KRAFTIA Construction progress slow, orders firm

研报英文原文证据摘录

KRAFTIA Construction progress slow, orders firm

Forecast returns

Forecast price appreciation 29.6%

Forecast dividend yield 2.9%

Forecast stock return 32.6%

Market return assumption 7.8%

Forecast excess return 24.8%

Company Description

Established in 1944 through the merger of 13 local electrical construction companies,

Kyudenko is a Kyushu-based facilities construction specialist which handles a wide range of

facilities construction work, including power distribution, electrical installation, HVAC

installation, and water and sewage systems work. It is also a major builder and operator of

renewable energy facilities including solar, hydroelectric, and other power plants. The firm

has relatively low exposure to power distribution. Recently, Kyudenko has increased its orders

outside Kyushu and taken on overseas work, supporting new growth.

Valuation Method and Risk Statement

Earnings are influenced by capital investment trends at domestic private companies and at

public entities. Efforts to limit capital spending at either could have a negative impact on

earnings. Higher materials and personnel costs could cause profitability to decline if cost

increases cannot be passed on to project prices. Kraftia establishes credit allowances for

customers based on the apparent financial strength of the customer. While the company

makes every effort to assess creditworthiness accurately, deteriorating management or

financial conditions at customers could have a negative impact on earnings. In addition to

facilities construction, Kraftia has exposure to renewable energy, personnel placement, hotel

management, and other businesses. These businesses could have a negative impact on

earnings in the event of increased competition or an economic downturn.