Hitachi Zosen Corporation produces waste treatment plants, industrial plants, precision machinery, industrial machinery, steel mill process equipment, steel structures, construction machinery, tunneling machines, and power plants.
Hitachi Zosen Stock
is a different stock than Covanta stock or Clean Harbors stock that we already
analysed. Clean Harbors being and expensive play in an exuberant market,
Covanta being a high risk dividend payer, Hitachi stock shows how this is a
difficult environment to operate it. The company forecasts profits of just 1
billion Yen on 395 billion in revenues.
However, if we
discount Hitachi’s future cash flows at a 10% discount rate, we get to a
present value that is similar to the current stock price. Given the price to
cash flow rate of 12.94, expected future growth, the company is likely to
deliver 10% returns.
As a typical
Japanese company, they have a short term and a long-term 2030 management plan. And, as a typical Japanese company, they
don’t mention rewarding shareholders within their plan.
They are really
banking on hot environmental topics, but this doesn’t mean the stock will be a
Their plan is to
grow revenues to 1 trillion Yen and to increase operating margins to 10%.
If they do that,
the stock will probably quintuple over the next decade, but I don’t see how
will they get to higher margins in 10 years if they don’t have them now. Now,
business is great globally, so why should it be better in 10 years with more
Plus, they expected
sales of 430 billion Yen for 2019 while actual sales are 390 billion.
To add to the above, they talk about data, artificial intelligence etc. Bullshit words I heard already and everyone is using them. Give me margins, not words. I don’t see from where will their competitive advantage come ???? A look at Hitachi Zosen’s stock price tells us the market doesn’t really believe them too.