Nomura Holdings Inc.

NMR Details

Nomura Holdings Inc.(NYSE: NMR) is a global financial services group with an integrated network spread over 30 countries by connecting markets to its three business divisions: Retail, Wholesale (Global Markets and Investment Banking) and Investment Management.

Latest News:

• The company has finalized issuing senior notes of USD 1.25 billion with an interest rate of 2.239% per annum. The settlement date is January 11, 2022. Moody’s and S&P Global ratings company assigned ratings of Baa1 and BBB+ respectively.

• On 23^rd December 2021, the company has announced to plan and publish its 3^rd quarter results on 1^st February 2022.
  

Q2FY22 Results:

• Record Retail Client Assets: The company’s retail client asset is at record high of 128.7 trillion Yen on account of strong recurring revenue driven by monthly net inflows into investment trusts and discretionary investments.

• Comparison of Quarterly Total Revenue: The total revenue of the company is 379.21 billion Yen in Q2 2022 vs. 419.3 billion Yen in Q2 2021 which is down by 9.54%.

• Record Assets under Management (AuM): The company has recorded high Investment Management AuM and higher management fees due to strong gains from listing of investee company.

Source: Company’s Filings

Key Risks:

• Credit Risk and Market Risk: The company might get impacted from credit risk, financial risk, market risk, discretionary investments coupled with other factors and COVID Pandemic risks. Which can slow its revenue growth in coming quarters.

Outlook:

Despite pandemic restrictions company has posted stable revenue and strong cash flows. Further the company also launched share buyback program to raise capital efficiency and ensure a flexible capital management policy. The upper limit of total shares will be 80 million shares and the upper limit for total value will be 50 billion Yen. The Share buyback program has already been started on November 16, 2021 and continue till March 31, 2022. 

Valuation Methodology: Price/Book Value Per Share Multiple Based Relative Valuation

Source: Analysis by Kalkine Group

Technical Summary Analysis:

NMR Daily Technical Chart as on 13^th January 2022 (Source: REFINITIV)

Stock Recommendation:

NMR’s share price has decreased by 11.69% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 6.72 to USD 4.10. The stock is currently trading below its 50 and above 200 DMA levels, and its RSI Index is at 69.09. We have valued the stock using the Price to Book Value per share based relative valuation methodology and arrived at a target price of USD 5.48 as on date January 13^th, 2022.

Considering the significant correction in the stock price, strong revenue track record, record Assets under management, associated risks, and current valuation, we recommend a “Buy" rating on the stock at the closing price of USD 4.70 as on date January 13, 2022.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.