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KDDI Corp ADR KDDIY

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Morningstar’s Analysis

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KDDI Reports Mild Growth Despite Mobile Price Cuts

Dan Baker Senior Equity Analyst

Analyst Note

| Dan Baker |

Narrow-moat KDDI’s first-quarter fiscal 2021 result (ended June) was broadly in line with our estimates. Revenue increased 4.6% year over year, with operating income up 2.9% and net profit up 4.1%. These were all slightly ahead of the growth rates implied in the company’s full-year guidance of 0.7% revenue growth, 1.2% operating profit growth, and 0.5% net profit growth. We note that the first quarter one year ago was more negatively affected by COVID-19 at the revenue line. However, the same first quarter one year ago also contained some one-off property transactions that boosted operating profit by several billion yen. We retain our forecasts and our JPY 4,100/USD 20 fair value estimate. At this fair value estimate, KDDI would trade at a price/earnings ratio of 13.9 times with a 3.0% dividend yield.

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Company Profile

Business Description

KDDI is Japan's second-largest wireless operator (31% market share), the largest pay-TV operator (53% market share) and the second-largest provider of fibre-to-the-home broadband (12% market share). It has grown through acquisition and is focusing on increasing the number of customers who subscribe to more than one telecommunication service. It is also looking to grow its Life Design business which includes commerce, energy, and finance and had over 18 million IOT connections by the end of March 2021.

Contact
Garden Air Tower, 10-10, Iidabashi 3-chome
Tokyo, 102-8460, Japan
T +81 333470077
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Mar 31, 2020
Stock Type
Employees 82,560

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