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Komatsu and the Farm and Construction Machinery Industry

Komatsu and the Farm and Construction Machinery Industry. Mod 9 John Rojo. The Company. Japanese manufacturer vehicles and machinery for construction, mining, and agriculture Includes excavators, backhoes, skid loaders, forest machines, forklifts, cutting lasers..

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Komatsu and the Farm and Construction Machinery Industry

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  1. Komatsu and the Farm and Construction Machinery Industry Mod 9 John Rojo

  2. The Company • Japanese manufacturer vehicles and machinery for construction, mining, and agriculture • Includes excavators, backhoes, skid loaders, forest machines, forklifts, cutting lasers.. • There is no specific farm equipment but many duel use products

  3. Key Financial Figures (All figures in million Yen) • Cash-¥93,620 • Total Assets ¥ 2,517,857 • Total Liabilities/ Equity- ¥ 1,265,162 & ¥ 1,252,695 • Net Sales- ¥ 1,884,991 • Operating Income- ¥ 211,602 • Net Income – ¥137,135 • To convert to dollars it is approximately ¥ 100 to $1

  4. Cost of Debt • 20. Fair Values of Financial Instruments • (1) Cash and cash equivalents, Time deposits, Trade notes and accounts receivable, Other current assets, Short-term debt, Trade notes, bills • and accounts payables, and Other current liabilities • The carrying amount approximates fair value because of the short maturity of these instruments. • (2) Investment securities, marketable equity securities • The fair values of investment securities available for sale for which it is practicable to estimate fair value are based on quoted market prices and are • recognized on the accompanying consolidated balance sheets. • (3) Long-term trade receivables (Note 4) • The fair values of long-term trade receivables are based on the present value of future cash flows through maturity, discounted using estimated current • interest rates. The fair values computed on such a basis approximate the carrying amounts. • (4) Long-term debt, including current portion (Note 21) • The fair values of each of the long-term debt are based on the quoted price in the most active market or the present value of future cash flows • associated with each instrument discounted using the current borrowing rate for similar debt of comparable maturity and is classified in Level 2 in the • fair value hierarchy.

  5. Dividends and Implied BV Actual 2,122 price So off by 15%

  6. Residual Income Model

  7. Sensitivity Analysis

  8. Issues • There is little analyst information and all of it comes from one site • The site does not provide a lot of the information needed for some of the examples from this chapter so numbers such as dividends are relatively arbitrary. I looked at this year and tried to forecast them out • When taking into account the analyst growth rates the value of the stock is unrealistic under every WACC and growth rate

  9. Questions

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