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KDDI Corp ADR KDDIY

Morningstar Rating
$15.16 +0.11 (0.73%)
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Company Report

KDDI Earnings: In-Line Period With Little Impact From Rakuten’s Customer Boost

Narrow-moat KDDI’s third-quarter fiscal 2023 result (quarter-ending December 2023) was slightly below our expectations, but the company should still be on track to achieve its unchanged full-year guidance of operating revenue rising 2.3%, and both operating income and net profit rising 0.4%, in our opinion. Third-quarter operating revenue increased by 3.1%, with operating profit up 0.9%. The result was driven by a strong performance from the business services segment, which saw revenue grow 20.6% year on year and operating income grow 11.4%, offsetting the 2.3% year-on-year operating income decline from the larger personal services segment. Business services is being driven by data centers with the company opening new facilities in Frankfurt and Paris in 2023 and purchasing facilities in Canada. Mutibrand communications average revenue per user declined by JPY 0.8 billion year on year in the third quarter and was broadly flat over the first three quarters, with management forecasting a return to growth in the fourth quarter.

Price vs Fair Value

KDDIY is trading at a 0% premium.
Price
$15.05
Fair Value
$26.00
Uncertainty
Low
1-Star Price
$31.18
5-Star Price
$97.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

KDDI has increased its dividend each year for 21 years until fiscal 2022 and it is forecasting this streak to continue for fiscal 2023.

Bears

All Japanese operators now have access to the iPhone and offer fixed/wireless bundles. Homogeneous service offerings could lead to excessive competition.

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Trading Information

Previous Close Price
$15.05
Day Range
$14.6615.57
52-Week Range
$13.8017.15
Bid/Ask
$15.16 / $15.21
Market Cap
$63.44 Bil
Volume/Avg
35,969 / 101,014

Key Statistics

Price/Earnings (Normalized)
12.95
Price/Sales
1.57
Dividend Yield (Trailing)
3.22%
Dividend Yield (Forward)
3.22%
Total Yield
6.72%

Company Profile

KDDI is Japan's second-largest wireless operator (31% market share), the largest pay-TV operator (53% market share) and the second-largest provider of fibre-to-the-home broadband (12% market share). It has grown through acquisition and is focusing on increasing the number of customers who subscribe to more than one telecommunication service. It is also looking to grow its Life Design business which includes commerce, energy, and finance and had over 45 million Internet of Things connections by the end of December 2023.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Core
Total Number of Employees
86,331

Competitors

Valuation

Metric
KDDIY
9432
9434
Price/Earnings (Normalized)
12.9515.7720.77
Price/Book Value
1.721.674.02
Price/Sales
1.571.191.56
Price/Cash Flow
6.305.318.26
Price/Earnings
KDDIY
9432
9434

Financial Strength

Metric
KDDIY
9432
9434
Quick Ratio
0.710.750.70
Current Ratio
0.760.980.75
Interest Coverage
122.2116.239.48
Quick Ratio
KDDIY
9432
9434

Profitability

Metric
KDDIY
9432
9434
Return on Assets (Normalized)
6.15%4.84%3.66%
Return on Equity (Normalized)
14.87%14.22%24.19%
Return on Invested Capital (Normalized)
9.86%6.31%5.95%
Return on Assets
KDDIY
9432
9434
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