Last Update 04 Jun 26
Further results from brand strategy execution
Q4 FY3/26 results update
FY3/26 guidance beat – FY3/26 Q1-4 sales and OP beat company guidance amid further evidence of effective mobile LTV (Lifetime Value) brand strategy execution and price revisions. Full-year sales rose +2.4% YoY to ¥86.35bn and OP rose +5.2% YoY to ¥18.69bn versus company guidance for sales of ¥85bn and OP of ¥18.2bn. This 14th consecutive year of OP growth, together with the sales and EPS rise, marked a strong start to its medium-term management plan.
Further growth forecast for FY3/27 – The company forecasts sales growth to accelerate to +4.2% YoY (¥90bn), helped partly by last year’s price revisions, further brand strategy traction, Business Services’ revenue growth and au Denki net additions.
Shareholder returns remain in focus
MTMP (FY3/26-FY3/31) aims for ¥100bn sales by FY3/31 – Almost all of the additional ¥15.69bn in sales needed to meet this target will be generated by Business Services and au Denki, amid intense competition in the mobile business.
Mobile branding strategy shows results – The company’s age-specific au plans are raising its competitiveness, encouraging users to its more profitable flagship brand from its lower-priced UQ service. Meanwhile, UQ user loyalty is improving through promoting bundle plans centered on device purchases.
Focus on shareholder returns – ¥5bn spent on its recently-completed buyback, representing 100% of volume, due to share price appreciation. A new ¥5bn program and planned 26th straight annual DPS hike for 3/27, highlights a continued focus on shareholder returns.
Valuations – According to our estimates for FY3/27, the shares are trading on a PER of 24.1x and a free cash flow yield of 4.0%. Total shareholder returns for FY3/27 will reach 84.1% on our estimates, assuming a dividend payout ratio of 47.7% and the company spending the maximum planned ¥5bn on share buybacks.
Full report here
Q3 FY3/26 results update
Strong progress towards full-year forecast – FY3/26 Q1-3 sales rose +3.1% YoY to ¥64.36bn and OP increased +4.5% YoY to ¥14.35bn, as the company’s focus on improving mobile customer LTV (Lifetime Value) started showing results, with churn declining YoY for the first time in 9 quarters. Additionally, the impact from service price revisions and inter-brand migration improvement led to total mobile revenue rising +6.1% YoY. Handset sales were strong as its UQ Mobile strategy focused on devices paid off, as did its strategy to offer device bundles when customers migrated from UQ to au. Furthermore, its entry into the electricity retail market is improving au Denki’s cost structure. We think the company has enough momentum to produce full-year results ahead of its guidance.
Growth businesses to drive MTMP
MTMP (FY3/26-FY3/31) aims for ¥100bn sales by FY3/31 – Almost all of the additional ¥15.69bn in sales needed to meet this target will be generated by the Solutions Business and au Denki, amid intense competition in the mobile business.
Mobile branding strategy shows results – The company’s age-specific au plans are raising its competitiveness, encouraging to users to its more profitable flagship brand from its lower-priced UQ service. Meanwhile, UQ user loyalty is improving through promoting bundle plans centered on device purchases.
Shareholder returns will continue to rise through the MTMP – According to our estimates for FY3/27, shares are trading on an estimated PER of 22.6x and a free cash flow yield of 4.1%. Total shareholder returns for FY3/26 will reach 84.1% on our estimates, assuming a dividend payout ratio of 46.1% and the company spending the maximum planned ¥5bn on share buybacks.
Full report available at this link
Description: Okinawa Cellular is a telecoms provider operating parent KDDI’s brands in Japan’s southernmost prefecture of the same name. It offers both mobile and FTTH services.
Have other thoughts on Okinawa Cellular Telephone?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeHow well do narratives help inform your perspective?
Disclaimer
The user AstrisCorporateAdvisory holds no position in TSE:9436. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.