Nippon Telegraph and Telephone (9432:JPY2,477.50) rises for a second consecutive day, a two-day rise of 0.7% 03 July 2020

NEWS BITES - JAPAN

Dateline: Friday July 03, 2020

Nippon Telegraph and Telephone Corp. (TO:9432), the 2nd largest Information & communication company by market cap in Japanese, has risen JPY4.0 (0.2%) for a second consecutive day on Friday. This brought its two-day rise to JPY16.50 (0.7%), compared with the Nikkei 225 Index which rose 184.8 points (0.8%) in the two days for a relative price change of -0.2%. Cumulative volume in the 2 days was 0.7 times the average 2-day volume of 6 million shares. Nippon Telegraph and Telephone's stock last traded at JPY2,477.50. There were 2,723,400 shares worth JPY6.7 billion (US$62.8 million) traded today.

Stock Summary (traded in JPY)

Currency1 USD = 107.52 JPYDividend Yield1.9%
Jul 03 closeJPY2,477.50SectorInformation & Communication
Ave Daily Volume6,041,366 sharesShares Outstanding3,900,000,000
52-Week Range2,153.00 - 2,908.00Market CapJPY9,662.2 billion [USD89.9 billion]
P/E12.9EPS Growth % (q.o.q)-48.0

ADR Summary (traded in USD)

Home ExchangeJapanRatio1 ADR equals 1 ordinary share
CodeNTTYYTypeSponsored
ISINUS6546241059Jul 02 closeUSD23.13
CUSIP654624105Ave Daily Volume172,225 ADRs
*No. Held by Institutions7,777,31152-Week Range20.35 - 27.00
% of shares outstanding0.2%

Financials Summary: EPS up 5% to JPY231.21 in FY2020

+ Net profit was up 0.1% from USD8 billion in FY2019 to USD8 billion in FY2020.

+ Earnings Per Share (EPS) was up 5% from JPY220.13 in FY2019 to JPY231.21 in FY2020.

Year ended MarFY2020FY2019FY2018
Sales (USD B)111.1110.9110
Pretax (USD B)14.715.616.3
Net (USD B)8811.3
EPS (JPY)231.21220.13225

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INDEX

SECTION 1 News In The Past Two Months

SECTION 2 Corporate Profile and Independent Ratings

SECTION 3 Today's Bullish Signals

SECTION 4 Ongoing Bullish Parameters

SECTION 5 Today's Bearish Signals

SECTION 6 Ongoing Bearish Parameters

Click here to view the following

SECTION 7 Patents

SECTION 8 Tax & Dividend

SECTION 9 Financials Q4 2020, FY 2020

SECTION 10 Peer Group Analysis & Ranking

SECTION 11 News Archives (Aug 2018 - Feb 2020)

Glossary

SECTION 1 News In The Past Two Months

1.1 Financial News

Quarterly Report (Q4/2020):

Quarterly Report Analysis Q4 2020: Nippon Telegraph and Telephone EPS slumps 48%

Nippon Telegraph and Telephone (TO:9432), announced EPS of JPY39.0 (US36.01c) for the quarter-ended 31 March 2020 [Q4/2020], down 48% sequentially from JPY75.0 (US69.01c) in the previous quarter [Q3/2020].

Compared with the previous corresponding period [PCP; Q4/2019], year-over-year [y.o.y.] EPS was down 8.2%, Revenue was down 1.6% and Net Profit was down 6.5%.

Read more in SECTION 9 on Financials

Annual Report (FY 2020):

May 29, 2020

FY2020 Annual Report: Nippon Telegraph and Telephone Income Before Tax down 6.1%

Nippon Telegraph and Telephone (TO:9432) reported income before tax for the year-ended 31 March 2020 [FY2020] of JPY1,570b ($US14.5b), down 6.1% from JPY1,672b ($US15.1b) in the previous year [FY2019]. Earnings per share (EPS) were up 5% from JPY220.13 ($US1.99) in FY2019 to JPY231.21 ($US2.13) in FY2020.

Read more in SECTION 9 on Financials

1.2 Changes in Board (TTM)

May 15: Nippon Telegraph and Telephone: NOTICE REGARDING CHANGES IN REPRESENTATIVE MEMBER OF THE BOARD

Nippon Telegraph and Telephone Corporation ("NTT" or the "Company") hereby announces that, at a meeting of its board of directors held on May 15, 2020, NTT prospectively determined to make changes to the Members of the Board, as stated below.

Source: Tokyo Stock Exchange

1.3 People's News

Fri May 15, 2020

Hiromichi Shinohara's performance as Chairman of Nippon Telegraph and Telephone (TO:9432) is ranked in the top 9% of BuySellSignals performers for the past ten years; a percentile ranking of 91.8. In the last 10 years the average annualized return to shareholders was 12.4%. The 10-year average return is ranked 3,445 out of 42,226 public companies traded globally. A three-bagger, the present value of US$1,000 (PV1000) invested 10 years ago is now worth USD3,217; a capital gain of USD1,760 and dividend reinvested of USD457.

SECTION 2 Corporate Profile and Independent Ratings

2.1 Activities

NIPPON TELEGRAPH AND TELEPHONE CORPORATION is a provider of fixed and mobile voice related services, regional communications services, long distance and international communications business, data communications business and other business. The Company operates in five segments: Regional Communications segment, which comprises fixed voice related services, IP/packet communications services, sale of telecommunications equipment, system integration services and other services; Long Distance and International Communications segment, which comprises fixed voice related services and IP/packet communications services; Mobile Communications segment, which comprises mobile voice related services and sale of telecommunications equipment; Data Communications segment, which comprises system integration services, and Other segment, which comprises building maintenance, real estate rentals, systems development and other services related to research and development.

2.2 Contact Details

Websitehttps://www.ntt.co.jp/
Physical AddressEast Tower, Otemachi First Square, 1-5-1, Ote-machi, Chiyoda-ku, TOKYO-TO, 100-8116
Phone81368385111

2.3 Industry & Sector

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

2.4 Independent Ratings

+ Fortune 500:

Nippon Telegraph and Telephone Corp. 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.

+ FT 500:

It is the 36th largest by revenue in the FT Global 500.

SECTION 3 Today's Bullish Signals

3.1 Momentum Up 1.0% Past Month

In the past quarter the week beginning Monday June 01 saw the highest weekly rise of 2.7% for a relative price increase of -1.8%.

The Best 3 weeks in the past quarter:

Mon-FriChange %Nikkei 225 index Change %RPC %Vol Ind [1 is avg]
Jun 01-052.74.5-1.81
May 18-222.71.80.90.8
Apr 06-102.49.4-71.1

3.2 Uptrend

Positive MACD:

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 2,491.34 minus the 26-day EMA of 2,490.7 is positive, suggesting a bullish signal.

3.3 Undervaluation

Price/Earnings of 12.9 < sector avg of 30.9:

- Price/Earnings of 12.9 versus sector average of 30.9 and market average of 20.2.

Earnings Yield of 7.8% > Japanese ave of 4.9%:

- Earnings yield of 7.8% is greater than the Japanese average earning yield of 4.9%.

(All figures in %)

Earnings Yield7.8
Japanese avg4.9
Dividend Yield1.9

Dividend Yield > Bond Yield of 0.04%:

The dividend yield of 1.92% is 48.0 times the triple-A bond yield of 0.04%. The times factor of 48.0 is above the benchmark factor of 0.67 times set by Benjamin Graham.

(All figures in %)

Dividend Yield1.92
Bond Yield0.04
Spread1.88

Price to Book of 1.2 < Sector average of 2.8:

- The Price to Book of 1.2 is lower than average of 2.8 for the Information & Communication sector.

MCap/Total Assets:

- Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.4. Compared with the rest of the market the stock is undervalued.

- The company is cash rich with Cash to Market Capitalisation at 14.3%.

3.4 Other Bullish Signals

- Return on Equity of 9.7% versus sector average of 6.3% and market average of 6.1%.

- Total Liabilities/EBITDA of 3.8 is less than 5, this compares favourably with the Joseph Piotroski benchmark of 5.

- Return on Assets of 4.8% versus sector average of 2.3% and market average of 1.0%.

- Return on Capital Employed of 9.6% versus sector average of 7.5% and market average of 1.9%.

- Net profit margin has averaged 9.7% in the last 3 years. This is better than the sector average of 9.0% and suggests a high margin of safety.

- As per the Du Pont analysis, Return on Equity of 9.7% is better than sector average of 6.3%. This is computed as net profit margin of 9.3% times asset turnover [sales/assets] of 0.52 times leverage factor [total assets/shareholders' equity] of 2.0.

SECTION 4 Ongoing Bullish Parameters

4.1 Rank in the top 2% by Size in the Japanese market

DescriptionValueRank
MCapUSD89.9 billionIn Top 1%
Tr 12 months RevenueJPY11,899.4 billion (US$110.7 billion)In Top 1%
Ave daily TurnoverJPY6.7 billion (US$62.8 million)In Top 2%

4.2 Rank in the top 19% by Performance in the Japanese market

DescriptionValueRank
EBITDA Margin %25.5In Top 8%
Net Profit Margin %9.3In Top 19%

4.3 Annualised Period-based Total Shareholder Returns [TSR %]: The Best Periods with TSR > 7.5%

TSR %5 yrs10 yrs
9432.TO7.615.3

4.4 Present Value of JPY1000 Invested in the Past [1 Yr, 3 Yrs]; The Best Periods with PVJPY1000 > 1,004

PVJPY1,0001 yr ago3 yrs ago
9432.TOJPY1,005JPY1,106
Information & Communication sectorJPY743JPY1,140
Nikkei 225 IndexJPY1,031JPY1,112

4.5 Moving Annual Return of 0.6% in the past year:

Moving Annual Return was 0.6% in the past year. Based on a dynamic start date of 5 years ago, the real rate of return has averaged 7.8%. The Moving Annual Return has been positive in 4 of the last 5 years.

9432Close (JPY)Dividends (JPY)Capital Gain / (Loss) %% YieldAnnual Return %
Jul 032,477.547.5(1.3)1.90.6
1 Yr ago2,508.96908.33.912.2
2 Yrs ago2,317.1275(5.1)3.1(2.1)
3 Yrs ago2,442.436013.12.815.9
4 Yrs ago2,159.37559.52.812.3

Close 5 years ago JPY1,971.63

4.6 MCap: 5-Year Increase of JPY4,549 billion [USD42 billion]

In the past 5 years Market Capitalization has increased by JPY4,549.4 billion (89%) from JPY5,112.9 billion to JPY9,662.2 billion. Based on a dynamic start date of 5 years ago, there have been declines in MCap in 3 out of 5 years.

PriceMCap (JPY B)MCap (US$ B)
LastJPY2,477.509,662.289.9
1 Year agoJPY2,508.969,960.692.5
2 Years agoJPY2,317.1210,26992.7
3 Years agoJPY2,442.4311,15199.4
4 Years agoJPY2,159.3710,08697.8
5 Years agoJPY1,971.635,112.941.4

4.7 Created Market Value [CMV] past 5 yrs of JPY3,275.5 billion (US$30.5 billion)

- Market Capitalization has increased by JPY4,648.8 billion from JPY5,013.4 billion to JPY9,662.2 billion in the last 5 years. This increase comprises cumulative retained earnings (RETE) of JPY1,373.3 billion and Created Market Value of JPY3,275.5 billion. The Created Market Value multiple, defined by the change in MCap for every JPY1 of retained earnings is exemplary at JPY3.39.

4.8 Past 5 years Annual Net Profit growth:

Average Annual Compounded rate of growth in Net Profit for the 5 years was impressive at 10.5%. There have been four rises and one decline in the past 5 years.

FYNet Profit (B JPY)Growth %
2020855.310.1
2019854.56-29.2
20181,206.713.9
20171,059.3843.6
2016737.7442.4

4.9 Low Debt to Equity (%)

The debt to equity ratio of 38.3% is under a safe benchmark figure of 50%. However, it has deteriorated in the past three years.

YearsDebt to Equity (%)
Mar 202038.31
Mar 201936.49
Mar 201834.78
Mar 20177.9
Mar 201647.49

4.10 Increased Volume, up 34% in 5 years

In the past five years, Average Daily Volume of Trading (ADVT) has increased 34.5% to 6 million shares.

Avg. Daily Volume Traded 12 months ended Jul 03, million shares

YearADVT
20206.0
20193.4
20183.3
20173.8
20164.5

4.11 Increased VWAP, up 24% in 5 years

In the past five years Volume Weighted Average Price (VWAP) has increased by 23.6% to JPY2,573.95. .

Past five years, 12 months ended Jul 03 (JPY)

YearHigh PriceVWAPLow Price
20202908.02573.952153.0
20192581.052311.11950.45
20182755.422454.272120.81
20172529.832204.951888.6
20162403.012081.691775.98

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

- Revenue growth has shown signs of recovery in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Mar 20 [Q4 vs Q3]2.1-76.62.8
Dec 19 [Q3 vs Q2]-0-6.710.8

4.13 Satisfies four criteria of Benjamin Graham

- The P/E of 12.9 multiplied by the P/NTA of 1.2 is 15.0. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

- "An earnings-to-price yield of at least twice the triple-A bond"; the stock's earning yield of 7.8% is 172.2 times the triple-A bond yield of 0%.

- "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 42.7 times the triple-A bond yield of 0%.

-"Total debt less than tangible book value"; total debt of JPY4391.4 billion (US$40.5 billion) is less than tangible book value of JPY8340.9 billion (US$77 billion).-"Total debt equal or less than twice the net quick liquidation value"; total debt of JPY4391.4 billion (US$40.5 billion) is 1.9 times the net liquidation value of JPY2312.15 billion (US$21.4 billion).

SECTION 5 Today's Bearish Signals

5.1 Momentum Down 0.7% Past Week

The price ranged between a low of 2,461.0 on Wednesday, Jul 01 and a high of 2,521.0 on Friday, Jun 26.

DayNippon Telegraph and TelephoneClose price [JPY]Price change %Relative change %Comment
ThursdayIncreases on average volume2,473.50.50.4Price rise on rising relative strength
Wednesday9432:JPY22,461.0-2.2-1.4Week-low of 2,461.0 Steepest Fall
TuesdayIncreases2,515.50.5-0.9Price rise on rising relative strength
MondayDecreases2,503.5-0.71.6Price/MAP200 below 1 and falling
FridayRises 1.2% on high volatility2,521.01.20.1Week-high of 2,521.0 Top Rise

5.2 Rank in the bottom 23% by Relative Valuation in the Japanese market

DescriptionValueRank
EV/EBITDA5.4In Bottom 23%
Price/Earnings/Growth2.56In Bottom 18%

5.3 Downtrend

Beta < 1 combined with price fall. The Beta of the stock is 0.5.

Price/Moving Average Price of 0.94:

- The Price/MAP 200 of 0.94 for Nippon Telegraph and Telephone is lower than the Price/MAP 200 for the Nikkei 225 Index of 1.1.

- The price to 200-day MAP ratio is 0.94, a bearish indicator. In the past 200 days this ratio has been under 0.94, 26 times suggesting further downside. The 50-day MAP of JPY2,478.28 is lower than the 200-day MAP of JPY2,627.88, a bearish indicator. The 200-day MAP has decreased to JPY2,627.88. A decrease is another bearish indicator.

SECTION 6 Ongoing Bearish Parameters

6.1 Rank in the bottom 17% by Growth in the Japanese market

DescriptionValueRank
EPS Growth %5In Bottom 17%

6.2 Annualised Period-based Total Shareholder Returns [TSR %]: The Worst Periods with TSR < 3.5%

TSR %3 yrs20 yrs30 yrs
9432.TO3.40.91.5

6.3 Present Value of JPY1000 Invested in the Past 3 Months; The Worst Period with PVJPY1000 < 991

PVJPY1,0003 mo ago
9432.TOJPY990
Information & Communication sectorJPY1,160
Nikkei 225 IndexJPY1,257

6.4 The Worst Periods [3 Mo, 1 Yr] with Price Change % < -0.9

1-Year price change of -1.3% for Nippon Telegraph and Telephone underperformed the change of 2.5% in the Nikkei 225 index for a relative price change of -3.8%.

Price Change %QuarterYear
Nippon Telegraph and Telephone-1-1.3
Information & Communication sector16-25.5
Nikkei 225 index25.22.5

6.5 P/E/G > 1

The price earnings ratio of 12.9 divided by trailing twelve months eps growth of 5.0% corresponds to P/E/G of 2.6 times.

EPS Growth (%)5.03
P/E/G2.56
P/E12.9

6.6 % Growth in EPS & RPS

EPS growth: Sequential EPS growth (Q4 vs Q3, 2020) was down 48.0% and PCP EPS growth (Q4 2020 vs Q4 2019) was down 8.2%. FY EPS growth (FY2020 vs FY2019) was up 5.0%.

RPS growth: Sequential growth in Revenue per share (Q4 vs Q3, 2020) was up 2.1% and PCP growth in Revenue per share (Q4 2020 vs Q4 2019) was down 48.1%. FY growth in Revenue per share (FY2020 vs FY2019) was up 5.1%.

(All figures in %)

Sequential growth in EPS (Q4 vs Q3, 2020)-48.0
Sequential growth in RPS (Q4 vs Q3, 2020)2.1
PCP growth in EPS (Q4 2020 vs Q4 2019)-8.2
PCP growth in RPS (Q4 2020 vs Q4 2019)-48.1
FY growth in EPS (FY2020 vs FY2019)5.0
FY growth in RPS (FY2020 vs FY2019)5.1

6.7 Declining share turnover, down 21% in 5 years

In the past five years, average daily share turnover has decreased 21.0% to JPY14.2 billion (US$131.9 million). This suggests decreased liquidity.

Past five years, 12 months ended Jul 03 (JPY billion)

YearAverage Daily Turnover
202014.2
201915.3
201816.2
201716.5
201618.0

6.8 Revenue, EPS, and EBITDA:

5-years average annualized earnings growth rate of 31.3%

- Profit growth and EBITDA growth have shown signs of deterioration in recent years. [compared with previous year, all figures in %]

FYRevenue GrowthEPS GrowthEBITDA Growth
20191-2-3
20183152

6.9 Satisfies 4 out of 9 criteria of Joseph Piotroski [pass mark 5]:

- Positive net income.

- Positive operating cashflow.

- Good quality of earnings [operating cashflow exceeds net income].

- Reduction in total shares on issue.

Glossary

ADVT: Average Daily Volume of shares Traded

Annual Return: Dividends Paid In a 12-Month Period/Price at the Beginning of the Period + Capital Gain or Loss over 1 Year/Price 1 Year Ago (%)

Capital Gain/Loss from n Years Ago to n-1 Years Ago: Capital Gain or Loss over 1 Year/Price 1 Year Ago (%)

Cash/MCap: Cash plus Liquids/Market Capitalisation (times)

Current Ratio: Current Assets/Current Liabiliites (times)

Debt/Equity: Net Debt/Net Assets %

Dividend Yield: Dividend Per Share/Share Price (%)

EBIT Margin : Earnings Before Interest and Tax/Revenue (%)

Earnings Yield: Earnings Per Share/Share Price (%)

Income during the n years (3/2/1): Dividends received during the Period

Moving Average Price (n periods): Sum of Prices for each Period/Number of Periods

PCP: Previous Corresponding Period

PV1000: Present value of 1000 invested 1 year/'n' years ago

Price Close/Moving Avg Price: Latest Price/Moving Average Price

Price/Earnings: Share Price/Earnings Per Share (times)

Price/NTA: Closing Share Price/Net Tangible Assets Per Share (times)

Price/Sales: Share Price/Sales Per Share (times)

Relative Price Change [RPC]: Relative price change is price change of stock with respect to Benchmark Index

Relative Strength (6 Months): Price close today/Price close 6 months ago, then ranked by percentile within the entire market.

Return on Assets: Net Profit/Total Assets (%)

Return on Equity (Shareholders' Funds): Net Profit/Net Assets (%)

TSR: Total Shareholder Returns is expressed as an annualized rate of return for shareholders after allowing for capital appreciation and dividend

TTM: Trailing 12 Months

Total Liabilities/Total Assets: Total Liabilities/Total Assets

Turnover Rate: value of annual trading volume as a percentage of market capitalisation

Volatility: Highest Price minus Lowest Price/Lowest Price (%)

Volume Weighted Average Price (VWAP): The Volume Weighted Average Price (VWAP) is the summation of turnover divided by total volume in the same period.

Created by www.buysellsignals.com