Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>2QFY2/27 OP of ¥13.6bn beat our ¥12.9bn on Robotics and System Engineering; revenue of ¥146.6bn missed by 2% as servo supply capped Motion Control.</li>
<li>Orders hit a record ¥185.4bn (+38% YoY), 10% above our forecast. FY2/27 OP guidance of ¥57.5bn sits in line with consensus.</li>
<li>We lift FY2/27–28 OP to ¥60.4bn / ¥81.6bn (+4–5%); DCF ¥6,007 (+26%). We remain bullish.</li>
</ul>


2QFY2/27 OP of ¥13.6bn beat our ¥12.9bn on Robotics and System Engineering; revenue of ¥146.6bn missed by 2% as servo supply capped Motion Control.
Orders hit a record ¥185.4bn (+38% YoY), 10% above our forecast. FY2/27 OP guidance of ¥57.5bn sits in line with consensus.
We lift FY2/27–28 OP to ¥60.4bn / ¥81.6bn (+4–5%); DCF ¥6,007 (+26%). We remain bullish.


Yaskawa (6506 JP) | Q2 Review: Orders Run Ahead

<ul>
<li>Orders hold at record levels, c.¥168bn in 2Q (+25% YoY), on semiconductor and datacentre demand; no orders lost to ERP. </li>
<li>ERP drag peaks in 2Q; full servo output from November should convert the backlog into FY2/28 earnings. </li>
<li>Consensus estimates already cut; at 12x forward EV/EBITDA against 15x history, our DCF implies ¥5,774 (+17%).</li>
</ul>


Orders hold at record levels, c.¥168bn in 2Q (+25% YoY), on semiconductor and datacentre demand; no orders lost to ERP. 
ERP drag peaks in 2Q; full servo output from November should convert the backlog into FY2/28 earnings. 
Consensus estimates already cut; at 12x forward EV/EBITDA against 15x history, our DCF implies ¥5,774 (+17%).


<ul>
<li>
Physical AI optionality: Yaskawa’s ¥250bn investment plan and humanoid strategy position its servo, drive and actuator businesses to benefit from the Physical AI growth cycle. </li>
<li>
Earnings inflection: Management targets ¥650bn revenue and ¥90bn OP by FY2029, with margins improving toward 15% as AI robotics and data-center demand ramp.</li>
<li>
 Attractive risk/reward: Shares are down 40% from their YTD high and trade below historical multiples, offering ~33% upside, though humanoid adoption and FA capex remain key risks.</li>
</ul>



Physical AI optionality: Yaskawa’s ¥250bn investment plan and humanoid strategy position its servo, drive and actuator businesses to benefit from the Physical AI growth cycle. 

Earnings inflection: Management targets ¥650bn revenue and ¥90bn OP by FY2029, with margins improving toward 15% as AI robotics and data-center demand ramp.

 Attractive risk/reward: Shares are down 40% from their YTD high and trade below historical multiples, offering ~33% upside, though humanoid adoption and FA capex remain key risks.


Yaskawa Electric (6506) | High-Quality Play on Physical AI

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

Robotphoenix Intelligent Technology / Equity Capital Markets

Robotphoenix Intelligent Technology (6871 HK)

<ul>
<li>To raise HK$679.2m of net proceeds, <a href="https://www.smartkarma.com/entities/robotphoenix-intelligent-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:48807:1" rel="noopener">Robotphoenix Intelligent Technology (6871 HK)</a>'s IPO is small. But this dedicated industrial robotics company is worth a bet.</li>
<li>Although losses have been increasing for FY23-25, with a 3-year forward revenue CAGR of 35.2%, they should peak in FY27 and start to reduce in FY28.</li>
<li>We calculate a fair P/S of 13.7-15.5x for FY26, translating into a price of HK$34.3-38.6, or 12.5-26.5% upside from the IPO price. </li>
</ul>


To raise HK$679.2m of net proceeds, Robotphoenix Intelligent Technology (6871 HK)'s IPO is small. But this dedicated industrial robotics company is worth a bet.
Although losses have been increasing for FY23-25, with a 3-year forward revenue CAGR of 35.2%, they should peak in FY27 and start to reduce in FY28.
We calculate a fair P/S of 13.7-15.5x for FY26, translating into a price of HK$34.3-38.6, or 12.5-26.5% upside from the IPO price. 


Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>The outlook for factory automation is improving with inventory clearance, the upturn in the semiconductor industry and an AI-enhanced response to the labor shortage.</li>
<li>Yaskawa's margins should continue to rise with renewed growth in Robotics, efficiency gains and an upgraded product line. </li>
<li>Valuation stretched at 30x EPS guidance for FY Feb-25, but current weakness looks like a long term buying opportunity.</li>
</ul>


The outlook for factory automation is improving with inventory clearance, the upturn in the semiconductor industry and an AI-enhanced response to the labor shortage.
Yaskawa's margins should continue to rise with renewed growth in Robotics, efficiency gains and an upgraded product line. 
Valuation stretched at 30x EPS guidance for FY Feb-25, but current weakness looks like a long term buying opportunity.


Yaskawa (6506 JP): Start of a New Factory Automation Growth Cycle

Japan

YASKAWA Electric Corporation manufactures and markets servomotors, controllers, inverters, and industrial robots.  The Company's products include spindle controllers, computerized numerical control (CNC) systems, and system engineering.

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Yaskawa Electric (6506 JP)

Yaskawa (6506 JP) | Q2 Review: Orders Run Ahead

Record orders hit a high; OP beat, revenue missed on servo constraints. FY27 guidance in line; earnings estimates and DCF raised. Bullish.

Mark Chadwick

Yaskawa (6506 JP): Looking Through to 2H

Yaskawa reports on Friday. Orders remain at record levels, but sales have yet to normalise after the ERP migration. Shares -35% over three months,...

Mark Chadwick

Yaskawa Electric (6506) | High-Quality Play on Physical AI

Yaskawa combines a resilient automation franchise with high-upside Physical AI optionality. Margin expansion, AI demand and attractive valuation...

Mark Chadwick

Robotphoenix (6871) IPO: Worth a Bet

Robotphoenix's small IPO aims to raise HK$679.2m, but with a promising future in industrial robotics and a leadership position in the industry, it...

Osbert Tang, CFA

Yaskawa (6506 JP): Start of a New Factory Automation Growth Cycle

Long-term buy with share price down 10% in the past month as orders bottom out. Robotics looking up with inventory cleared and need for automation...

Scott Foster

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52-week Range

Market Cap (USDm)

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Yaskawa (6506 JP) | Q2 Review: Orders Run Ahead

Record orders hit a high; OP beat, revenue missed on servo constraints. FY27 guidance in line; earnings estimates and DCF raised. Bullish.

Mark Chadwick

Yaskawa (6506 JP): Looking Through to 2H

Yaskawa reports on Friday. Orders remain at record levels, but sales have yet to normalise after the ERP migration. Shares -35% over three months,...

Mark Chadwick

Yaskawa Electric (6506) | High-Quality Play on Physical AI

Yaskawa combines a resilient automation franchise with high-upside Physical AI optionality. Margin expansion, AI demand and attractive valuation...

Mark Chadwick

Robotphoenix (6871) IPO: Worth a Bet

​Robotphoenix's small IPO aims to raise HK$679.2m, but with a promising future in industrial robotics and a leadership position in the industry, it...

Osbert Tang, CFA

Yaskawa (6506 JP): Start of a New Factory Automation Growth Cycle

Long-term buy with share price down 10% in the past month as orders bottom out. Robotics looking up with inventory cleared and need for automation...

Scott Foster

Robotphoenix's small IPO aims to raise HK$679.2m, but with a promising future in industrial robotics and a leadership position in the industry, it...