Home Japanese
Omega Investment Co., Ltd.

Itoki (Company Note – 3Q update)

Coverage
Share price (12/26) ￥601 Dividend Yield (22/12 CE) 2.49 %
52weeks high/low ￥619/327 ROE(TTM) 7.77 %
Avg Vol (3 month)  168.9 thou shrs Operating margin (TTM) 4.06 %
Market Cap ￥27.44 bn Beta (5Y Monthly) 0.90
Enterprise Value ￥29.03 bn Shares Outstanding 45.664 mn shrs
PER (22/12 CE) 5.44 X Listed market TSE Prime section
PBR (21/12 act) 0.57 X    
Click here for the PDF version of this page
PDF Version

The company has revised up its full-year forecasts for FY12/2022, proposing a new office with the Smart Office Concept.

◇  The full-year forecasts for FY12/2022 were raised, with operating profit close to a record high.

On 23 December, Itoki announced the booking of an extraordinary profit following the transfer of fixed assets and an extraordinary loss due to the removal of fixed assets. The company also revised its full-year forecasts for FY12/2022. The extraordinary profit recorded was 6,500 million yen, while the extraordinary loss was 1,377 million yen. As a result, the sales estimate for FY2022 is unchanged from the previous guidance, but operating profit will be better by 200 million or +5%, recurring profit by 100 million yen or +2.5% and net profit attributable to owners of the parent by  2,300 million yen or +85.2% compared to the previous forecasts. However, recurring profit has already achieved the revised estimate at the end of 3Q and could further come in on the upside.

The company’s 3Q results for FY2022 are shown in the table below: sales grew by 7% yoy and operating profit by 1.4 times. By segment, the mainstay Workplace-related businesses posted sales of  63.2 billion yen (+5.1% yoy) and an operating profit of 2.4 billion yen (+66.7%), while Equipment / Public Business-related businesses performed well with sales of 25.4 billion yen (+13.0%) and operating profit of 1.2 billion (+135.3%). Both segments succeeded in winning orders for large projects. Despite the impact of higher raw material prices, this made a significant contribution to performance due to increased revenues and improved margins thanks to the increased value provided.

◇  Share price trend: Up 60.7% YTD, backed by robust business performance. The share price performance stands out amongst those of the peers.

The company’s share price has risen 60.7% since the beginning of the year. This compares very favourably to a performance of -16.1% to 10.0% for its peers over the same period. This is attributable to the robust demand for office furniture and the company’s ability to secure high profit margins through a more proposal-oriented sales approach in response to new office demand.

However, the company’s shares are as yet undervalued vis-a-vis its peers trading on PBR in the region of 0.5 times, despite improving trends (see chart below). The five-year average operating profit margin was 1.8%, which compares to 5.6% for Kokuyo (7984), 5.5% for Okamura (7994) and 3.0% for Uchida Yoko (8057) and indicates that the company was inferior to competitors in terms of profitability. In addition, its sales per employee were only half to two-thirds of the peers’, suggesting that it also needed to improve its productivity. While the company’s office furniture was highly acclaimed for its design, it was not fully reflected in the added value, as illustrated by these statistics.

The company advocates the Smart Office Concept, which aims to realise a new post-pandemic disease way of working through a fusion of technology and design. It seeks to create a new business model by realising office DX. If this strategy contributes to earnings, the company’s share price should be revalued further.

  JPY, mn, % Net sales YoY
%		 Oper.
profit		 YoY
%		 Ord.
profit		 YoY
%		 Profit
ATOP		 YoY
%		 EPS
(¥)		 DPS
(¥)
2019/12 122,174 2.9 903 -53.1 945 -60.1 -550 – -12.08 13.00
2020/12 116,210 -4.9 1,798 99.1 1,881 99.0 -235 – -5.18 13.00
2021/12 115,839 -0.3 2,536 41.0 2,437 29.5 1,166 – 25.82 15.00
2022/12 (old CE) 123,000 6.1 4,000 56.2 4,000 64.1 2,700 131.4 59.63 15.00
2022/12 (new CE) 123,000 6.1 4,200 65.6 4,100 68.2 5,000 328.8 110.42 15.00
2021/12 3Q 84,047 -2.5 1,731 140.7 1,651 123.4 850 – 18.82 –
2022/12 3Q 89,961 7.0 4,086 136.0 4,125 149.8 3,517 313.8 77.73 –

　

5-year stock price move

Share price compared to TOPIX (last three years)

7972: Historical PBR of Itoki and the three competitors (LTM, past five years)

　

Financial data (full-year basis)

FY (¥mn) 2012/12 2013/12 2014/12 2015/12 2016/12 2017/12 2018/12 2019/12 2020/12 2021/12 2022/9
[Statements of income]                      
Net sales 105,508 103,461 102,993 106,516 101,684 108,684 118,700 122,174 116,210 115,839 121,832
　Year-on-year basis (%) 14.6 -1.9 -0.5 3.4 -4.5 6.9 9.2 2.9 -4.9 -0.3 6.9
Cost of sales 70,027 67,118 66,797 68,374 65,021 69,966 77,436 80,495 74,322 74,145 77,063
Gross profit 35,481 36,343 36,196 38,142 36,663 38,718 41,264 41,679 41,888 41,694 44,769
　Gross profit ratio (%) 33.6 35.1 35.1 35.8 36.1 35.6 34.8 34.1 36.0 36.0 36.7
SG&A expenses 32,040 32,203 33,723 33,836 33,862 35,761 39,339 40,776 40,089 39,158 39,833
Operating income 3,441 4,140 2,472 4,306 2,800 2,956 1,925 903 1,798 2,536 4,935
　Operating profit ratio (%) 3.3 4.0 2.4 4.0 2.8 2.7 1.6 0.7 1.5 2.2 4.1
Non-operating income 813 813 841 898 771 750 889 677 804 694 582
Non-operating expenses 518 528 495 605 483 412 448 634 720 793 607
Ordinary income 3,735 4,425 2,818 4,599 3,087 3,295 2,365 945 1,881 2,437 4,911
Extraordinary income 269 685 615 171 97 228 919 27 1,111 1,554 1,131
Extraordinary expenses 352 238 262 524 267 121 204 35 1,716 2,468 1,620
Income before income taxes 3,653 4,872 3,171 4,246 2,918 3,401 3,081 938 1,277 1,523 4,421
Total income taxes 689 876 813 -385 1,068 959 1,339 1,517 1,632 590 810
Net income 2,702 3,910 2,160 4,530 1,907 2,402 1,722 -550 -235 1,166 3,833
　Net income ratio (%) 2.6 3.8 2.1 4.3 1.9 2.2 1.5 -0.5 -0.2 1.0 3.1
                       
[Balance Sheets]                      
Current assets 49,294 52,925 55,714 56,342 52,410 58,147 62,143 58,109 57,183 57,753 59,873
　Cash and deposits 17,441 19,553 21,211 21,456 19,839 19,977 16,229 17,030 18,246 17,351 17,138
　Notes and accounts receivable
　　- trade		 24,935 26,234 25,965 26,138 23,241 26,869 33,160 28,244 26,599 26,783 –
　Notes and accounts receivable
　　- trade, and contract assets		 – – – – – – – – – – 24,111
Non-current assets 39,961 42,335 41,007 41,832 43,271 44,073 46,559 49,955 47,912 46,144 48,126
　Property, plant and equipment 27,928 28,193 27,041 26,395 25,322 24,426 26,362 27,781 26,206 24,417 26,932
　Intangible assets 705 1,230 1,109 1,313 1,142 3,651 4,437 4,945 5,590 4,114 4,145
　　Goodwill 6 34 26 240 208 2,793 3,005 2,413 2,093 1,317 1,200
　Investments and other assets 11,327 12,911 12,857 14,123 16,806 15,995 15,760 17,229 16,116 17,612 17,048
Total assets 89,256 95,261 96,721 98,175 95,681 102,221 108,703 108,778 105,096 103,898 108,000
Current liabilities 36,455 35,359 36,677 36,106 35,390 39,683 45,133 47,559 43,646 42,544 43,655
　Short-term borrowings 8,272 8,257 8,432 8,496 9,458 9,604 9,230 12,769 10,055 9,682 10,009
Non-current liabilities 14,560 16,874 16,854 14,756 14,888 15,211 16,076 15,385 17,259 16,277 16,178
　Long-term borrowings 3,816 4,456 4,447 4,708 4,963 5,074 4,933 6,493 8,408 7,531 7,266
Total liabilities 51,016 52,234 53,532 50,863 50,278 54,894 61,210 62,944 60,906 58,822 59,833
Total net assets 38,240 43,026 43,189 47,311 45,402 47,326 47,492 45,834 44,189 45,076 48,166
Shareholders’ equity 35,640 39,578 41,061 44,723 44,222 45,296 46,168 44,311 43,691 44,301 47,408
　Share capital 5,277 5,277 5,277 5,277 5,277 5,277 5,277 5,294 5,294 5,294 5,294
　Capital surplus 13,020 13,061 13,061 13,222 13,140 12,404 9,786 9,201 9,628 9,638 9,638
　Retained earnings 18,520 22,073 23,556 29,223 30,504 32,315 31,104 29,862 28,950 29,530 32,610
　Treasury shares -1,178 -833 -834 -3,000 -4,700 -4,701 0 -46 -182 -161 -134
　Share acquisition rights                 45 45 45
Total liabilities and net assets 89,256 95,261 96,721 98,175 95,681 102,221 108,703 108,778 105,096 103,898 108,000
                       
[Statements of cash flows]                      
Cash flow from operating activities 8,259 3,162 5,715 4,522 5,072 3,565 1,384 3,586 4,561 2,774 –
　Income before income taxes 3,653 4,872 3,171 4,246 2,918 3,401 3,081 938 1,277 1,523 –
Cash flow from investing  activities -14 -1,978 -1,742 -803 -4,044 -2,971 -3,094 -3,221 -1,152 -1,170 –
Cash flow from financing activities -1,652 51 -2,179 -3,807 -2,571 -706 -2,463 0 -2,267 -2,658 –
Free cash flow 8,245 1,184 3,973 3,719 1,028 594 -1,710 365 3,409 1,604 –
Net increase in cash and cash equiv. 6,601 1,944 1,814 184 -1,619 88 -4,031 952 1,203 -900 –
Cash and cash equiv. at beginning
of period		 9,555 16,156 18,102 19,918 20,103 18,483 18,571 14,540 15,494 16,697 –
Cash and cash equiv. at end of period 16,156 18,102 19,918 20,103 18,483 18,571 14,540 15,494 16,697 15,797 –

Note: PL for FY9/2022 is calculated on an LTM basis.
Source: Omega Investment from Company materials.

Recommend
Search