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David Kugelman is the President of Atlanta Capital Partners, LLC, a private equity and investor relations consulting firm, and the Publisher of the small-cap stock newsletter, OTC Stock Review. Mr. Kugelman has been in the Investment industry since 1986 and has held the National Association of... More
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  • The Tokyo Electric Power Company, Incorporated (JP: 9501) (OTC: TKECF) (Frankfurt: TPO) (OTC: TKECY)  4 comments
    Apr 5, 2011 1:54 PM | about stocks: TKECY
    The Tokyo Electric Power Company, Incorporated (OTC: TKECF)
    Several weeks ago global stock markets slid, following the biggest drop in Tokyo since 2008, and Treasuries gained amid concern Japan’s biggest earthquake on record will hurt economic growth. As the people of Japan begin to move forward once again, many investors find themselves wondering if there are opportunities in Japanese stocks. First, we would like to express our sincere condolence and would like to extend our deep sorrow to the people and their families suffering damage.

    Hot topic: Japan's economy after earthquake shock

    Merrill Lynch already has it covered, so we will spare you our opinion. You can read Merrill Lynch's opinion here.

    The Best Stock Play

    The Tokyo Electric Power Company, Incorporated (OTC: TKECF)

    Established                    May 1, 1951
    Equity capital                 676.4 billion yen
    Shareholders                 794,653
    Sales turnover               5016.2 billion yen (FY2009)
    Ordinary income           
    204.3 billion yen (FY2009)
    Net income                    133.7 billion yen (FY2009)
    Gross assets                  13,203.9 billion yen
    Employees                     38,227
    Electricity sales              280,167 GWh (FY2009)
    Customer agreements   28.62 million (does not include specified scale demand)
    Maximum output             64.3 GW (July 24, 2001)
    Affiliated companies       258
    Area served                   Tokyo, Kanagawa, Saitama, Chiba, Tochigi, Gunma, Ibaraki, Yamanashi, and eastern area of Shizuoka
    Key people                     Masataka Shimizu, President
    Services                        Electric generation, transmission, and distribution
    Revenue                        ¥5308.0 billion (consolidated)
    Operating income          ¥576.2 billion (consolidated)
    Net income                    ¥310.3 billion (consolidated)
    Employees                     38,235 (consolidated)
    Website               http://www.tepco.co.jp

    If you like buying stocks that are out of favor, Tokyo Electric could be an ideal scenario. Tokyo Electric, which is Asia’s largest utility and operates the Fukushima Dai-Ichi nuclear plant that was damaged by the 9.0 magnitude earthquake and tsunami, tumbled 14 percent to 902 yen last week, the biggest drop in the Nikkei 225. The company, which suspended its plan to pay a second-half dividend of 30 yen, was the most actively traded stock in Japan.

    Tokyo Electric last failed to pay dividends in fiscal 1980 due to the fallout from the second oil shock, skipping interim dividend payments for the fiscal year.

    Japan's major banks are considering extending loans up to 2 trillion yen to
    Tokyo Electric as early as by the end of March, sources close to the matter said Wednesday. The move is aimed at helping the utility raise funds for measures to boost electricity supply following a quake-triggered accident at its nuclear power plant in Fukushima Prefecture. Among banks, Sumitomo Mitsui Banking Corp. is expected to provide loans of about 600 billion yen, Mizuho Corporate Bank some 500 billion yen and the Bank of Tokyo-Mitsubishi UFJ about 300 billion yen, the sources said. In addition, Mitsubishi UFJ Trust and Banking Corp., Sumitomo Trust & Banking Co., Chuo Mitsui Trust and Banking Co. and Shinkin Central Bank are also considering extending loans as Tokyo Electric is likely to have requested loans from each of them last week, the sources said.

    The utility firm had procured funds mostly through issuing corporate bonds, but it has apparently decided to ask banks for loans as conditions to issue corporate bonds have become severe following the nuclear power plant accident. Rating agencies Moody's Japan K.K. and Standard & Poor's downgraded their long-term credit ratings for Tokyo Electric with the utility's financial heath expected to worsen due to the nuclear power plant accident following the devastating March 11 earthquake.

    The utility plans to repair its thermal power plants damaged by the quake and is expected to activate some of the thermal plants, whose operations have been suspended, to make up for an electricity shortage, likely costing the company a large amount of money to purchase heavy oil and other materials used to generate electricity.

    Meanwhile, the government has started considering whether it is possible for the Development Bank of Japan to extend loans to Tokyo Electric with a scheme which involves providing loans in the event of wide-scale disasters using funds procured by the government, sources close to the matter said. The government has set aside about 3.3 trillion yen in fiscal 2010 for the scheme, while it is considering increasing the amount for fiscal 2011 starting April.

    Think about this one for a minute. With world governments (especially the US) bailing everyone out these days, don't you think there will be some public funds (as well as insurance money) to clean up the nuclear disaster? In our opinion, we believe there will be. We also believe history repeats itself in the stock market and
    Tokyo Electric will return to favor one day and resume it's dividend. If you have access to Japanese markets, the stock trades in Tokyo, Osaka, and Nagoya. If you don't have access to Japan, buying TKECF or TKECY (the sponsored ADR) on the US OTC market is the same company.


    OTC Stock Review is not registered as an Investment Advisor or a Broker/Dealer. The information in this newsletter is not an offer to buy or sell securities of the companies profiled. Information is for informative purposes, not intended as advice for investment and is subject to change without notice. OTC Stock Review has not been compensated to perform investor relations services Tokyo Electric Power Company. Officers, directors, and employees of OTC Stock Review, may hold a long equity position of a profiled company and may from time to time trade in these securities for their own accounts. Information on each company is from public releases and can not be guaranteed by OTC Stock Review. Companies profiled herein may carry a high investment risk; readers should carefully review profiled companies thoroughly with their investment advisor, stockbroker, or other such professional. OTC Stock Review is not liable for any investment decisions by its readers or their advisors. Any analysis contained herein does not purport to be a complete analysis of the profiled Companies and reflects the opinion of the author.  Readers should obtain copies of the profiled Company’s periodic reports filed with United States Securities and Exchange Commission, generally available at http://www.sec.gov.


    Stocks: TKECY
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Comments (4)
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  • punkgirl9
    , contributor
    Comment (1) | Send Message
    Hi! What is the difference between TKECF and TKECY? Is there a benefit or advantage of having one as opposed to the other? Thanks for your help!
    14 Apr 2011, 08:10 PM Reply Like
  • David Kugelman
    , contributor
    Comments (10) | Send Message
    Author’s reply » TKECY is the Sponsored ADR. TKECF is the Unsponsored ADR. You can search for "sponsored versus unsponsored ADR" for a description of the difference between the two.
    15 Apr 2011, 08:47 AM Reply Like
  • palsg
    , contributor
    Comments (240) | Send Message
    According to your article, TKECY is the unsponsored ADR:
    If you don't have access to Japan, buying TKECF or TKECY (the unsponsored ADR) on the US OTC market is the same company.


    However, in your comment, you have TKECY as the sponsored ADR.


    So, which is it really?
    8 Nov 2011, 05:42 AM Reply Like
  • David Kugelman
    , contributor
    Comments (10) | Send Message
    Author’s reply » According to Bloomberg Businessweek TKECY is the Unsponsored ADR http://bit.ly/v1cxnH. However, TKECY is sponsored by Citi Depository Receipt Service http://bit.ly/rJ7tsT.
    8 Nov 2011, 09:28 AM Reply Like
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