Namura Shipbuilding Co., Ltd. engages in shipbuilding business worldwide. The company builds crude oil carriers, tankers, product carriers, bulk carriers, ore carriers, LPG carriers, etc., as well as provides ship repair services. It is also involved in the design, production, and installation of bridges and steel structures. Namura Shipbuilding Co., Ltd. was founded in 1911 and is headquartered in Osaka, Japan.

Japan

Namura Shipbuilding Co., Ltd.

Industrials

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been good and slightly above its peers. At the same time, the average five-year yield has been significantly lower, at very close to zero. On average, the company pays dividends annually. 

7014.T reported revenue of JPY 158 772mn in the last 12 months, up 24% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 179% from FY23 to JPY 444.68.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 2ppts and its growth accelerated by 4ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 21.9% in the last 12 months, up from 13.4% in FY23. 

Historically, 7014.T has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 19.5%, a growth from 8.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 17.4% in the last 12 months, an increase from 7.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 29.2%, above the peers. 

Namura Shipbuilding Co., Ltd. reported a return on equity (RoE) of 36.7% in the last 12 months, up from 18.8% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 4.1 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

7014.T boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is relatively stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is minimal. We note solid return on capital, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, 7014.T is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, 7014.T is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

Based on key historical and expected multiples, the stock is greatly undervalued relative to its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITD. 

Namura Shipbuilding Co., Ltd.

¥ 2068

5

Namura Shipbuilding Co., Ltd.

¥ 2068

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 2068

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