Industrials
Yurtec is a construction company of electric power facilities. It is a beneficiary of increased power consumption, reshoring manufacturing and the surge in construction activities, particularly due to government-backed offshore wind power and solar projects. The firm boasts a robust balance sheet with ¥27bn in net cash, leaving it well-equipped to finance its expansion initiatives. The share price jumped c.15% post FY24 results and are up 35% YTD, but still trade at a low PE of 13.3x for FY25E and PB of 0.76x. Yuka Marosek believes Yurtec can catch up with industry leader, Kyudenko, which trades at 17.7x PE. Under this multiple expansion scenario, the shares offer 30% upside.
Edition: 185
- 03 May, 2024
Industrials
This electrical engineering company is a key beneficiary of investment in new fabs in Japan as the largest proportion is focused in Kyudenko’s home region of Kyushu. Sales recognition from large projects undertaken 3-4 years ago that resulted in low profitability after raw material and labour costs spiked are disappearing and cost pass through means higher margins on newer projects are starting to feed through. Despite a surge in orders since H2 last year, an anticipated step up in earnings and increasing shareholder returns (cash is >¥100bn vs. ¥300bn MCap), the stock trades on a forward PER of <10x - a low valuation for the obvious positives.
Edition: 169
- 15 September, 2023