Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Japanese and Asian equity long/short strategies

Uzabase

Specialising in Japanese and Asian equity long/short strategies with a focus on rigorous, but targeted quantitative analysis to temper evaluations of company strategy, potential and vision. At Uzabase, our team of analysts provides coverage of industry dynamics with a local Asian flavour on Speeda, our financial information platform. Going forward we are aiming to channel our focus toward thematic research on emerging industries and company research.

Equity Bottom-Up

<p>Fanuc, while relatively well known as an industrial robot manufacturer, is reliant on its CNC business as its crown jewel. It enjoys the top market share in this space globally and is considered a dominant force with significant barriers to entry due to engineers being familiar with its controls and its strong support network. For many years this allowed it to effortlessly lead the market and the company enjoyed stable demand and pricing premiums. However, this is not to say that there were never any problems with its products. While the products enjoyed top market shares, we believe the strength of its network effects due to engineer familiarity and product support masked underlying dissatisfaction with the product. This dissatisfaction is not a particularly new development and rather is a function of Fanuc failing to adapt to a changing environment. Like many Japanese companies, it has been left behind in terms of the simplicity and user-friendliness of its UI and we believe it is now at risk of having its dominance in the space undermined. Worse yet, its historical success could blind management to the need for change and it would not be the first company to fall foul of its previous successes.</p><p>Is a company that is not focused on its UI likely to succeed in the IoT era?</p>

Fanuc, while relatively well known as an industrial robot manufacturer, is reliant on its CNC business as its crown jewel. It enjoys the top market share in this space globally and is considered a dominant force with significant barriers to entry due to engineers being familiar with its controls and its strong support network. For many years this allowed it to effortlessly lead the market and the company enjoyed stable demand and pricing premiums. However, this is not to say that there were never any problems with its products. While the products enjoyed top market shares, we believe the strength of its network effects due to engineer familiarity and product support masked underlying dissatisfaction with the product. This dissatisfaction is not a particularly new development and rather is a function of Fanuc failing to adapt to a changing environment. Like many Japanese companies, it has been left behind in terms of the simplicity and user-friendliness of its UI and we believe it is now at risk of having its dominance in the space undermined. Worse yet, its historical success could blind management to the need for change and it would not be the first company to fall foul of its previous successes.Is a company that is not focused on its UI likely to succeed in the IoT era?

Fanuc's Structural Issues (1): Is the CNC Business Losing Its Edge?

Japan

OKUMA Corporation manufactures machine tools and other industrial machinery. The Company produces computerized numerically controlled (CNC) machine tools including lathes, machining centers (MCs), grinders, and drilling machines.

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Okuma Corp (6103 JP)

Fanuc's Structural Issues (1): Is the CNC Business Losing Its Edge?

Fanuc, while relatively well known as an industrial robot manufacturer, is reliant on its CNC business as its crown jewel. It enjoys the top market...

Mio Kato

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