Disclaimer: This content is for informational purposes only, not investment advice. I may own equities mentioned in this article. Investing involves risk, so always do your own research before buying or selling any securities.
A note on the format: I recorded myself and then transcribed it and cleaned up the formatting. So it reads a lot more like I actually talk than my usual written pieces do. However, all figures and facts are based on Hitachi’s disclosed documents and have been rigorously verified as always. Tell me in the comments whether you like this format better than the normal one!
After last week's Okinawa Cellular Telephone analysis, I've really taken a liking to Katsenelson’s Absolute P/E. To fully test it out, I needed a worthy Japanese company.
Hitachi is the obvious choice!
It is the best turnaround this country has produced in my lifetime, and it happens to sell the electrical infrastructure of the entire AI buildout.
They just reported their Q1 this Tuesday, raised guidance and the stock popped 3.8%.
So now, how do I view this company after a brilliant report and ultra positive management?
Executive Summary
KonichiValue Score for Hitachi Ltd. (6501): Sell | Last: 5,146 JPY | Mkt Cap: 23.1 Trillion JPY
Trailing P/E: 29.1x
Forward P/E: 25.6x
Absolute Fair Value P/E: 16.5x
Base-case Fair Value: 3,323 JPY
Weighted Fair Value: 3,444 JPY
Normalized EPS: 201 JPY (management’s own number)
Dividend Yield: 1.07%
Net debt to equity: 15.4%
Why I am writing this:
This is an amazing company with incredible moats.
However, the stock is trading 8% above my bull case, not my base case, my bull case! And my bull case already assumes a decade long global infrastructure boom.
