Japan Deep Value
Japanese Equity Research, Deep Value & Below-Book Opportunities
Large passive buying relative to Kioxia's float should support it over the next month. The TPX buying event involves 56 million shares on Thursday (roughly $4-4.4 billion), with another 56 million at November's end; an earnings buyback would add more if announced. Early buyers are stopping out before Thursday. Fundamentals also offer support, so it is not a terrible time to pick a level, though October 30 earnings are the main risk. x.com x.com x.com x.com
Kioxia's trading is rhyming with the 2000 bubble, so a similar path forward should follow. Japan's largest company traded 2.55 trillion yen in half a session and rallied 23% from low to high on vibes, which was not normal market behavior. Of 18 analysts covering it, 16 rate it Buy or Outperform and 14 have price targets of 100,000 yen or more, an insanity market historians should look back on. x.com x.com x.com
Kioxia trades closer to 2x forward EPS once the cash it will generate is counted, despite eye-popping results. April-June revenue rose 415% and GAAP EPS 4,506% year over year; on sell-side estimates it trades at 3x next-twelve-month EPS, and that year's net income is about a third of its market cap. Even if this is peak earnings, they should stay strong for years, generating enough FCF to buy back 50-100% of the float. Five-year LTAs near record prices are a good business decision. x.com x.com … Show more
Kioxia is very shareholder friendly at about 4x earnings, choosing to buy back stock rather than spend on capex. Per @jukan05, it plans to repurchase up to 30 million shares, 5.5% of shares outstanding, for up to ¥800 billion between August 3 and October 30, alongside April-September operating profit guidance of ¥3.16 trillion and a 3-for-1 split. A miss against expectations would matter more if the stock were still at ¥100,000 rather than near ¥49,000. x.com x.com
Kioxia's need to do a buyback is proof that the flash-memory boom is over. x.com
Kioxia is priced for a cyclicality that long-term agreements are removing, as those contracts form the backbone of its forward earnings. It also has an 800B yen buyback, putting it at a compelling price on the AI watchlist. x.com
Kioxia's P/E and growth are about as good as investing gets, so anyone worried about holding it here simply owns too much. Fear around Chinese AI models looks misplaced: they cost just as much to serve as US models, which points to an even bigger compute shortage. Short term, momentum has turned and selling across the compute trade is likely to continue, but the plan is to ride it out; there is some risk, as always. x.com
Kioxia faces eroding pricing power as surging chip production capacity threatens the storage-chip boom. TSMC's signal of a hike in 2026 capex to $64 billion fed fears that new capacity will erode the pricing that made memory a gold mine, amid broader doubts that AI spending turns into stable profits. The stock has fallen 52% from its June highs. After a 600% climb on retail leverage, the descent is rarely gentle, and in cyclical industries supply-side realities catch up to the hype. x.com
Kioxia looks cheap at about 5x next-twelve-month earnings as the NAND supercycle drives a massive profit surge. Q1 FY2026 revenue rose 415.5% year over year and net profit reached ¥842 billion versus ¥18 billion a year earlier, while the equity ratio climbed from 37.9% to 50.8%. First-half guidance implies Q2 EPS of about ¥2,322, up 51% on Q1; annualized, that is about ¥9,289 against a ¥46,000 share price. The open question is whether the cycle lasts or earnings peak sooner. x.com
Low multiples give AI infrastructure good risk/reward as demand outruns supply and agentic workloads have runway. TSMC at 17x 2027E EPS appears to have all the accelerator and CPU demand it can handle this year and next; Ultra Clean is at 8x, MKS 12x, TTM 13x, Nvidia 14x and Celestica 15x. Kioxia at 3x and Samsung preferreds at 2.5x carry a big discount on pricing and cycle fears. Multiples imply a 2027 capex peak and meaningful drop; 2028 capex growth is expected, but below 2027's rate. x.com … Show more
Kioxia's 74% operating margin is a shortage premium with an expiration date set by its own investor deck. AI inference storage demand is real, but management's supply-demand chart shows NAND returning toward balance by late 2027, and its long-term model targets mid-20% operating margins. The stock is about 12x the annualized peak quarter but roughly triple that on the company's normalized plan. The bull case: hyperscaler contracts and the inference-storage tier keep margins structurally higher. … Show more
Kioxia, Japan's answer to SanDisk, plans a US share listing to widen its investor base and lift its corporate value, while NAND demand and pricing are soaring. x.com
