Tempted to seize the opportunity on Yamaha ヤマハ after a 14% plunge!

 

Despite a 4.4% upward revision to Mar '25 forecast FY net profit to ¥35.5 billion & an improvement in net margin from 6.2% to 8.2% from the Apr-Jun quarter compared to '23, the stock shockingly plunged 14.13% seemingly because of 1) the general Tokyo market malaise represented by the nearly 1,000 point plunge in the Nikkei back to within 515 points of July's low of 37,611.19 due to the yen's sharp appreciation lately to below  ¥150 to the US$ 2) an upcoming 1 to 3 stock-split to make the shares more affordable to individual investors & an abolishment of the preferential shareholder benefit of about ¥2,000 at meetings(?)

It seems a little bit of an overreaction given that it has already sagged -47.5% from its '23 high of ¥5,876 and is just over 2/5ths of its all-time peak in Sep '21. Forecast '24 FY earnings are almost 3/4 of its all-time EPS record of  ¥291.8 in Mar '18 with forecast revenue of ¥475 billion almost 10% above FY '18 revenue & 27% above FY '21 turnover when EPS was 30% lower than next year's predicted number, & when the price peaked at ¥7,490 in Sep.

Of course, this figure is still 22% below the all-time high turnover of ¥608.99 billion announced in 3/'98 with the price peaking at ¥2,630 in May '97 perhaps in anticipation of that figure, yet the EPS accompanying that record was only ¥65.3 & dividend was only ¥10 & was subsequently cut to as low as ¥3 in '00 with the price bottoming at ¥620 in Nov '99 perhaps in anticipation of the big loss of ¥40,777 million[¥197.4] that was announced 4 months later. 

After a rebound to an EPS of ¥64.5 in '01, there was another loss of  ¥10,274 million[¥49.7] in '02, then a rebound in revenue from ¥504 billion in '02 to ¥550 billion in '07 while EPS rebounded to ¥86.7 in '03 & doubled to ¥210.6 the next year before dipping to ¥95.1,¥136 & ¥135.2 from '05-'07, peaking at ¥191.8 in '08 then turning red at ¥103.7 in '09 and narrowing to ¥25, turning black at ¥25.9 in '11, reversing to ¥151.7, then reversing to ¥21.3 in '13 & soaring back to ¥118.3, ¥128.8, ¥168.9 & ¥249 from '14-'17, peaking in '18 & falling back to ¥240.9, ¥195 & ¥151.4  in '19,'20 & '21 before rebounding to ¥214.9, ¥222.6 & ¥175.7  in FY 03/'22,'23 & '24 respectively.

CAR has risen from 31% in the mid-80s, to 42% in '96, just over 50% in '98, dipped to 39% in '02, rebounding to 51% by '05, peaking at 63% in '08, dipping to the mid-50s after the GFC, then rising to 67% in '16, 72% in '22 & 77.6% currently, accompanied by a rise in NTA from ¥680 in '96 to ¥1,135 in '98, dipping then rising from ¥978 in '02 to ¥1,335 in '05, ¥1,681 in '07 then dropping to  ¥1,052 in '12 & rebounding to ¥1,581 in '16, ¥1,911 in '19, reaching ¥2,423 in '22, ¥2,680 in '23, & ¥3,201.7 forecast compared to ¥3,075.7 in Mar this year. 

Adjusted NTA was ¥456 at the '81 peak &  ¥756 at the '88-'89 peak, dipping from ¥811 in '85 with revenue rising steadily from ¥203 billion in 1976 to between ¥300-400 billion in the 1980s, with EPS declining from ¥42 in '85 to ¥28 in '88, to  ¥22 in '90, likely due to the sharp appreciation in the yen to 120 from over 200 against the US$, dropping to ¥15 by '93 before rising sharply to ¥48 & ¥72  in '96 & '97,  then turning to losses by '00 & '02.

The unadjusted price actually peaked at around  ¥1,000 in 1961 before correcting down to the low ¥200 range near the market bottom in '63/'64. The last times it almost matched or fell below the book value was in the '73/'74 bear market, which was when it bottomed at ¥450 when NTA was ¥436 in '73, ¥463.6 in '74, over ¥470 in '75 before dipping to ¥460 in '76 at the time its revenue shot up from  ¥93 billion in 1973 to over double that by 1977, and in '82-'84 when the price slid to ¥594 from over ¥1,000 unadjusted before rocketing up through the last of the bubble years to a ¥2,460 peak, coincident with peak EPS in '88, not to be seen again for 9 years!

Total assets at the time was ¥131 billion, rising to over ¥400 billion by 1989, down to ¥314 billion in '96, over ¥500 billion by the '00s to ¥677 billion at last count. Borrowings used to be as high as ¥85 billion in '89 but all lease & financial liabilities total only ¥26.5 billion now, down from ¥27.8 billion in 3/'24.

I believe the recent tumble is also pricing in some of the estimated potential ¥4 billion yen in profit decline due to yen appreciation mentioned in the latest quarterly report, representing an 11.3% decline in EPS.