Ricoh (7752 JP): Issues to consider
Background
We think Ricoh is a classic Japanese zombie, kept alive by cheap funding rates while steadily destroying shareholder capital. Its staff, average age 43 and successful in the analogue era, are struggling to compete with the cloud. Revenues and margins are falling and we suspect both are being inflated, the former by generous leasing deals, the latter by cost capitalisation. Pension returns are failing to keep up with expenses and the US$1.1bn deficit remains unfunded.
Issues to consider
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We think Ricoh is a classic Japanese zombie, kept alive by cheap funding rates while steadily destroying shareholder capital. Its staff, average age 43 and successful in the analogue era, are struggling to compete with the cloud. Revenues and margins are falling and we suspect both are being inflated, the former by generous leasing deals, the latter by cost capitalisation. Pension returns are failing to keep up with expenses and the US$1.1bn deficit remains unfunded.
Issues to consider
- What are the plans for funding its pension commitments?
- The staff average age is 43 and climbing, what is Ricoh doing to address the issue?
- Although the company announces profits, it remains cashflow negative so gearing is rising. Is there any limit to gearing levels?
- The yields on leased assets are falling, is there anything the company can do to reverse this?
- Ricoh is capitalising expenses saying that they are future value creating. How can you justify this when revenues and margins are falling?
- The company continually has the worst growth and margins in the sector, why is this?
Please contact us, if you would like to become a client and get a full copy of the report.
Important
This note is written with the sole purpose of highlighting some issues we think are important.
It is not a recommendation to BUY or SELL any of the securities mentioned and should not be taken as such.
Readers should form their own opinions about the company and seek appropriate advice.
Please read the Bucephalus disclaimer.
This note is written with the sole purpose of highlighting some issues we think are important.
It is not a recommendation to BUY or SELL any of the securities mentioned and should not be taken as such.
Readers should form their own opinions about the company and seek appropriate advice.
Please read the Bucephalus disclaimer.