Financials
Mike Allen expects NMAC to post OP of ¥5bn (vs. consensus of ¥4bn) when the company reports Q3 results on Jan 30th. In the previous quarter, NMAC’s operating profit exceeded original consensus forecast by 95%, and for a stock with 18% of its M/Cap in cash, a trough RoE exceeding 18%, and almost zero capital requirements, he thinks it is unambiguously cheap. But the market seems unimpressed, at least so far. In the past three months, the stock is up 13.1% vs. Topix +12.8%. In his latest report, Mike details what needs to happen to gain the market’s attention.
Edition: 178
- 26 January, 2024
Financials
Nihon M&A Center’s stock peaked in Nov 2021, plagued by accounting scandals, the stock has underperformed in 23 of the last 33 months. The most recent quarterly results saw a 52% decline in operating profit on a 9% decline in sales. Before peaking though, the company grew sales and operating profits at a compounded average annual rate of more than 20% for 13 years and routinely earned a return on equity more than 3x the Topix average. They have also hired new senior staff and completely revamped their internal controls. Azabu believes the company is about to bounce back in a stronger position than ever. Their base-case forecast offers ~30% upside.
Edition: 168
- 01 September, 2023