Yurtec Corp (1934): Implied Q4 decline drove a 6% decline of the stock

·      Yurtec reported earnings after market close on January 29, posting consolidated ordinary profit of ¥12.4bn for 9M FY3/26 (April–December), up 21.4% YoY

·      This represents progress of 70.9% toward the full-year forecast of ¥17.5bn, well above the five-year average progress rate of 50.5%

·      Based on the nine-month results and unchanged full-year guidance, 4Q (January–March) ordinary profit is estimated to decline 28.1% YoY to ¥5.09bn

·      This implied 4Q decline may have contributed to the roughly 6% drop in the share price

·      In contrast, 3Q (October–December) results were solid, with ordinary profit rising 18.2% YoY to ¥6.93bn

·      Operating margin in 3Q improved to 9.8% from 8.6% a year earlier

·      As such, the expected 4Q slowdown appears temporary rather than indicative of a deterioration in underlying performance

·      I initially wrote about Yurtec in April 2024, based on expectations of increased construction activity for electric power facilities driven by AI and data center demand

·      According to scenarios published by the Organization for Cross-regional Coordination of Transmission Operators, Japan’s electricity demand is projected to increase by 8–42% in 2050 compared with 2019, before the COVID outbreak

·      While the range is wide, the direction of demand growth supports the long-term investment case for power-related infrastructure (Yurtec’s core business).

·      Please DM me if you are interested in my initial 4/24 report.

#Yurtech #electricinfracontraction #Japanesestocks #valuestocks #AI #Datacenters