Japanese stock report - Nippon Telegraph and Telephone

JAP

Nippon Telegraph and Telephone increases 1.4% on average volume January 16, 2018 15:00 JST

NEWS BITES - JAPAN

Nippon Telegraph and Telephone Corp. (TO:9432), the largest Information & communication company by market cap in the Japan, has increased JPY73.0 (1.4%) from its last trading session of January 15 to close at JPY5,234.0. Compared with the Nikkei 225 Index which rose 236.9 points (1%) in the day, the relative price increase was 0.4%. The volume of 3.6 million shares was close to average trading.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators

SECTION 2 BEARISH SIGNALS

Fundamentals, Low Performance Indicators

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 STOCK BUZZ

SECTION 1 NIPPON TELEGRAPH AND TELEPHONE BULLISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 2.6%, divided by average yield of dividend yielding stocks in the Nikkei 225 Index of 2.2% is 117.8%. 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 10.9%. 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.

1.2 Undervaluation [compared with sector average]:

+ Price/Sales of 1 [1.5]. 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 [4.5]. We estimate Nippon Telegraph and Telephone stock is trading at a current year Price to Book of 2 and a forward year Price to Book of 2.1.

+ Return on Equity 14.6% [10.9%].

+ Dividend yield of 2.6% [1.6%].

+ Price to EBITDA of 3.6 [8.3].

1.3 Technicals:

+ In the last three months the stock has hit a new 52-week high twelve times, pointing to a significant uptrend.

+ The present value of JPY1,000 (PV1000) invested twenty years ago in Nippon Telegraph and Telephone is JPY1,452, including a capital gain of JPY265 and dividend reinvested of JPY187.

+ 20 years Multiplier in JPY = 1.452x

+ 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 $US1,700, including a capital gain of $US481 and dividend reinvested of $US219.

+ 20 years ago USD 1 equalled JPY 129.8701

+ 20 years Multiplier in USD = 1.7x

+ Compound Annual Growth Rate (CAGR) in USD = 2.7%

Jan 16, 2018: USD 1 equals JPY 110.94

1.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverJPY17.8 billion (US$160.9 million)In Top 1%
EBITDA Margin %26.6In Top 7%
Price Change %1.4In Top Quartile

SECTION 2 NIPPON TELEGRAPH AND TELEPHONE BEARISH SIGNALS

2.1 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.

2.2 Low Performance Indicators:

DescriptionValueRank In Market
Price/MAP500.94In Bottom 5%
Price/MAP2001.0In Bottom Quartile

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 3,410,000 shares worth JPY17.8 billion (US$160.9 million) traded today. In the past week, volume was 1.2 times average and the shares were down 3.7%.

+ Nippon Telegraph and Telephone is at a discount of 11.4% to its 12-month high of JPY5,905.0 on November 30, 2017. It is also at a premium of 14.7% to the 12-month low of JPY4,562.52 on February 17, 2017.

+ The present value of JPY1,000 (PV1000) invested one year ago in Nippon Telegraph and Telephone is JPY1,098, comprising a capital gain of JPY69 and dividend reinvested of JPY29.

PV10001-week1-month1-year
9432.TO9639741,098
Nikkei 225 Index1,0041,0441,254

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has consistently exceeded 9%.

9432Close (JPY)Dividends (JPY)Capital Gain %% YieldAnnual Return %
Jan 165,2341356.92.89.6
1 Yr ago4,896.551207.52.610.2
2 Yrs ago4,552.959551.13.254.2
3 Yrs ago3,013.77-15.6-15.6
4 Yrs ago2,606.778053.44.758.1

Close 5 years ago JPY1,699.24

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 -5.5. The actual return of 7.6% fell short of the expected return of 13.1%, reflecting underperformance.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 41.3% (or a turnover period of 2 years 5 months). This average length of ownership of the stock at 2.0 times the average holding period of 1 year 2 months 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 47,413 stocks] and Rank in the Asia Region [out of 22,520 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)99.1B11019
Total Assets (US$)192.2B34673
Revenue (US$)103.3B6723
Net Profit (US$)7.2B10528
Return on Equity %14.67,9494,043
Net Profit Margin %9.312,0836,326
Price to Book1.817,50310,026
Yield %2.69,3953,805
PV$1000 (1Year) US$*1,13321,73910,648
US$* Change (1Year) %8.922,26610,960

* 1 year ago USD 1 = JPY 114.47

Jan 16, 2018: USD 1 equals JPY 110.94

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 2704/3473 in BSS News Bites' ranking of Japan performers in the past year, a percentile ranking of 23.

+ Vanguard Total World Stock ETF 7457:

The stock was one of 7457 global stocks selected by Vanguard Total World Stock ETF (VT). As at November 30, 2017, the Vanguard Total World Stock ETF held 182,600 shares worth $US9,278,816 or 0.07% by value of the ETF's portfolio [Ranked 279 out of 7457 by value and 18 out of 1285 for Japan].

SECTION 5 NIPPON TELEGRAPH AND TELEPHONE FINANCIALS

5.1 Financials Summary

Year endedMar 2017Mar 2016Mar 2015
Sales (USD B)102.6104100
Pretax (USD B)13.7129.6
Net (USD B)7.26.64.7
EPS (JPY)--118.425

Sales was down 1.3% from US$104 billion in 2016 to US$102.6 billion in 2017. Net profit was up 8.5% from US$6.6 billion in 2016 to US$7.2 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)
16 Jan 2018135
16 Jan 2017120
16 Jan 201695

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 JPY10,991.4 billion (US$99.1 billion).

SECTION 7 STOCK BUZZ

Corporate Wire

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December 11 2017: Nippon Telegraph and Telephone: Notice regarding the Revision of Non-Consolidated Financial Forecasts

Nippon Telegraph and Telephone Corporation ("NTT") hereby announces that, at a meeting of its Board of Directors held today, NTT resolved to revise its non-consolidated financial forecasts for the fiscal year ending March 31, 2018, as stated below.

December 11 2017: Nippon Telegraph and Telephone: NOTICE REGARDING TENDER OFFER FOR SHARE REPURCHASE BY NTT DOCOMO, INC.

NTT DOCOMO, INC. ("NTT DOCOMO"), a subsidiary of Nippon Telegraph and Telephone Corporation ("NTT"), has announced its decision, adopted at its Board of Directors' meeting held today, to launch a tender offer to repurchase a portion of its outstanding common stock. For more details, please see the attached press release by NTT DOCOMO.

December 11 2017: Nippon Telegraph and Telephone: NOTICE REGARDING THE STATUS AND CONCLUSION OF STOCK REPURCHASES

Nippon Telegraph and Telephone Corporation ("NTT") hereby announces as below the results and conclusion 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. This concludes NTT's repurchase of its common stock authorized by the Board of Directors' meeting held on September 25, 2017.

August 04 2017: Nippon Telegraph and Telephone: Announcement of Financial Results for the Three Months Ended June 30, 2017

August 04 2017: Nippon Telegraph and Telephone: Announcement of Financial Results for the Three Months Ended June 30, 2017 (Presentation Material)

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

Nippon Telegraph & Telephone Corp, Nippon Telegraph And Telephone Corp

Source: www.BuySellSignals.com