NTT - Nippon Telegraph & Telephone Corp

[frommi]

This company looks like a good value play, or is there a hidden trap?

 

EV/EBITDA: 2.8

EV/EBIT: 7.5

PE: 11

Price/FCF: 6.7

Price/Book: 0.7

Price/Tangible Book: 1.0

Dividend yield: ~3.6% (dividend growing since 10 years)

 

Revenues of the last 10 years look stable and they have reduced their share count by 25% in that timeframe. Their fixedline business in Japan was shrinking, but seems to have stabilized, cloud based services worldwide and their mobile business are growing. According to http://www.ntt.co.jp/ir/fin_e/highlight.html they plan to grow revenues by ~3% and EPS by ~16% in the next year. Even when that won`t happen it looks to good to be true. So where is the catch? :)

 

 

[Palantir]

You sir, have a point...well done.

 

I wonder if there is some weird share structure at play?

[gary17]

I believe the government still owns substantial amount of the company...  30%?  could that be a factor?

[no_free_lunch]

There is something not quite right with the numbers.  Look at the financials posted in the link below.  They show that the dividend for the current year is about 6000 yen per share versus earnings of 11,900 yen per share.  Based on that, the earnings are roughly double the dividend.  If the dividend yield is 3.5%, then that indicates the earning yield is only 7%. 

 

https://www.nttdocomo.co.jp/english/corporate/ir/library/annual/fy2012/html/overview/financial_data/index.html

[frommi]

You are right, there is something wrong with the data. But your data is from DCM, not NTT.  :)

 

I mixed data from finance.yahoo with data from gurufocus. According to their last reports they reported earnings (http://www.ntt.co.jp/ir/library_e/results/index.html) of

 

2012=432 Yen per share, stock price is currently 5130 Yen so PE of 11.875

planned earnings for 2013(ending march 2014)=503 Yen so PE of 10.2

 

Perhaps the share is so cheap because its so hard to find the right data.  :o

 

I updated my first post to gurufocus data, that seems to be right. Can someone with another data source confirm that? :)

 

[no_free_lunch]

:P  Good catch.

[Palantir]

Even if GoJ has a big stake.... They're paying divs and buying back stock, it should accrue to shareholders.

[Phaceliacapital]

From BB.

[frommi]

Thank you, that matches gurufocus data.

[Palantir]

Pension Liability is a net minus of about 15B if I have my math right. It seems the Net Debt+Pension Liability is about 33B in total. Normalized FCF over past 5 years is about 7.25B. So an EV of 90.62B, gives us an FCF yield of about 8%. Fairly cheap, but not a huge steal IMO.

[frommi]

Pension Liability is a net minus of about 15B if I have my math right. It seems the Net Debt+Pension Liability is about 33B in total. Normalized FCF over past 5 years is about 7.25B. So an EV of 90.62B, gives us an FCF yield of about 8%. Fairly cheap, but not a huge steal IMO.

 

What i like the most is the limited downside of this investment. I would have no problems buying more if it gets cheaper.

[Palantir]

Does the Japanese Govt withhold taxes from the dividends or is the dividend declared the one you actually get?

[frommi]

I had to pay 7.14% withhold tax.

[Spekulatius]

Here are the numbers from TSE

http://quote.tse.or.jp/tse_n/quote.cgi?F=listing%2FEDetail1&MKTN=T&QCODE=9432