Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>We turned bullish on Komatsu a year ago and the stock has since returned over 50%.</li>
<li>Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.</li>
<li>Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.</li>
</ul>


We turned bullish on Komatsu a year ago and the stock has since returned over 50%.
Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.
Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.


Komatsu (6301) | A Winning Bet on Onshoring and Electrification

<ul>
<li>We remain bullish on Komatsu despite returning a positive 37% return over the past year. </li>
<li>Q1 results are likely to exceed expectations and guidance is likely to be cautious, due to forex, pricing and cost factors.</li>
<li>Komatsu is still attractively valued compared to its peers and historical averages, and has 20% upside potential.</li>
</ul>


We remain bullish on Komatsu despite returning a positive 37% return over the past year. 
Q1 results are likely to exceed expectations and guidance is likely to be cautious, due to forex, pricing and cost factors.
Komatsu is still attractively valued compared to its peers and historical averages, and has 20% upside potential.


Komatsu (6301) | The Back Test Worked. Now What?

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>After the market close on 20 June, Doosan Enerbility announced that it will sell 5 million shares of Doosan Bobcat through a block deal worth about 300 billion won.</li>
<li>The block deal price range is from 54,800 won to 56,200 won, which represents a discount range from 6.18% to 8.51% (versus current price).</li>
<li>We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn in North America.</li>
</ul>


After the market close on 20 June, Doosan Enerbility announced that it will sell 5 million shares of Doosan Bobcat through a block deal worth about 300 billion won.
The block deal price range is from 54,800 won to 56,200 won, which represents a discount range from 6.18% to 8.51% (versus current price).
We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn in North America.


Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn

<ul>
<li>Komatsu Q3 operating profit rose 54% YoY, beating analyst estimates by around 12%</li>
<li>Construction and Mining Equipment sales rose 31% in the quarter, or ~10% on a constant currency basis versus industry volume of -6%</li>
<li>Komatsu shares have sharply lagged the recovery at CAT. We still see significant upside with current P/B of 1.2x</li>
</ul>


Komatsu Q3 operating profit rose 54% YoY, beating analyst estimates by around 12%
Construction and Mining Equipment sales rose 31% in the quarter, or ~10% on a constant currency basis versus industry volume of -6%
Komatsu shares have sharply lagged the recovery at CAT. We still see significant upside with current P/B of 1.2x


Komatsu (6301) | Plenty of Gas in the Tank

<ul>
<li>Komatsu reported above Consensus 2Q OP; lifted OP guidance; and raised dividends.  Outlook for next FY3/24 looks bright</li>
<li>Share price is pricing in a severe recession. A PBR of 1.1x is implies a significant OP decline. We see no evidence of an earnings contraction next year</li>
<li>We expect the share price to re-rate as the market prices in resilient earnings outlook. Our back test still suggests over 45% upside </li>
</ul>


Komatsu reported above Consensus 2Q OP; lifted OP guidance; and raised dividends.  Outlook for next FY3/24 looks bright
Share price is pricing in a severe recession. A PBR of 1.1x is implies a significant OP decline. We see no evidence of an earnings contraction next year
We expect the share price to re-rate as the market prices in resilient earnings outlook. Our back test still suggests over 45% upside 


Komatsu(6301) | Post 2Q Earnings – BACKTEST STILL Says over 45% Upside

Japan

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders.  The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

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Komatsu Ltd (6301 JP)

Komatsu (6301) | A Winning Bet on Onshoring and Electrification

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

Komatsu (6301) | The Back Test Worked. Now What?

Komatsu: A strong buy with 20% upside. Q1 results to beat expectations, guidance is too cautious. Valuation still attractive.

Mark Chadwick

Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn

We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn...

Douglas Kim

Komatsu (6301) | Plenty of Gas in the Tank

We remain bullish on Komatsu. Komatsu shares have sharply lagged the recovery at CAT. We still see significant upside with current P/B of 1.2x

Mark Chadwick

Komatsu(6301) | Post 2Q Earnings – BACKTEST STILL Says over 45% Upside

Komatsu is severely undervalued vs fundamentals. 2Q results should go a far way to ally fears of a significant earnings contraction. This is a top...

Mark Chadwick

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52-week Range

Market Cap (USDm)

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Komatsu (6301) | A Winning Bet on Onshoring and Electrification

​Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

Komatsu (6301) | The Back Test Worked. Now What?

Komatsu: A strong buy with 20% upside. Q1 results to beat expectations, guidance is too cautious. Valuation still attractive.

Mark Chadwick

Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn

We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn...

Douglas Kim

Komatsu (6301) | Plenty of Gas in the Tank

We remain bullish on Komatsu. Komatsu shares have sharply lagged the recovery at CAT. We still see significant upside with current P/B of 1.2x

Mark Chadwick

Komatsu(6301) | Post 2Q Earnings – BACKTEST STILL Says over 45% Upside

Komatsu is severely undervalued vs fundamentals. 2Q results should go a far way to ally fears of a significant earnings contraction. This is a top...

Mark Chadwick

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...