7012 JP
Kawasaki Heavy Industries Ltd
Industrial/Transportation
05/23/2016
Presented
| Date | 05/20/2016 |
| Price | ¥329.00 |
| Market Cap | $4.59B |
| Ent Value | $7.63B |
| P/E Ratio | 11.94x |
| Book Value | ¥258.22 |
| Div Yield | 0.04% |
| Shares O/S | 1,670.58M |
| Ave Daily Vol | 20,850,216 |
| Short Int | N/A |
Current
| Price | ¥6,563.00 |
| Market Cap | $9.18B |
| Kawasaki Heavy Industries, Ltd. engages in the manufacture of transportation equipment and industrial goods. It operates through the following segments: Ship and Offshore Structure, Rolling Stock, Aerospace, Gas Turbine and Machinery, Plant and Infrastructure, Motorcycle and Engine, Precision Machinery, and Others. The Ship and Offshore Structure segment builds and sells ships and other vessels. The Rolling Stock segment produces and sells railway vehicles and snow plows. The Aerospace segment manufactures and sells aircrafts. The Gas Turbine and Machinery segment produces and merchandises jet engines, general gas turbines, and prime movers. The Plant and Infrastructure segment covers industrial machinery, boilers, environmental equipment, steel structures, and crushers. The Motorcycle and Engine segment includes motorcycles, personal watercrafts, all-terrain vehicles, utility vehicles, and general purpose gasoline engines. The Precision Machinery segment manufactures and sells hydraulic equipment and industrial robots. The Other segment includes construction machinery production and sale, commercial activities, sales and order placement agency and mediation services, and welfare facilities administration. The company was founded by Shozo Kawasaki in April 1878 and is headquartered in Kobe, Japan. |
Publicly traded companies mentioned herein: Boeing Co (BA), Harley-Davidson Inc (HOG), Kawasaki Heavy Industries Ltd (7012 JP), Polaris Industries Inc (PII)
Highlights
The presenter is short shares of Kawasaki Heavy Industries (KHI) and sees 35% downside risk for the diversified manufacturer of aerospace parts and equipment, motorcycles, gas turbines, and much more. KHI’s market cap is roughly 549,621 million JPY (please note, all figures herein are millions of JPY, unless otherwise specified), and it is relatively indebted at 2.7x Total Debt/ EBITDA and 3.6x Net Debt. A combination of FX exposure, margin pressure, and unfavorable dynamics in the North American motorcycle and ATV/ORV markets are likely to weigh on EBITDA/ cash flow and make leverage more of an issue. He sees shares as more fairly valued at JPY 200 - 225 based on a “reasonable” 7.5x EBITDA multiple.
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