Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>We are bearish on Fanuc. Yaskawa's robotics orders were strong but Fanuc is more correlated with machine tool orders</li>
<li>Machine Tool orders have already turned south and Fanuc is losing momentum in its order growth</li>
<li>If we are right on the cycle, we expect Fanuc to trade down to 2.3x book value, 20% downside risk from here</li>
</ul>


We are bearish on Fanuc. Yaskawa's robotics orders were strong but Fanuc is more correlated with machine tool orders
Machine Tool orders have already turned south and Fanuc is losing momentum in its order growth
If we are right on the cycle, we expect Fanuc to trade down to 2.3x book value, 20% downside risk from here


Fanuc (6954) - Forget Yaskawa...a Slowdown Is Coming

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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>Yaskawa reported weak results as we expected (¥12.9bn OP vs. our ~¥14bn estimate and consensus at ¥16.7bn). </li>
<li>Despite this the company actually guided for a very punchy ¥72bn in OP next FY even above consensus’ ¥65.5bn and our expectation for OP to be flattish or even decline. </li>
<li>Nevertheless, there was nothing on the earnings call to suggest that guidance was anything more than overoptimism on the top line.</li>
</ul>


Yaskawa reported weak results as we expected (¥12.9bn OP vs. our ~¥14bn estimate and consensus at ¥16.7bn). 
Despite this the company actually guided for a very punchy ¥72bn in OP next FY even above consensus’ ¥65.5bn and our expectation for OP to be flattish or even decline. 
Nevertheless, there was nothing on the earnings call to suggest that guidance was anything more than overoptimism on the top line.


Yaskawa – Results as We Expected, Guidance Much Stronger

<ul>
<li>Yaskawa reports today and we expect earnings and guidance to both be on the weak side. </li>
<li>The stock has been weak of late but we still lean towards the idea that there is a little downside risk remaining. </li>
<li>The key question is whether the market attaches any credibility to consensus projections of 15% YoY OP growth next FY.</li>
</ul>


Yaskawa reports today and we expect earnings and guidance to both be on the weak side. 
The stock has been weak of late but we still lean towards the idea that there is a little downside risk remaining. 
The key question is whether the market attaches any credibility to consensus projections of 15% YoY OP growth next FY.


Yaskawa – We Expect a Slight Miss and Tepid Guidance

<ul>
<li>We spoke to Yaskawa today to understand recent trends and the detailed outlook on demand going forward. </li>
<li>There were no major surprises with the company still relatively positive on demand remaining strong across the board though only robots seem to offer strong growth potential. </li>
<li>Profitability for robots should also improve going forward creating a nice story, but valuations are still too dear.</li>
</ul>


We spoke to Yaskawa today to understand recent trends and the detailed outlook on demand going forward. 
There were no major surprises with the company still relatively positive on demand remaining strong across the board though only robots seem to offer strong growth potential. 
Profitability for robots should also improve going forward creating a nice story, but valuations are still too dear.


Yaskawa – Increasingly Positive on Robotics but Still Too Early… Except…

<ul>
<li>Yaskawa’s stock has been broadly flattish since the beginning of 2021 despite an accelerating earnings profile. </li>
<li>This is largely due to valuations remaining elevated at over 20x EV/EBIT. </li>
<li>Thus, while we continue to favour the name vs. FA peers we remain cautious.</li>
</ul>


Yaskawa’s stock has been broadly flattish since the beginning of 2021 despite an accelerating earnings profile. 
This is largely due to valuations remaining elevated at over 20x EV/EBIT. 
Thus, while we continue to favour the name vs. FA peers we remain cautious.


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)

Fanuc (6954) - Forget Yaskawa...a Slowdown Is Coming

The market should ignore the positive read-across from Yaskawa results. Fanuc is more correlated with machine tool orders. We see signs of a...

Mark Chadwick

Yaskawa – Results as We Expected, Guidance Much Stronger

Yaskawa reported weak results but guided very strongly for next FY. Nevertheless, there was nothing on the earnings call to suggest that guidance...

Mio Kato

Yaskawa – We Expect a Slight Miss and Tepid Guidance

Yaskawa reports today and we expect earnings and guidance to be on the weak side. The key question is whether the market attaches any credibility...

Mio Kato

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Yaskawa's Robotics segment offers intriguing growth potential but we remain concerned about a tech capex peak out. However, as a long hedge the...

Mio Kato

Yaskawa – Peak Out in Sight

Yaskawa’s stock has been flattish since 2021 despite accelerating earnings due to valuations remaining elevated at over 20x EV/EBIT and while we...

Mio Kato

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