPY1,000 (PV1000) invested twenty years ago in Nippon Telegraph and Telephone is JPY1,460, including a capital gain of JPY280 and dividend reinvested of JPY180.

+ 20 years Multiplier in JPY = 1.46x

+ Compound Annual Growth Rate (CAGR) in JPY = 1.9%

Present Value of USD1,000 invested 20 years ago:

+ The present value of USD1,000 (PV1000) invested twenty years ago in Nippon Telegraph and Telephone is $US1,784, including a capital gain of $US565 and dividend reinvested of $US220.

+ 20 years ago USD 1 equalled JPY 131.5789

+ 20 years Multiplier in USD = 1.784x

+ Compound Annual Growth Rate (CAGR) in USD = 2.9%

Apr 20, 2018: USD 1 equals JPY 107.65

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverJPY12.2 billion (US$113.3 million)In Top 1%
EBITDA Margin %26.6In Top 6%
Volatility %0.8In Top Quartile
Price/MAP501.05In Top Quartile

2.5 A positive finish to 2017

The stock has increased JPY223.13 (or 4.8%) in FY 2018 to close at JPY4,900.0. The average daily volume of 3.6 million shares in FY 2018 was 0.9 times the average daily volume in FY 2017.

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 2,360,000 shares worth JPY12.2 billion (US$113.3 million) traded today. In the past week, volume was 0.8 times average and the shares were up 1.9%.

+ Nippon Telegraph and Telephone is at a discount of 11.1% to its 12-month high of JPY5,814.98 on November 30, 2017. It is also at a premium of 15.5% to the 12-month low of JPY4,475.72 on February 14.

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has consistently exceeded 0%.

9432Close (JPY)Dividends (JPY)Capital Gain / (Loss) %% YieldAnnual Return %
Apr 205,16915011.73.214.9
1 Yr ago4,629.3120(1.8)2.50.7
2 Yrs ago4,714.2911025.22.928.1
3 Yrs ago3,765.4245531.854.8
4 Yrs ago2,4614015.21.917.1

Close 5 years ago JPY2,135.66

3.3 Beta & Alpha:

+ Beta: the Beta of Nippon Telegraph and Telephone stock is 0.6. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

+ Alpha: the Alpha of the stock is -1.9. The actual return of 8.29% fell short of the expected return of 10.2%, reflecting underperformance.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 42.7% (or a turnover period of 2 years 4 months). This average length of ownership of the stock at 2.2 times the average holding period of 1 year 18 days for stocks in the Nikkei 225 Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 4 RANKING

4.1 Global Rank [out of 47,666 stocks] and Rank in the Asia Region [out of 22,769 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)100.8B10018
Total Assets (US$)200.1B34273
Revenue (US$)107.5B6722
Net Profit (US$)7.5B10628
Return on Equity %14.68,0884,083
Net Profit Margin %9.312,2556,414
Price to Book1.717,95610,460
Yield %3.18,7743,554
PV$1000 (1Year) US$*1,16315,8387,953
US$* Change (1Year) %9.618,0488,700

* 1 year ago USD 1 = JPY 109.29

Apr 20, 2018: USD 1 equals JPY 107.65

4.2 Independent Ratings

+ FT 500:

Nippon Telegraph and Telephone Corp. is the 36th largest by revenue in the FT Global 500.

+ Fortune 500:

It was ranked 50 by total revenues in the Fortune 500 annual list for 2017; an improvement over a year from rank 60 in 2016.

+ Newsweek 500:

It was ranked 99 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2016. It had outstanding scores of 12.9% in Waste productivity, 6.6% in Energy productivity and 4.9% in Carbon productivity.

+ Forbes 2000:

It is the 54th largest by revenue in the Forbes Global 2000.

+ BSS/News Bites:

It is placed 2266/3475 in BSS News Bites' ranking of Japan performers in the past year, a percentile ranking of 35.

+ Vanguard Total World Stock ETF 7517:

The stock was one of 7517 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 10,600 shares in the period Nov 30, 2017 to Jan 31, 2018 worth $US55,865,272 at an estimated Volume Weighted Average Price (VWAP) of $US5270.3087. As at Jan 31, 2018, the Vanguard Total World Stock ETF held 193,200 shares worth $US9,325,910 or 0.06% by value of the ETF's portfolio [Ranked 325 out of 7517 by value and 28 out of 1306 for Japan].

SECTION 5 NIPPON TELEGRAPH AND TELEPHONE FINANCIALS

5.1 Financials Summary

Year endedMar 2017Mar 2016Mar 2015
Sales (USD B)106.4107.8103.7
Pretax (USD B)14.212.49.9
Net (USD B)7.56.94.8
EPS (JPY)--118.425

Sales were down 1.3% from US$107.8 billion in 2016 to US$106.4 billion in 2017. Net profit was up 8.5% from US$6.9 billion in 2016 to US$7.5 billion in 2017.

5.2 Annual Report for the year ended March 31, 2017 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Net profit up 8.5% from JPY737.7b ($US6.6b) to JPY800.1b ($US7.2b)

+ EBIT Margin up from 11.9% to 13.7%.

+ Interest cover up 26% from 32.9 to 41.5.

+ EBIT to total assets up from 6.5% to 7.4%.

+ Profit before tax to Sales up from 11.5% to 13.4%.

+ Retained earnings to total assets up from 24.1% to 26.5%.

+ Total Liabilities to EBITDA of 3.2 compares favourably with the Joseph Piotroski benchmark of <5. However, it has deteriorated by 2.9% from the previous year's ratio of 3.1.

+ Total Liabilities to Operating Cash Flow of 3.3 compares favourably with the Joseph Piotroski benchmark of <4. This ratio has improved by 7.8% from the previous year's ratio of 3.6.

Unfavourable Changes:

+ Sales and marketing expenses to Sales up from 24% to 24.5%.

+ Current ratio down 11% from 1.4 to 1.3.

+ Working capital to total assets down from 8.0% to 5.6%.

+ Total current assets to Total Assets down from 25.8% to 25%.

Note:

+ Total revenue steady at JPY11,416.8b ($US102.6b).

+ Total revenue to total assets steady at 0.5.

+ Cost of Goods Sold to Sales down from 48.7% to 48.5%.

+ Depreciation to Sales down from 15.3% to 12.8%.

+ Tax expenses to Sales up from 3.1% to 4.1%.

+ Debt to Equity steady at 0.5.

+ Total non-current assets to Total Assets up from 74.2% to 75%.

+ Fixed Assets to Total Assets up from 45.4% to 45.7%.

+ Current Debtors to Total Assets down from 15% to 14.9%.

+ Intangibles to Total Assets up from 13.5% to 14%.

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (JPY)
20 Apr 2018150
20 Apr 2017120
20 Apr 2016110
20 Apr 201545
20 Apr 201440

SECTION 6 NIPPON TELEGRAPH AND TELEPHONE PROFILE

6.1 Activities

Nippon Telegraph and Telephone (NTT) is a Japan-based telecommunications provider offering fixed and mobile voice related services, Internet protocol (IP)/packet communications services and system integration services. The Company primarily operates in five business segments. The regional communications segment is engaged in the provision of domestic intra-prefectural communication services and incidental services. The long distance and international communications segment is engaged in the provision of domestic inter-prefectural and international communication services and incidental services. The mobile communications segment is engaged in the provision of mobile phones services and other related services. The data communications segment is engaged in the provision of system integration and network system services, among others. The others segment is engaged in the city development and financial businesses.

6.2 Industry & Sector

Classification LevelName of Sector
Economic SectorTelecommunication Services
Business SectorTelecommunications Services
Industry GroupTelecommunications Services

6.3 Top Management

The chairman is Satoshi Miura.

6.4 Issued Capital

Based on 2,100,000,000 issued shares the market capitalisation is JPY10,854.9 billion (US$100.8 billion).

SECTION 7 NIPPON TELEGRAPH AND TELEPHONE PATENTS

Issued April 17, 2018

Base station apparatus, wireless communication system, and communication method for uplink coordinated multi-point transmission and reception with intra-phy split base station architecture [9,948,483]

A base station apparatus is provided with at least one remote unit apparatus each including at least one antenna, and a central unit apparatus connected to each remote unit apparatus via a transmission path. The antenna provided in the remote unit apparatus receives a transmission signal wirelessly transmitted from at least one wireless terminal each including at least one antenna. The remote unit apparatus includes a channel estimation unit that estimates channel information between the antenna of the wireless terminal and the antenna of the remote unit apparatus, using a reception signal received by the antenna provided in the remote unit apparatus, a likelihood calculation unit that calculates likelihood of each transmission signal included in the reception signal, for each antenna provided in the remote unit apparatus, using the channel information estimated by the channel estimation unit, and an inter-unit transmission unit that transmits likelihood information calculated by the likelihood calculation unit to the central unit apparatus. The central unit apparatus is provided with an inter-unit receiving unit that receives the likelihood information transmitted from the inter-unit transmission unit, and a signal detection unit that combines the likelihood information received by the inter-unit receiving unit, and outputs a signal corresponding to each transmission signal transmitted from the wireless terminal, using combined likelihood information.

Flow cell and liquid feed system [9,945,773]

A flow cell (2) includes a plate-shaped body 21 that is almost rectangular in a plan view, an introduction portion (22) that is made of a concave portion formed in the upper surface of the body (21), a channel (23) that is formed inside the body (21) and has one end connected to the lower end of the introduction portion (22), and a delivery portion (24) that is made of a concave portion formed in the body (21) and has the lower end connected to the other end of the channel (23). The introduction portion (22) is formed to cause the meniscus of a liquid introduced from an opening to apply, to the liquid, a positive pressure or a negative pressure whose absolute value is smaller than that of a negative pressure applied to the liquid introduced into the channel (23) by the meniscus of the liquid. The channel (23) is formed to cause the meniscus of the liquid introduced into the channel (23) to apply a negative pressure to the liquid. This invention provides a flow cell and a liquid feed system capable of more easily controlling feed of a trace amount of liquid.

Encoding method, decoding method, encoder, decoder, program and recording medium [9,947,331]

A frequency-domain sample interval corresponding to a time-domain pitch period L corresponding to a time-domain pitch period code of an audio signal in a given time period is obtained as a converted interval T.sub.1, a frequency-domain pitch period T is chosen from among candidates including the converted interval T.sub.1 and integer multiples U.times.T.sub.1 of the converted interval T.sub.1, and a frequency-domain pitch period code indicating how many times the frequency-domain pitch period T is greater than the converted interval T.sub.1 is obtained. The frequency-domain pitch period code is output so that a decoding side can identify the frequency-domain pitch period T.

To view more details on these Patents, click here

SECTION 8 STOCK BUZZ

Corporate Wire

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April 02: NIPPON TELEGRAPH AND TELEPHONE CORPORATION: NOTICE REGARDING THE STATUS OF STOCK REPURCHASES

Nippon Telegraph and Telephone Corporation ("NTT") hereby announces the status of repurchases of shares of its common stock conducted pursuant to Article 156 of the Companies Act of Japan, as applied pursuant to Paragraph 3, Article 165 of the Companies Act.

March 30: Nippon Telegraph and Telephone: Notice Regarding Completion of Temporary Handling Procedures for ADRs and Application to Terminate Registration and Ongoing Reporting Obligations

Nippon Telegraph and Telephone Corporation ("NTT") hereby announces that the temporary handling procedures for its American Depositary Receipts ("ADRs") that were announced on February 10, 2017 (including temporarily suspending the issuance of new ADRs and temporarily suspending ADR cancellation fees) will end on March 30, 2018 (Friday), as previously scheduled.

March 30: Nippon Telegraph and Telephone: Notice Regarding Adoption of International Financial Reporting Standards (IFRS)

Nippon Telegraph and Telephone Corporation ("NTT") hereby announces its decision to replace the currently applied Generally Accepted Accounting Principles in the United States ("U.S. GAAP") and adopt International Financial Reporting Standards ("IFRS") for its consolidated financial statements in order to improve the international comparability of its financial information in the capital markets, among other reasons.

March 29: Nippon Telegraph and Telephone: Notice Regarding Completion of Temporary Handling Procedures for ADRs and Application to Terminate Registration and Ongoing Reporting Obligations

Nippon Telegraph and Telephone Corporation ( "NTT ") hereby announces that the temporary handling procedures for its American Depositary Receipts ("ADRs") that were announced on February 10, 2017 (including temporarily suspending the issuance of new ADRs and temporarily suspending ADR cancellation fees ) will end on March 30, 2018 (Friday), as previously scheduled.

March 29: Nippon Telegraph and Telephone: Notice Regarding Adoption of International Financial Reporting Standards (IFRS)

Nippon Telegraph and Telephone Corporation ("NTT") hereby announces its decision to replace the currently applied Generally Accepted Accounting Principles in the United States ("U.S. GAAP") and adopt International Financial Reporting Standards ("IFRS") for its consolidated financial statements in order to improve the international comparability of its financial information in the capital markets, among other reasons.

Contact: 81 35 20 55 58 1

Physical Address: 2-3-1 Ohtemachi Chiyoda-ku Tokyo, 100-0004 Japan

State/Province/Country: TKY, Japan

Country of Incorporation: Japan

Exchange: Tokyo Stock Exchange

ISIN: JP3735400008

TO:9432; TYO:9432; T:9432; JP:9432; 9432.T

RIC: 9432.T

Nippon Telegraph & Telephone Corp, Nippon Telegraph And Telephone Corp

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