Shikoku Electric Power Company, Incorporated generates, transmits, distributes, and sells electricity in Japan and internationally. It operates through Electric Power Business, Telecommunications Business, Construction and Engineering Business, Energy Business, and Other Business segments. The company generates electricity through nuclear, thermal, hydro, solar, wind, and biomass sources. It also engages in the engineering, procurement, construction, operation, and maintenance of renewable energy electric power generation facilities. The company also provides fiber optic internet, data center, and cloud-related services; and supplies gas and heat. As of March 31, 2022, it operated electric power generating facilities with a total capacity of 5,280 MW, including 1,153 MW of hydro, 3,235 MW of thermal, 890 MW of nuclear, and 2 MW of solar power generating facilities. It serves 2,295 thousand residential, and 266 thousand industrial and commercial customers. Shikoku Electric Power Company, Incorporated was incorporated in 1951 and is based in Takamatsu, Japan.
Strategy: Beat the Nikkei 225
Return at exit: 13.0%
Recent underperformance amid operational challenges
• Rotated out in favor of stocks with more favorable risk-reward profiles.
• Recent large-scale blackout affecting ~365,000 homes across four prefectures creates operational uncertainty and potential regulatory scrutiny.
• Revenue declined 9.6% in the most recent quarter, with management citing reduced retail sales income as a key factor.
• Profitability metrics appear challenged with 12.5% gross margin, despite showing some improvement in EBITDA growth (28.8%).
• Stock maintains some attractive features including a solid 3.2% dividend yield, robust dividend growth (42.9%), and trades at just 4.2x earnings.
• This change reflects portfolio rotation based on relative opportunities, not a sell signal.