On Monday, HSBC revised its price target for KDDI (OTC:KDDIF) Corp. (9433:JP) (OTC: KDDIY (OTC:KDDIY)), a leading Japanese telecommunications company, to JPY4,520 from JPY4,560. Despite the price target reduction, HSBC has decided to maintain a Hold rating on the company's shares.
The adjustment in KDDI's price target reflects HSBC's anticipation of higher tax expenses than previously expected. The firm also took into account KDDI's recent move to acquire Lawson, a convenience store chain, which has been approved by Lawson and its key shareholder, Mitsubishi Corporation. HSBC believes that the acquisition is unique in its coverage and could be a strategic move considering Japan's demographic challenges.
KDDI's strong history of capital allocation was also noted, with the company targeting its 22nd consecutive year of dividend growth in the fiscal year 2023. HSBC highlighted that KDDI's market capitalization increases have consistently outpaced retained earnings, indicating robust financial management.
However, HSBC expressed caution due to the risks associated with mobile competition within the industry. The upcoming results for the quarter ending March, which is traditionally the most competitive period of the year, are expected to shed light on how KDDI is managing in this challenging environment.
HSBC's revised price target and rating reflect a balance between KDDI's strategic acquisition and its solid financial performance against the backdrop of heightened competition in the mobile sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.