Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>Results ahead of our forecasts and top-line growth is accelerating</li>
<li>Q2 revenue growth of 4% includes 6% growth in core segments on telework demand</li>
<li>Operating profit grew 25% as it lapped aggressive caapacity spend last year</li>
</ul>


Results ahead of our forecasts and top-line growth is accelerating
Q2 revenue growth of 4% includes 6% growth in core segments on telework demand
Operating profit grew 25% as it lapped aggressive caapacity spend last year


Arteria Networks (Buy) - Q2 21 Results Reaction: Growth Rates Trending Higher

Arteria shares have rebounded from a dreary 2020 as Q4 results and an optimistic mid-term plan have re-kindled interest in telecoms growth. Management will invest heavily in FY21 to support revenue CAGR of 8% through 2025. We are slightly more conservative but our forecasts for FY25 revenue and profitability are 10% higher than before and support a higher valuation. We are raising our DCF-driven FY21 target price from ¥2,380 to ¥2,800 and with 45% potential upside to our target, remain at Buy.

Arteria shares have rebounded from a dreary 2020 as Q4 results and an optimistic mid-term plan have re-kindled interest in telecoms growth. Management will invest heavily in FY21 to support revenue CAGR of 8% through 2025. We are slightly more conservative but our forecasts for FY25 revenue and profitability are 10% higher than before and support a higher valuation. We are raising our DCF-driven FY21 target price from ¥2,380 to ¥2,800 and with 45% potential upside to our target, remain at Buy.  

Arteria Networks (Buy)- Aggressive Growth Plans Highlight Market Potential

<a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a> ended the year with a flourish as accelerating revenue and profitability growth allowed it to exceed its full-year targets despite market worries for most of FY20 that it would fall short. As important, the company has released its mid-term financial plan with growth expectations through FY25 that are well-ahead of consensus expectations. We believe markets have underestimated the company’s growth potential as it leverages a collection of high-quality assets including Japan’s fourth-largest fiber network to operate in selected market segments that are growing faster than the overall industry. We remain at Buy.

ARTERIA Networks Corp (4423 JP) ended the year with a flourish as accelerating revenue and profitability growth allowed it to exceed its full-year targets despite market worries for most of FY20 that it would fall short. As important, the company has released its mid-term financial plan with growth expectations through FY25 that are well-ahead of consensus expectations. We believe markets have underestimated the company’s growth potential as it leverages a collection of high-quality assets including Japan’s fourth-largest fiber network to operate in selected market segments that are growing faster than the overall industry. We remain at Buy.

Arteria Networks Q4 20 Results: Robust Growth in Mid-Term Plan

Arteria Networks is a facilities-based provider of fixed telecom services that stands out for having the fourth-largest fiber network in Japan whilst it is also a major provider of ISP services to condominiums. Its main business is the provision of Internet and network services to Enterprise customers and the company is well positioned to grow, especially as a coronavirus-driven demand shift expands the market. We initiate coverage at Buy supported by a ¥2,380 target price for FY21-end implying 48% potential upside.

Arteria Networks is a facilities-based provider of fixed telecom services that stands out for having the fourth-largest fiber network in Japan whilst it is also a major provider of ISP services to condominiums. Its main business is the provision of Internet and network services to Enterprise customers and the company is well positioned to grow, especially as a coronavirus-driven demand shift expands the market. We initiate coverage at Buy supported by a ¥2,380 target price for FY21-end implying 48% potential upside.  

Arteria Networks - Focused Growth Supported by High-Quality Assets (Initiation of Coverage)

Arteria posted mixed Q3 20 results as an easing of Covid-19 restrictions helped sales growth recover although higher operating costs remain a drag on profitability. Management has kept its full-year guidance intact and we suspect that the result will be a lot like Q3 with a revenue beat but profitability miss.   Shares are traded down 2% on the expectation that FY20e targets may be out of reach but the focus should be on the sustainable demand for Arteria products and services as the corporate environment shifts.

Arteria posted mixed Q3 20 results as an easing of Covid-19 restrictions helped sales growth recover although higher operating costs remain a drag on profitability. Management has kept its full-year guidance intact and we suspect that the result will be a lot like Q3 with a revenue beat but profitability miss.   Shares are traded down 2% on the expectation that FY20e targets may be out of reach but the focus should be on the sustainable demand for Arteria products and services as the corporate environment shifts. 

Arteria Networks Q3 20 Results: Encouraging Return to Top-Line Growth Despite Margin Shortfall

Japan

ARTERIA Networks Corporation provides telecommunication services. The Company offers internet connection, virtual private network construction, colocation, mobile connection, mobile device management, optical fiber network construction, and other services.

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ARTERIA Networks Corp (4423 JP)

Arteria Networks (Buy)- Aggressive Growth Plans Highlight Market Potential

We are raising our forecasts for Arteria (Buy, TP ¥2,800 from 2,380 before) to reflect mid-term guidance and even on a relatively conservative...

Kirk Boodry

Arteria Networks Q4 20 Results: Robust Growth in Mid-Term Plan

Arteria met guidance for FY20 and posted targets for FY25 that are well-ahead of consensus expectations. Weakness earlier in the year re-set...

Kirk Boodry

Arteria Networks - Focused Growth Supported by High-Quality Assets (Initiation of Coverage)

Arteria shares have lagged as markets worry that it may fall short of financial targets for FY20 but we expect a return to growth in FY21. We are...

Kirk Boodry

Arteria Networks Q3 20 Results: Encouraging Return to Top-Line Growth Despite Margin Shortfall

Arteria re-iterated full-year guidance after Q3 results that were solid on the top line but challenging for profitability.

Kirk Boodry

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Arteria Networks (Buy) - Q2 21 Results Reaction: Growth Rates Trending Higher

Arteria posted Q2 results ahead of our forecasts and is on track to beat full-year targets as telework-driven demand remains strong and the company...

Kirk Boodry

Arteria Networks (Buy)- Aggressive Growth Plans Highlight Market Potential

We are raising our forecasts for Arteria (Buy, TP ¥2,800 from 2,380 before) to reflect mid-term guidance and even on a relatively conservative...

Kirk Boodry

Arteria Networks Q4 20 Results: Robust Growth in Mid-Term Plan

Arteria met guidance for FY20 and posted targets for FY25 that are well-ahead of consensus expectations. Weakness earlier in the year re-set...

Kirk Boodry

Arteria Networks - Focused Growth Supported by High-Quality Assets (Initiation of Coverage)

Arteria shares have lagged as markets worry that it may fall short of financial targets for FY20 but we expect a return to growth in FY21. We are...

Kirk Boodry

Arteria Networks Q3 20 Results: Encouraging Return to Top-Line Growth Despite Margin Shortfall

Arteria re-iterated full-year guidance after Q3 results that were solid on the top line but challenging for profitability.

Kirk Boodry