Who can the shares in SoftBank belong to?
Is the SoftBank share now a buy? 🖥️🔎 - SoftBank Group stock analysis
In the following SoftBank Group Corp. (WKN: 891624) Share analysis, I will go into the current situation, caused by the corona virus and the future of the group. Furthermore, I will shed light on the company's history and, at the end, give my personal conclusion on the share.
The SoftBank Group is one of the largest telecommunications operators in Japan, with a market capitalization of around € 100 billion and a workforce of over 80,000.
The group is active in roughly equal parts in Japan and the USA. Only 7% of its sales come from the rest of the world. This has the advantage that a shareholder is already represented in several currency areas through an investment in the SoftBank Group.
The current chairman and CEO is Masayoshi Son (62). He holds around 26.9% of the shares (562,125,916 shares).
On September 3, 1981, the Softbank Group was founded by Masayoshi Son, who was 24 at the time. He borrowed the $ 1 million seed capital from Dai-Ichi Kangyo Bank.
In the following years, the group began to invest in more and more IT companies from the very beginning. In 1995, this included the company Yahoo, in which SoftBank had a 37% stake. From 1997 onwards, SoftBank became more and more involved in Internet companies and thereby became one of the main winners of the new economy.
At the time of the dot-com bubble peak, SoftBank was valued at around $ 140 billion and Son owned roughly 53% of the shares at the time. All of the acquisitions at the time were financed by the resale of shares in Yahoo.
After the bubble, the stock market value of many Internet companies and with it the value of SoftBank fell sharply. Therefore, Softbank concentrated more on broadband expansion and became Japan's leading broadband Internet provider through Yahoo BB.
As the next smart move, Apple secured the exclusive iPhone rights for the Japanese market. In 2008 they jointly brought the iPhone 3G onto the Japanese market.
In the years to come, SoftBank made many other investments with other groups. But more on that later with the current list of the company, because most of these holdings still exist today.
How is the company currently positioned?
To understand how the company is positioned, it helps to take a look at the balance sheet. The group currently has a market capitalization of around € 100 billion and sales of € 49.32 billion in 2019. With an annual surplus of € 11.25 billion, this corresponds to a margin of over 20%.
SoftBank's dividend policy is also interesting for some investors. The group pays out around € 0.35 per share per year, spread over 2 payout dates.
A series of annual increases cannot be recorded, but the dividend has not been reduced once in the past 9 years. The dividend of the past financial year is to be paid out in full this year, despite a loss of billions.
The capital for this is financed from the sale of other assets. But more on that later.
SoftBank's turnover can be broken down into 3 business areas:
In the first place come the Fixed line and cellular telecommunication services in Japan with a share of 78.3%. Under the name SoftBank, the group sells landline and mobile telephony, broadband transmission, data transmission services, sales of mobile phones and accessories, etc.
Sales of mobile Telecommunication equipment in the foreign countries makes up a share of 15.4% and operates under the name Brightstar.
The third business area includes the Design and development of microprocessors and Solutions for the Internet of Things. This currently accounts for 3.3% and is known as Arm.
All other sales account for around 3%.
Here is a small selection of brands that belong to the SoftBank Group:
- Kinema Systems
- Boston Dynamics
- Clash Royale
- clash of clans
Because of these and many other investments, the group is extremely well positioned. Various services related to the Internet and related future innovations are currently in SoftBank's portfolio.
Most of the investments were made under the umbrella of the Softbanks Vision Fund. It manages around $ 100 billion and invests in the world's largest tech companies. For many start-up founders, the big dream is to be financed by the SoftBank Fund.
But in recent years SoftBank had to write off double-digit billions with its fund.
The failures include the failed Wirecard investment, too high a rating from TikTok and Uber, the insolvent satellite company OneWeb and the debacle with the office landlord Wework.
But not everything about the fund is bad, because start-ups can only advance into the world of “global champions” with risk capital. If SoftBank only helps a handful of such companies to achieve sustainable success with its fund, the "burned" capital will pay off many times over.
This also explains why the group has already set up a Vision Fund 2. More on this later, on the subject of "Future Opportunities".
Effects of the coronavirus on the Softbank Group?
Now, of course, the question arises as to whether and to what extent the group has suffered from the corona virus and its consequences on the economy.
This question can be answered with an unequivocal yes. Because the group closed its fiscal year in March with a loss of 750 billion yen (6.4 billion euros). That's the biggest loss for Softbank since Son took the company public.
In comparison, the previous financial year closed with a plus of 1.4 trillion yen (around 11 billion euros).
SoftBank's Vision Fund is largely responsible for this. because the investments in technology start-ups included in it caused a loss of 15 billion euros during the corona crisis.
There were also 800 billion yen (approximately € 6.36 billion) in losses from investments outside the Vision Fund. These include the shares in the real estate rental company We Company (Wework) and the satellite operator One Web.
What chances do I see for the future of Softbank?
Even if the current year has not been very rosy for the SoftBank Group due to the coronavirus, I am very confident about the future.
On the one hand, the group has set up a Vision Fund 2 with the aim of "accelerating the revolutionary Artificial Intelligence (AI) by investing in technology-driven, market-leading growth companies." (Source: SoftBank)
On the other hand, however, the activist hedge fund Elliott ensures that SoftBank sells company investments from its tech portfolio worth up to 38 billion euros. € 17 billion of this will then flow into share buybacks and the remaining amount will be used to repay debt or to build up reserves.
I am convinced that SoftBank has unimagined potential. The group has stakes in so many technology companies and if only a few of them become new “big players”, the investment will pay off many times over.
Furthermore, an investment in SoftBank ensures that I am invested in the Japanese currency area (yen) and thus further promote diversification in my portfolio.
What do you think of SoftBank? Have you already invested yourself or do you have a position ahead of you? Be sure to write your thoughts and your opinion on the post in the comments!
I wish you a financially successful week,
Author: Marco the financial owl
Author of the finance blog "Finanzeule" and enthusiastic private investor in the field of ETFs & stocks.
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