Japanese stock report - Nippon Telegraph and Telephone

JAP

Nippon Telegraph and Telephone down 2.5% in 2 days August 17, 2018 15:00 JST

NEWS BITES - JAPAN

Nippon Telegraph and Telephone Corp. (TO:9432), the 3rd largest Information & communication company by market cap in Japan, extended its slide on Friday, shedding an additional JPY26.0 (0.5%) to close at JPY5,210.0. The shares have dropped JPY133.0 (2.5%) 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 change of -2.8%. Cumulative volume in the 2 days was 0.8 times the average 2-day volume of 3.3 million shares. Its MCap is JPY10,941 billion (US$98.7 billion).

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

SECTION 2 BULLISH SIGNALS

SECTION 3 PRICE VOLUME DYNAMICS

SECTION 4 RELATED NEWS

SECTION 5 GLOBAL RANKING

SECTION 6 SUMMARY FINANCIALS

SECTION 7 PROFILE

SECTION 1 NIPPON TELEGRAPH AND TELEPHONE BEARISH SIGNALS

1.1 Technicals:

+ The price decreased 1.5% in the last week.

+ Compared with the Nikkei 225 Index which fell 0.1% for the week, this represented a relative price decrease for Nippon Telegraph and Telephone's stock of 1.4% for the week.

Low Performance Indicator and rank of Nippon Telegraph and Telephone in the Japan market:

DescriptionValueRank In Market
Price Change %-0.5In Bottom Quartile

1.2 Fundamentals:

+ As per the Du Pont analysis, Return on Equity [ROE] of 12.7% is lower than sector average of 12.7%. ROE is computed as net profit margin of 10.3% times asset turnover [sales/assets] of 0.55 times leverage factor [total assets/shareholders' equity] of 1.8.

Quarterly Trend in Revenue, Net Profit and Net Profit Margin:

+ Net Profit margin is positive but falling in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Mar 18 [Q4]--7.5
Dec 17 [Q3]7.1-18.310.2
Sep 17 [Q2]1.6-5.711.5
Jun 17 [Q1]-7.3106.612.2

SECTION 2 NIPPON TELEGRAPH AND TELEPHONE BULLISH SIGNALS

2.1 Technicals:

+ The present value of JPY1,000 (PV1000) invested twenty years ago in Nippon Telegraph and Telephone is JPY1,556, including a capital gain of JPY364 and dividend reinvested of JPY191.

+ 20 years Multiplier in JPY = 1.556x

+ Compound Annual Growth Rate (CAGR) in JPY = 2.2%

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 $US2,063, including a capital gain of $US809 and dividend reinvested of $US254.

+ 20 years ago USD 1 equalled JPY 147.0588

+ 20 years Multiplier in USD = 2.063x

+ Compound Annual Growth Rate (CAGR) in USD = 3.7%

Aug 17, 2018: USD 1 equals JPY 110.88

High Performance Indicators and rank of Nippon Telegraph and Telephone in the Japan market:

DescriptionValueRank In Market
Today's Trading TurnoverJPY10.8 billion (US$97.3 million)In Top 2%
EBITDA Margin %26.5In Top 6%
Price/Earnings/Growth0.2In Top 6%
Price/MAP501.01In Top Quartile

2.2 Fundamentals:

+ The P/E of 11.4 multiplied by the P/NTA of 1.1 is 12.1. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

+ The relative yield of Nippon Telegraph and Telephone, defined by its yield of 2.9%, divided by average yield of dividend yielding stocks in the Nikkei 225 Index of 2.5% is 116.1%. This suggests Nippon Telegraph and Telephone 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 3.1 is comfortably below the Joseph Piotroski benchmark of 5.

+ Interest cover defined by EBIT/I is 55.5 times. This indicates it is less leveraged.

+ Net profit margin has averaged 9.3% in the last 3 years. This is better than the sector average of 9% and suggests a high margin of safety.

2.3 Undervaluation [compared with sector average]:

+ Price/Earnings of 11.4 [14.9]. We estimate Nippon Telegraph and Telephone stock is trading at a current year P/E of 6.9 and a forward year P/E of 5.4.

+ 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 1.1 [3.1]. We estimate Nippon Telegraph and Telephone stock is trading at a current year Price to Book of 0.8 and a forward year Price to Book of 0.6.

+ Return on Capital Employed 10.3% [9.2%].

+ Dividend yield of 2.9% [1.9%].

+ Price to EBITDA of 3.5 [8.6].

SECTION 3 NIPPON TELEGRAPH AND TELEPHONE PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 2,070,000 shares worth JPY10.8 billion (US$97.3 million) traded today. In the past week, volume was 0.8 times average and the shares were down 1.5%. The volume was 0.6 times the average daily trading volume of 3.3 million shares.

+ Nippon Telegraph and Telephone is at a discount of 10.4% to its 12-month high of JPY5,814.98 on November 30, 2017. It is also at a premium of 16.4% to the 12-month low of JPY4,475.72 on February 14.

+ The present value of JPY1,000 (PV1000) invested one year ago in Nippon Telegraph and Telephone is JPY1,048, comprising a capital gain of JPY17 and dividend reinvested of JPY31.

PV10001-week1-month1-year
9432.TO9851,0171,048
Nikkei 225 Index9999861,130

3.2 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 40.9% (or a turnover period of 2 years 5 months). This average length of ownership of the stock at 2.4 times the average holding period of 1 year 4 days for stocks in the Nikkei 225 Index suggests a larger number of core investors, making a long-term investment safer.

3.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the Moving Annual Return has consistently exceeded 3%.

TO:9432Close (JPY)Dividends (JPY)Capital Gain %% YieldAnnual Return %
Aug 175,2101501.72.94.6
1 Yr ago5,123.3912011.52.614.1
2 Yrs ago4,596.851101.12.43.5
3 Yrs ago4,546.634548.61.550.1
4 Yrs ago3,058.774036.11.837.8

Close 5 years ago JPY2,248.18

3.4 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 -6.8. The actual return of 1.26% fell short of the expected return of 8.0%, reflecting underperformance.

3.5 The Past Year

+ Nippon Telegraph and Telephone Corp. (TO:9432), strengthened JPY86.61 (or 1.7%) in the past year to close at JPY5,210.0 today. Compared with the Nikkei 225 Index which has risen 12.9% over the same period, this is a relative price change of -11.2%.

SECTION 4 NIPPON TELEGRAPH AND TELEPHONE RELATED NEWS

4.1 American Depository Receipts

+ Nippon Telegraph and Telephone ADR decreases 1.9% - at bearish turning point

Nippon Telegraph and Telephone Corporation (N:NTTYY), the International Depository Receipt (IDR) market's 3rd largest Telecommunication company by market cap, has reached a bearish turning point with a P/MAP greater than 1 and MAP rising switching to P/MAP of below 1 and MAP falling. The ADR has dropped below its trend. The price to 200-day MAP ratio is 0.99. In the past 200 days this ratio has been under 0.99, 69 times suggesting downside. The 50-day MAP of $US46.24 is lower than the 200-day MAP of $US47.46, a bearish indicator. The 200-day MAP has decreased to $US47.46. A decrease is another bearish indicator. Nippon Telegraph and Telephone's ADR price has decreased 89.0c (1.9%) from its last trading session of August 15 to close at $US47.15. Compared with the Bank of New York Mellon Composite ADR Index which rose 1.0 points (0.7%) in the day, the relative price change was -2.6%. The fall was exacerbated by strong volume of 3.5 times the average daily volume of 49,599 ADRs. Its MCap is $US99 billion.

4.2 Other News

+ BSS/News Bites:

Nippon Telegraph and Telephone Corp. is placed 1852/3455 in BSS News Bites' ranking of Japan performers in the past year, a percentile ranking of 47.

+ Vanguard Total World Stock ETF 2588:

The stock was one of 2588 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 208,500 shares in the period May 31, 2018 to Jun 30, 2018 worth $US-1,075,675,898 at an estimated Volume Weighted Average Price (VWAP) of $US5159.1185. As at Jun 30, 2018, the Vanguard Total World Stock ETF held 0 shares worth $US3 or 208,100% by value of the ETF's portfolio [Ranked 494 out of 2588 by value and 28 out of 308 for Japan].

SECTION 5 NIPPON TELEGRAPH AND TELEPHONE GLOBAL RANKING

Global Rank [out of 47,645 stocks] and Rank of Nippon Telegraph and Telephone in the Asia Region [out of 22,904 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)98.7B9917
Total Assets (US$)195.4B33075
Revenue (US$)107.7B7122
Net Profit (US$)11B4718
Return on Equity %12.710,0425,178
Net Profit Margin %10.311,4045,870
Price to Book1.113,3758,000
Price/Earnings11.55,9443,273
Yield %2.910,3754,568
PV$1000 (1Year) US$*1,04715,6476,810
US$* Change (1Year) %2.315,7717,000

* 1 year ago USD 1 = JPY 109.42

Aug 17, 2018: USD 1 equals JPY 110.88

SECTION 6 NIPPON TELEGRAPH AND TELEPHONE SUMMARY FINANCIALS

6.1 Dividend History

+ Trailing 12 months dividend has improved from JPY40.0 in 2014 to JPY150.0 in 2018.

6.2 Financials Summary (Past 3 years)

Year endedMar 2018Mar 2017Mar 2016
Sales (USD B)107.9102.8104.4
Pretax (USD B)15.813.812
Net (USD B)119.66.7
EPS (JPY)455.78390.94-

+ Net profit was up 15.1% from US$9.6 billion in 2017 to US$11 billion in 2018.

+ Earnings Per Share (EPS) was up 16.6% from JPY390.94 to JPY455.78.

SECTION 7 NIPPON TELEGRAPH AND TELEPHONE PROFILE

7.1 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.

7.2 Top Management

The chairman is Satoshi Miura.

7.3 Issued Capital

Based on 2,100,000,000 issued shares the market capitalisation is JPY10,941 billion (US$98.7 billion).

COMPANY IDENTIFIERS

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

Economic Sector: Telecommunication Services

Business Sector: Telecommunications Services

Industry Group: Telecommunications Services

ISIN: JP3735400008

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

RIC: 9432.T

Nippon Telegraph & Telephone Corp, Nippon Telegraph And Telephone Corp

Source: www.BuySellSignals.com