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Komatsu and the Farm and Construction Machinery Industry

Komatsu and the Farm and Construction Machinery Industry. Mod 3 John Rojo. The Company. Japanese manufacturer vehicles and machinery for construction, mining, and agriculture Includes excavators, backhoes, skid loaders, forest machines, forklifts, cutting lasers..

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Komatsu and the Farm and Construction Machinery Industry

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  1. Komatsu and the Farm and Construction Machinery Industry Mod 3 John Rojo

  2. The Company • Japanese manufacturer vehicles and machinery for construction, mining, and agriculture • Includes excavators, backhoes, skid loaders, forest machines, forklifts, cutting lasers.. • There is no specific farm equipment but many duel use products

  3. Key Financial Figures (All figures in million Yen) • Cash-93,620 • Total Assets 2,517,857 • Total Liabilities/ Equity- 1,265,162 & 1,252,695 • Net Sales- 1,884,991 • Operating Income- 211,602 • Net Income – 137,135 • To convert to dollars it is approximately 100 to 1

  4. Inputs

  5. NEA Multiple Big difference between John Deere and Caterpillar

  6. BV Multiple Caterpillar is the largest by a good amount

  7. EPAT Multiple

  8. Net Income Multiple There is a big spread which could be a result of them being in slightly different industries

  9. Comprehensive Income Multiple The same as the previous slide with difference industries having different performances Last year, especially the mining industry doing poorly

  10. Sales Multiple This could be the most accurate as the sales multiple doesn’t vary by much as compared to the other multiples

  11. PPE Multiple We used PPE expenses because it is the largest item on all of their statement of cash flows signifying that it is a major driver of growth for them

  12. Buy-Hold-Sell

  13. Explanation • The Net Income, EPAT, and CI multiples were a sell rating especially as they moved down the line. • This could be because Komatsu expected to have a good year for mining which tanked lowering their bottom line significantly • All other mutliples were buy as they were undervalued • PPE was the biggest as they are making large expansions on the expectations that the cement industry will have a boom • Overall if you feel that they are correct in their predictions of growth industries then next year they will have all positive multiples

  14. Possible alternatives • One thing could be to look at multiples over several years to reduce the amount of booms and bust that they experience in their industry. • This could help eliminate any flukes and identify true drivers of value in this industry • We could try more multiples besides PPE

  15. Questions

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