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Komatsu and the Farm and Construction Machinery Industry

Komatsu and the Farm and Construction Machinery Industry. Mod 6 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 6 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 Sales growth is historic over 10 Years. Terminal Sales growth is the expected world GDP growth EPM and EATAO are from last few Years. WACC is calculated using various Inputs and terminal WACC is Inputs from historic averages

  5. REI Model

  6. Comparison Uh oh this is a huge difference from market to actual value. It does match the DCF though which is necessary

  7. Let us try some different inputs From a difference of 18.75% to 7.62% on the first try

  8. If I try using Bloomberg’s WACC I probably should not use that with my growth rates

  9. Changing my current growth rate From 7% currently to 3.8% which is the terminal rate. Still off by a lot even with unrealistic expectations

  10. Possible differences • My WACC of 6.32% is very different from Bloomberg’s10.3%. It appears a market rate is between there assuming my forecast are correct • The growth rate in the terminal years drops off dramatically. Im thinking there needs to be a smoothing out process but an attempt to do that got really messy real quickly so that was abandoned • This is the same with the WACC, all of a sudden it changes by a percent instead a possible gradual decline • Im not sure if there will be any adjustments soon that will help bring this in line such as if leases will affect it.

  11. Questions

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