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.

Equity Bottom-Up

<ul>
<li>With the company's share price still below its 2021 and 2024 highs, Keyence management has again raised the dividend and is planning for share buy-backs. </li>
<li>Margins under pressure, but factory automation in China, the U.S. and other markets continues to drive sales and profit growth. Forecast P/E dropping toward low end of historical range.</li>
<li>But the question remains: What will the company do with its growing pile of cash? Total cash &amp; securities exceeded ¥3 trillion ($19 billion) at the end of FY Mar-26.</li>
</ul>


With the company's share price still below its 2021 and 2024 highs, Keyence management has again raised the dividend and is planning for share buy-backs. 
Margins under pressure, but factory automation in China, the U.S. and other markets continues to drive sales and profit growth. Forecast P/E dropping toward low end of historical range.
But the question remains: What will the company do with its growing pile of cash? Total cash &amp; securities exceeded ¥3 trillion ($19 billion) at the end of FY Mar-26.


Keyence (6861 JP): Welcome Attention to the Share Price

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Global Ex-USA funds have almost eliminated a decade-long Japan underweight, lifting average exposure to 13.64%, just 0.22% below benchmark.</li>
<li>Japan has seen strong rotation in 2026, with an estimated $3.8bn of net inflows and broadening ownership across Industrials, Financials and Materials.</li>
<li>Stock selection is shifting towards semiconductors and industrial technology, led by Kioxia, Advantest and Sumitomo Electric, while established holdings including Nintendo and Sony lose ground.</li>
</ul>


Global Ex-USA funds have almost eliminated a decade-long Japan underweight, lifting average exposure to 13.64%, just 0.22% below benchmark.
Japan has seen strong rotation in 2026, with an estimated $3.8bn of net inflows and broadening ownership across Industrials, Financials and Materials.
Stock selection is shifting towards semiconductors and industrial technology, led by Kioxia, Advantest and Sumitomo Electric, while established holdings including Nintendo and Sony lose ground.


<ul>
<li>Sales are up but profits are lagging, with the gross, operating and net margins all declining in the first nine months of FY Mar-26.</li>
<li>Overseas sales have risen to two-thirds of total sales, with growth led by Asia and America. This trend seems likely to continue.</li>
<li>Keyence continues to pile up cash, but for what purpose? With no obvious gearing to AI, its stock price has been underperforming.</li>
</ul>


Sales are up but profits are lagging, with the gross, operating and net margins all declining in the first nine months of FY Mar-26.
Overseas sales have risen to two-thirds of total sales, with growth led by Asia and America. This trend seems likely to continue.
Keyence continues to pile up cash, but for what purpose? With no obvious gearing to AI, its stock price has been underperforming.


Keyence (6861 JP): Sliding Down a Mountain of Cash

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>Can expect more from the likes of Rakus Co Ltd, Shift Inc, NEC Corp and Fujitsu Ltd which all traded well yesterday on the rotation away from frontline AI plays.</li>
<li>It would make sense to see interest in physical AI FA plays such as Yaskawa Electric, Mitsubishi Electric, Keyence Corp and Fanuc Corp as alternative exposure to the AI theme.</li>
<li>The power semis such as Fuji Electric, ROHM Co Ltd and Renesas Electronics should hold up after a strong day for the sector in the US.</li>
</ul>


Can expect more from the likes of Rakus Co Ltd, Shift Inc, NEC Corp and Fujitsu Ltd which all traded well yesterday on the rotation away from frontline AI plays.
It would make sense to see interest in physical AI FA plays such as Yaskawa Electric, Mitsubishi Electric, Keyence Corp and Fanuc Corp as alternative exposure to the AI theme.
The power semis such as Fuji Electric, ROHM Co Ltd and Renesas Electronics should hold up after a strong day for the sector in the US.


Japan Morning Connection: Physical AI FA Plays May Draw Fresh Interest as Alternative AI Exposure

<ul>
<li>Rigaku worth watching as a play on the shift to 2D and more complex transistors requiring X-ray/metrology capabilities.</li>
<li>Photonics names QD Laser, Seiko Giken, Santec and Samco back on the menu for believers in co-packaged optics and photonic-driven AI scale-up.</li>
<li>Japanese space names finally looking more attractive after &gt;50% corrections from recent highs.</li>
</ul>


Rigaku worth watching as a play on the shift to 2D and more complex transistors requiring X-ray/metrology capabilities.
Photonics names QD Laser, Seiko Giken, Santec and Samco back on the menu for believers in co-packaged optics and photonic-driven AI scale-up.
Japanese space names finally looking more attractive after &gt;50% corrections from recent highs.


Japan Morning Connection: Broadening AI Rally Should Increase Photonics and Glass Substrate Focus

Japan

KEYENCE CORPORATION develops, manufactures, and sells sensors and measuring instruments used for factory automation (FA) and high technology hobby products. The Company's products include fiber optic sensors, photoelectric sensors, programmable logic controllers (PLC), laser scan micrometers, bar code readers, and radio-controlled model cars.

Price Gauge
52-week Range	0.00 - 0.00
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Keyence Corp (6861 JP)

Japan: Underweight No More?

Global Ex-USA funds have almost eliminated their decade-long Japan underweight, as rising allocations and strong inflows drive rotation towards...

Steven Holden

Keyence (6861 JP): Sliding Down a Mountain of Cash

Keyence may bounce off the bottom of its trading range, but has been underperforming other FA stocks due to lack of gearing to DX, slipping margins...

Scott Foster

Japan Morning Connection: Physical AI FA Plays May Draw Fresh Interest as Alternative AI Exposure

Expect a continuation of the shift away from frontline AI plays. Interest in physical AI FA plays may see an increase as alternative exposure to...

Andrew Jackson

Japan Morning Connection: Broadening AI Rally Should Increase Photonics and Glass Substrate Focus

Japanese SPEs continue to benefit from Korean tailwinds while photonics and glass substrate names should be increasingly back on the menu as...

Andrew Jackson

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Keyence (6861 JP): Welcome Attention to the Share Price

Outlook improving with buy-backs planned and dividend raised. Factory automation driving sales despite war on Iran. OP margin under pressure but...

Scott Foster

Japan: Underweight No More?

Global Ex-USA funds have almost eliminated their decade-long Japan underweight, as rising allocations and strong inflows drive rotation towards...

Steven Holden

Keyence (6861 JP): Sliding Down a Mountain of Cash

Keyence may bounce off the bottom of its trading range, but has been underperforming other FA stocks due to lack of gearing to DX, slipping margins...

Scott Foster

Japan Morning Connection: Physical AI FA Plays May Draw Fresh Interest as Alternative AI Exposure

Expect a continuation of the shift away from frontline AI plays. Interest in physical AI FA plays may see an increase as alternative exposure to...

Andrew Jackson

Japan Morning Connection: Broadening AI Rally Should Increase Photonics and Glass Substrate Focus

Japanese SPEs continue to benefit from Korean tailwinds while photonics and glass substrate names should be increasingly back on the menu as...

Andrew Jackson