Is NTT's data center business a breakthrough in stock price reversal?! If good material comes out at DOCOMO, it will be a positive surprise! [Earnings Preview]

Stock prices reversed due to the announcement of financial results for the first quarter, then fell
NTT's first quarter financial results were announced on 8/7, which is 2 days after “Reiwa Black Monday.” Although sales were higher than the same period last year, operating profit fell below 8.2% and net profit by 27.0%, respectively. It did not reach analyst consensus by Bloomberg, including sales.
However, the share buyback with an upper limit of 200 billion yen and 1.4 billion shares (1.66% of issued shares), which was announced at the same time, was well received, and stock prices reversed. The price temporarily increased from around 145 yen when financial results were announced to the 158 yen range on 9/3.
However, after that, there was a downward trend, and it has now dropped to around 147 yen.

Stock price movements have an impact on the number of shareholders who have returned to number one in Japan
The reason why stock prices are sluggish is that individual investors increased due to the stock split of 1 share into 25 shares in 23/7.
According to the detailed version of the FY23 stock distribution survey announced by the Tokyo Stock Exchange on 8/14,The number of shareholders of NTT was about 1.78 million, 2.5 times the previous fiscal year, leading the way for the first time in 14 years, breaking the record for the highest number of shareholders in history for the first time in 31 yearsI did (Nihon Keizai Shimbun, 8/14). According to NTT IR materials, as of 24/6The number of shareholders is 2.26 millionIt has increased to
There is an aspect that when individual investors move in one direction of buying and selling, it becomes difficult to break the downtrend they once fell into.
Conversely,It is also assumed that if bright information comes out in business results and earnings forecasts are reversed, the momentum of rising stock prices will also be driven, and a virtuous cycle will be createdIt will be done.

Analysts don't anticipate surprises in mid-term results
However, analysts don't seem to anticipate any surprises in the interim results. Intermediate by BloombergAnalyst consensus on earnings forecasts is that sales are 6 trillion556.7 billion yen, up 3.0% from the same period last year, operating profit is 886.3 billion yen, down 6.8%, and net profit is 552.6 billion yen, down 17.6%. It seems that operating profit is expected to decline slightly, but it is a figure obtained by roughly dividing the company's full-year forecast in half.

Can DOCOMO and NTT Tozai, which are undergoing structural reforms, show signs of “bottoming out”
Even if there are no surprises in the overall numbers, there is a possibility that positive material can be obtained from the “content” of the results. What are the major factors that make NTT anticipate a decrease in profit in fiscal year 24 compared to the previous fiscal yearStructural issues between NTT DOCOMO, the breadwinner, and NTT East and NTT West (NTT Tozai), which have landline phones that are “ancestral businesses”It's in. BothFY24 is in the midst of structural reforms, and both see fiscal year 24 as the “bottom” of the decline in profit.If part of the results of structural reforms is shown in line with the announcement of interim financial results, it is also assumed that it will lead to a reversal in stock pricesIt will be done.

DOCOMO's issues are an important indicator of the mobile phone businessARPU (average sales per user) continues to decline due to intensifying price competitionThat's it. DocomoAim to reverse ARPU by the bottom of fiscal year 24It's as,Increased data usage due to enhanced in-house servicesI'm working on it. Specifically, there is expansion of entertainment-related content such as videos, books, and music, and promotion of the use of d points, which are the core of the DOCOMO economic zone. Regarding the promotion of the use of d points, in addition to developing “Poi activities” linked to financial services such as Monex Securities and ORIX Credit, which were under the umbrella of the previous fiscal year, an internet shopping service “d point market” with an increased return rate of d points will begin in October.

What are the issues with regional communication business (fixed communication) by NTT TozaiMarket share continues to decline due to delays in responding to high-speed needs due to optical linesThat's it. Cost reduction effects up until now have also declined, and operating profit has declined steadily. NTTThe operating profit of the regional telecommunications business will change to an upward trend from fiscal year 24 to the bottomIt says so.
Specific measures include:Promote strong corporate sales and restore market share by encouraging individual users of landline phones to switch to optical linesThat's it. Furthermore,Withdrawal of unprofitable servicesetc. are listed.
Regarding unprofitable services, NTT announced in July '24The telephone directory and number guidance service “104,” such as town pages, will end at the end of 26/3, and the weather forecast service “177” will end at the end of 25/3, respectivelyand announced. including the digitization of invoices,Profit improvement effect of 13.5 billion yen in fiscal year 27I'm expecting it. Regarding the telegram service, President Shimada Akira stated at the 1st quarter earnings conference on 8/7 that “legal discussions should proceed in the direction of ending at some timing” (Nihon Keizai Shimbun dated 8/7).

The light of hope is NTT DATA's data center business
Within NTT, which is struggling with structural reforms, it is the NTT DATA Group. Although net profit for the first quarter (April-6) financial results for the fiscal year ending 25/3 split from the same period last year,Sales and operating profit increased sales and profitIt became. The full-year forecast has not changed the schedule for an increase in sales and profit, including net profit.
NTT DATA's financial results for the first quarter (April-June)Order volume surged approximately 1.5 times compared to the same period last yearWhat I did caught my eye. Above allThe volume of orders received for the data center business for overseas hyperscalers rose to 398 billion yen, nearly four times that of the same period last year, accounting for 27% of all orders received.
Although NTT DATA's stock price began to decline in October, it rose by a maximum of about 40% after the announcement of financial results for the first quarter. If orders for the data center business are strong in the second quarter, there is a possibility that it will be a breakthrough that will change the stagnant mood of the NTT Group as a whole.