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Hitachi Construction Machinery Co Ltd 6305

Morningstar Rating
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Stock XTKS Rating as of
¥‎4,161.00 +25.00 (0.60%)
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As of Delayed Price Closed
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Company Report

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Expect Hitachi Construction Machinery's Profitability to Improve From Growth of Value Chain Business

Jason Kondo

As a construction/mining machinery manufacturer, Hitachi Construction Machinery’s, or HCM’s, lifeline will be from sales of its mainstay hydraulic excavators, mining dump trucks, and wheel loaders. However, the company’s core strategy will focus on growing its “value chain” business, which includes services like spare parts supply and maintenance. As its product sales increase through both direct channels and dealers, the company can provide more aftermarket services. Further, more of HCM’s machines will be included its ConSite system, which allows the monitoring of the equipment’s operational status and if issues are detected, HCM can provide preventative/corrective measures. These services provide significant value for the end-users and are highly profitable.

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Price vs Fair Value

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6305 is trading at a 89% premium.
Price
¥‎4,161.00
Fair Value
¥‎3,625.00
Uncertainty
Medium
1-Star Price
¥‎9,319.40
5-Star Price
¥‎8,365.00
Economic Moat
Whvnyx
Capital Allocation
Bbpvfplw

Bulls Say, Bears Say

Bulls

Increased mining and parts sales will lead to a material improvement in operating margins.

Bears

Declining commodities demand can lead to weaker profitability from lower mining machinery sales.

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Trading Information

Previous Close Price
¥‎4,136.00
Day Range
¥‎4,143.00–4,233.00
52-Week Range
¥‎3,499.00–4,927.00
Bid/Ask
¥‎4,152.00 / ¥‎4,175.00
Market Cap
¥‎885.06 Bil
Volume/Avg
1.4 Mil / 901,781

Key Statistics

Price/Earnings (Normalized)
7.48
Price/Sales
0.63
Dividend Yield (Trailing)
3.60%
Dividend Yield (Forward)
5.29%
Total Yield
3.60%

Company Profile

Hitachi Construction Machinery, or HCM, manufactures and sells construction and mining machinery, and provides related services such as parts supply, rentals, and others. HCM was established in 1970 as a subsidiary of Hitachi, but its origins date back to 1949 when it introduced Japan’s first mechanical excavator. The company’s main products include hydraulic excavators for mining/construction, rigid dump trucks, and wheel loaders. As of August 2022, Hitachi is no longer the parent company of HCM, after selling 26% of its stake to HCJI Holdings, a joint venture between Itochu and Japan Industrial Partners. Currently, Hitachi has a 25.4% stake in Hitachi Construction Machinery as an equity-method affiliate. HCM is based in Tokyo, Japan.
Sector
Industrials
Industry
Farm & Heavy Construction Machinery
Stock Style Box
Mid Value
Total Number of Employees
28,624
Website
https://www.hitachicm.com

Competitors

Valuation

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Metric
6305
DE
CAT
Price/Earnings (Normalized)
 7.4811.9116.00
Price/Book Value
 1.164.709.72
Price/Sales
 0.631.912.66
Price/Cash Flow
 8.369.5113.68
Price/Earnings
6305
DE
CAT

Financial Strength

Metric
6305
DE
CAT
Quick Ratio
 0.671.800.73
Current Ratio
 1.482.011.35
Interest Coverage
 9.654.9526.54
Quick Ratio
6305
DE
CAT

Profitability

Metric
6305
DE
CAT
Return on Assets (Normalized)
 7.13%9.09%13.02%
Return on Equity (Normalized)
 17.37%41.64%59.16%
Return on Invested Capital (Normalized)
 9.25%13.75%19.73%
Return on Assets
6305
DE
CAT
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