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.