Investment Rating - The report downgrades Bezeq to Neutral with a new price target of NIS4.4, down from Buy and NIS6.1 [2][5][13] Core Viewpoints - Bezeq has a strong balance sheet with a net debt to EBITDA ratio of approximately 1.6x, compared to the sector average of 2.7x, and offers defensive returns with a projected 70% net profit payout in 2024, translating to a dividend yield of around 7% [2][4][10] - The mid-term outlook remains attractive with catalysts such as a decline in FTTH capex and cost reductions in satellite operations, although the risk premium has increased recently, leading to caution regarding the 2024 outlook [2][3][10] - Regulatory pressures are expected to continue impacting profitability, particularly concerning FTTH campaigns and fixed broadband rates, which may hinder revenue growth [3][10][11] Summary by Sections Financial Performance - Bezeq's revenue for 2024 is projected at NIS8.823 billion, reflecting a slight decline from previous estimates, with EBITDA expected to be around NIS3.719 billion [7][15] - The company anticipates a flat year-over-year adjusted EBITDA for 2024, with a forecasted slight miss at NIS3.7 billion [3][15] Dividend Policy - Bezeq plans to increase its net profit payout ratio by 10 percentage points annually from 70% in 2024 until it reaches 100% in 2027 [4][8][18] Valuation and Estimates - The report incorporates a higher WACC of 9.2% due to an increased risk premium, which has contributed to the reduction in price target [6][13] - The valuation reflects a DCF-derived price target of NIS4.4, with a dividend yield of approximately 7% for 2024, supported by a free cash flow yield of around 9% [6][10] Market Position and Outlook - Bezeq is positioned as Israel's largest telecommunications provider, with significant market share in mobile and pay-TV, but faces ongoing regulatory challenges that may limit growth [10][12] - The company is expected to achieve a compound annual growth rate (CAGR) of 8% in free cash flow from 2024 to 2027, despite a projected dip in 2024 [9][10]

ab 13 August 2024 Global Research and Evidence Lab MatsukiyoCocokara & Co. Revising forecasts: Strong sales to be a means of strengthening competitiveness Action: Earnings update following Q1 results We are updating our earnings forecast following Q1 results. While we are increasing our SG&A expense assumption and lowering our OP forecasts slightly, we continue to expect record high OP including in FY3/25. We are also factoring in the share buyback and retirement announced along with the results. We are rev ...

Global Research and Evidence Lab 13 August 2024 US Economic Data NFIB: Stronger small business sentiment Economics Americas Small business optimism rises with expectations for economic improvement The NFIB small business optimism index rose 2.2 points to 93.7 in July, ahead of our estimate of 91.9 but well above consensus expectations for the index to be unchanged at 91.5. This marks the fifth consecutive month of improvement in the index but from a low base, with the level of the index remaining below its ...

Global Research and Evidence Lab 13 August 2024 Equities Japan Retail Sector July 2024 sales (announced 9 and 13 August): SEJ's same-store sales continue to seesaw Japan Retail Welcia HD (3141): Sales missed the company's plan again in July Monthly sales (end of month, FY2/25): Group same-store sales rose 0.3% yoy, with customer numbers down 1.0% yoy and sales per customer up 1.3% yoy. By category, product sales fell 2.4% yoy (pharmaceuticals -0.5%, hygiene and nursing care -8.8%, counselling cosmetics -4.2 ...

Global Research and Evidence Lab 13 August 2024 US Economic Data Core PPI perks up a little Headline producer prices edge up 0.1% in July, core rises 0.3% The headline Producer Price Index (PPI for final demand) increased 0.1% in July, in line with our expectations (0.1%) and a touch below consensus (0.2%). Prices for final demand goods climbed 0.6%, on the back of the 1.9% increase in energy prices. The volatile trade services weighed on the monthly gain, holding down the increase in headline PPI by 0.3 pp ...

Global Research and Evidence Lab 13 August 2024 First Read Japan Retail Sector Jiji Press report: Government to alter the consumption tax-exemption system – as has been expected; no surprises Summary On 13 August, Jiji Press reported that the government and current ruling party will proceed with a fundamental review of the consumption tax-exemption system for visitors to Japan. Specifically, the report said the system will change so that consumers get their tax refund after it is confirmed that tax-free pur ...

Global Research and Evidence Lab 13 August 2024 Tsuruha Holdings Revising forecasts: Showing merger effects will be important Action: Earnings update We are updating our earnings estimates. In addition to lowering our OP forecast slightly, we are reflecting growth in the number of stores for the overall sector and continued upward pressure on labour costs over the medium term, and we are changing our OP margin forecast from FY5/30 onward from 4.5% to 4.0%. Measures to maintain or increase profitability in t ...

Global Research and Evidence Lab 13 August 2024 | --- | --- | --- | --- | --- | --- | --- | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|-------------|-------------|--------------|--------------|-------------------------------------------|-------------------------|--- ...

Industry Investment Rating - The report provides a stock ranking for the Japan Food Sector, with Buy and Neutral ratings for various companies in the Beer & Beverage, Processed Food, and Tobacco/Others categories [5] Core Investment Thesis - The report highlights that share prices reacted sharply to concrete earnings figures during the April-June period, with stocks that reported stronger Q1 results than guidance and had high visibility of profit growth for the next fiscal year being favored [2] - Stocks with high medium- and long-term growth prospects but short-term earnings falling short of consensus were overly penalized by the market, presenting potential investment opportunities [2] Stock Recommendations - Nissin Foods is recommended as a Buy due to: 1) Q1 profit stagnation being attributed to a time lag in recording costs, 2) overseas instant noodle sales growing at a high single-digit rate, and 3) outperforming the market in terms of volumes in the US despite price mix issues [3] - Coca-Cola Bottlers Japan is recommended as a Buy due to: 1) strong monthly sales indicating continued positive news flow, and 2) high visibility for the next fiscal year with full contribution from price increase effects [3] Stock Ranking Details - Buy-rated stocks include Coca-Cola Bottlers Japan, Nissin Foods, Asahi GHD, Japan Tobacco, Kikkoman, and Toyo Suisan Kaisha among others [5] - Neutral-rated stocks include Suntory Beverage & Food, Dydo GHD, Itoen, Morinaga Milk, and Yakult among others [5]

Global Research and Evidence Lab 13 August 2024 Japan Equity Strategy & Thematic Research Event Watch: Focus on micro factors while also monitoring macro conditions Equity Strategy Japan Nozomi Moriya Strategist nozomi.moriya@ubs.com +81-3-5208 6260 Miranda Zhang Associate Analyst miranda.zhang@ubs.com +81-3-5208 6283 Focus on Japan-specific corporate change while monitoring macro conditions Having edged down 0.5% in July, Japan's TOPIX index fell by 20% in just three days in August in reaction to the BoJ's ...