- Yamato’s strong dominance in Japan’s courier market with 43% market share and a secular growth trend for ecommerce will serve a strong tailwind for the company’s top line growth.
- Recent Yamato’s stock price decline is likely a temporary event, as it is linked to higher subcontracting costs incurred while adjusting delivery network to better handle ecommerce large volumes.
- I expect recent cost initiatives and business reforms to take hold within the next one or two years, which will lower subcontracting expenses and create a significant market expectations reset.
- As Yamato optimizes its network and diversifies into other logistics services, it is very likely that the company will be able to gain market share and gradually raise unit prices to secure proper profits in the long-term.
- Based on relative and intrinsic valuations, Yamato is 50%-70% undervalued. Incorporating even the worst case scenario inputs shows that there is very limited downside with a very attractive risk/reward profile.
For further details see:
Yamato Holdings: Diversify Your Portfolio With 50%-70% Upside From Dominant Japanese Logistics Company