K.Fujimuro, M.Kitahara, S.Asai and T.Sogame
TOTO a Company which makes Plumbing-Related Household Fixtures 3
Summary Cost Reduction + Investment Net Sales in Domestic Market Net Sales in Overseas Market Theoretical Share Price (DCF method) : 729 yen Present Share Price (7.21.2011): 611 yen 4
Domestic Household Fixtures Market 1400000 New Housing 1200000 1000000 800000 600000 400000 200000 0 houses 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5
Domestic Household Fixtures Market Market Scale of Remodeling A Demand of Domestic Household Fixtures 84000 82000 80000 78000 76000 74000 72000 70000 68000 66000 houses 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 6
TOTO in Domestic Market Focusing on Remodeling -TDY alliance (Tie-Up with YKK AP Inc.& Daiken Corp.) - Remodel Club Stores 7
TOTO s Overseas Project Breakdown of Net Sales in Overseas Market(Fiscal Year 2010) 17.2 million yen 3% 104 million yen 19% 277.3 million yen 50% 158.8 million yen 28% America China Europe Asia & Oceania 8
Chinese Market Further Demand for Housing with Economic Growth Strong Presence in Luxury Brand Have a 40% share of high grade sanitary ware market 9
The other Developing Countries India India - the most important country in V-Plan 2017 Further Demand for Housing with Economic Growth 10
Cost Reduction Cost Reduction + Financial Surplus Investment Investment Domestic Market Overseas Market 11
Cost Reduction-Future Plan V-Plan 2017 : 25 billion (2008~2017) Our Estimation > 25 billion billion yen 50 Cost Reduction-Future Plan 45 40 35 30 25 20 15 10 5 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 12
Cost Reduction President Harimoto( 張本邦雄 ) The detail of Cost Reduction Combining the factories Stopped making showrooms in surplus Started to share of resource with YKK AP Inc. and Daiken Corp., and structured integrated purchasing system etc. 13
Net Sales Estimation 600000 500000 400000 300000 200000 Others Overseas Project Domestic Project 100000 million 0 yen 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 14
Valuation DCF method Estimation 10-Year Net Sales Eternal Growth: 1.00% WACC: 4.29% DCF Theoretical Share Price:729 yen A range by Multiple Analysis:523 yen~ 1645 yen 15
Conclusion Cost Reduction + Investment Net Sales in Domestic Market Net Sales in Overseas Market Theoretical Share Price (DCF method) :729 yen Present Share Price (7.21.2011):611 yen BUY 16
Thank You!! 17
TOTO Projects Breakdown of the Project's Net Sales The Other 4% Overseas Household Fixtures 13% Domestic Household Fixtures 83% 18
Net Sales Forecast DCF method Domestic Market 株価 + Overseas Market = Future Net Sales 19
Change of TOTO s Stock Price 800 700 7.22.2009 V-Plan 2017 announced 1 600 500 400 300 4.1.2009 Inouguration of 2.16.2010 V-Plan 2017 announced 2 200 100 0 Jul-11 May-11 Mar-11 Jan-11 Nov-10 Sep-10 Jul-10 May-10 Mar-10 Jan-10 Nov-09 Sep-09 Jul-09 May-09 Mar-09 Jan-09
Breakdown of the Project's Net Sales 165 million yen 4% 557 million yen 13% 1130 million yen 26% Domestic New Housing Household Fixuture Project Domestic Remodeling Household Fixuture Project Overseas Household Fixuture Project New Areas & the Other 2480 million yen 57%
Breakdown of Net Sales in Overseas Market 104million yen 17.2million yen 3% 19% 158.8million yen 28% America China Eurpe Asia&Oceania 277.3 million yen 50%
Facility Investment Depliciation 300 250 (million yen) 200 150 Facility Investment (million yen) Depliciation (million yen) 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Breakdown of Facility Investment 9% 0% 2% 3% 2% 3% 81% Domestic household fixture U.S.A China Asia/Oceania Europe New areas
5 Forces Analysis
Total Sales Operating Margin 2000000 0.07 1800000 0.06 TOTO 1600000 INAX 1400000 0.05 1200000 0.04 Panasonic Electric Works Home 1000000 800000 0.03 TOTO 600000 400000 0.02 INAX 200000 (million yen) 0 (year) 2005 2006 2007 2008 2009 2010 0.01 0 Panasonic Electric Works Home
ROE 0.1 0.05 0 2005 2006 2007 2008 2009 2010 TOTO -0.05 (year) INAX Panasonic Electric Works Home -0.1-0.15
ROA 0.1 0.05 0 2005 2006 2007 2008 2009 2010 INAX -0.05 (year) TOTO -0.1 Panasonic Electric Works Home -0.15
Total Asset Turnover 0.04 Total Asset Turnover 0.03 0.02 0.01 0-0.01-0.02-0.03 2005 2006 2007 2008 2009 2010 (year) TOTO INAX -0.04-0.05 Panasonic Electric Works Home -0.06-0.07
Current Net Income Ratio 0.04 0.03 0.02 0.01 0-0.01-0.02-0.03 2005 2006 2007 2008 2009 2010 (year) TOTO INAX Panasonic Electric Works Home -0.04-0.05-0.06-0.07
Capital Adequacy Ratio 0.8 0.7 0.6 0.5 0.4 0.3 TOTO INAX Panasonic Electric Works Home 0.2 0.1 0 2005 2006 2007 2008 2009 2010 (year)
Net D/E Ratio 0.25 0.2 0.15 0.1 0.05 TOTO Panasonic Electric Works Home 0 2005 2006 2007 2008 2009 2010-0.05 (year) -0.1-0.15
Comparison of TOTO and the Competitor's 14% Foreign Sales Ratio (in Fiscal Year 2010) 12% 10% 8% 6% 4% 2% 0% TOTO JS GROUP CORPORATION Panasonic Electric Works Home
β 0.5 0.4 0.3 0.2 y = 0.8101x + 0.0023 0.1 0-0.2-0.15-0.1-0.05 0 0.05 0.1 0.15 0.2 0.25 0.3-0.1-0.2-0.3
Excel Sheet Figures
Cost Reduction-Achievement 160 (million yen) 140 120 100 80 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010
Cost Reduction-Future Plan 50 45 (million yen) 40 35 30 25 20 15 10 5 0 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cost Reduction Achivement & Future Plan (million yen) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Cost Reduction-Achievement 23 28 Automation of Producting Washlets 3 3 3 3 3 3 3 3 3 New Materials 2 2 2 2 2 2 2 2 2 Cost Reduction of Manifacturing 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 Restructuring of Factories 7 7 7 7 7 7 7 7 7 Distribution Center 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Inovation of Management Information 16 16 the Unification of Factories 2 2 2 2 2 2 2 TDY (TOTO, Daiken Corp. and YKK AP Inc.)1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 TDY (TOTO, Daiken Corp. and YKK AP Inc.)2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Others 10 10 10 10 10 10 10 10 10 Total 28.2 28.7 30.7 30.7 30.7 30.7 30.7 46.7 46.7 303.8
the Number of Existing Houses Under 530000 Distribution in Japan 520000 510000 500000 490000 480000 470000 460000 450000 440000 430000 2006 2007 2008 2009 2010 2011 2012 2013
New Housing in Japan 1400000 1200000 1000000 800000 600000 400000 200000 0 2006 2007 2008 2009 2010 2011 2012 2013
Market Scale of Remodeling in Japan 78000 77000 76000 75000 74000 73000 72000 71000 70000 69000 2008 2009 2010 2011 2012 2013
Market Scale of Remodeling Household Fixture Market 2000000 (million yen) 1800000 1600000 1400000 1200000 1000000 800000 total plumbing-related household fixtures 600000 400000 200000 0 2008 2009 2010 2011 2012 2013
Market Scale of Remodeling Plumbing- Related Household Fixture Market 450000 (million yen) 400000 350000 300000 250000 200000 150000 total kitchens bathrooms washlets sinks 100000 50000 0 2008 2009 2010 2011 2012 2013
New Housing in China 3000 (10,000 houses) 2500 2000 1500 Number of houses 1000 500 0 1998 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Household Fixtures Market in China 250000 200000 150000 100000 TOTO's net sales in China China the luxury high grade sanitary ware market 50000 *It is an anticipation value from 2010 onward (10,000yen) 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
China GDP 16 14 (%) 12 10 8 6 4 2 0 2002 2004 2006 2008 2010 2012 2014 2016
China Real GDP per Capita 14000 12000 10000 8000 6000 4000 2000 0
India GDP 12 (%) 10 8 6 4 2 0 2002 2004 2006 2008 2010 2012 2014 2016
Brazil GDP 9 (%) 7 5 3 1-1 2002 2004 2006 2008 2010 2012 2014 2016-3 -5
Russia GDP 10 8 (%) 6 4 2 0 2002 2004 2006 2008 2010 2012 2014 2016-2 -4-6 -8-10
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Why the eternal growth is 1%? 1500000 1000000 500000 0 New Housing Million yen 85000 80000 75000 70000 65000 Market Scale of Remodeling Million yen
Price of Toilet for remodeling