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.

Equity Bottom-Up

Omron Corp reported 4QFY21 results on Tuesday (27th April), which saw both revenues and operating profits increase YoY by 3.5% and 36.7% respectively. These were beats of 5.4% on revenue and 20.9% on OP vs. consensus.

Omron Corp reported 4QFY21 results on Tuesday (27th April), which saw both revenues and operating profits increase YoY by 3.5% and 36.7% respectively. These were beats of 5.4% on revenue and 20.9% on OP vs. consensus.

Omron Corp (6645 JP) reported its 3QFY21 results on Wednesday (27th January) which saw revenues and operating profits increase YoY by 0.1%% and 23% respectively. The reported results were 6.4% and 32.5% higher than consensus.

Omron Corp (6645 JP) reported its 3QFY21 results on Wednesday (27th January) which saw revenues and operating profits increase YoY by 0.1%% and 23% respectively. The reported results were 6.4% and 32.5% higher than consensus. 

Omron - Improving Margins, but Priced Above Its Potential

Omron posted a reasonable 2Q and raised OP guidance from ¥30bn to ¥40bn but this is still far from Consensus’ ¥51bn. While we believe guidance is conservative and expect the company to get close to ¥50bn in OP, the likelihood of a large beat of consensus appears small and market expectations seem to have gotten ahead of themselves.

Omron posted a reasonable 2Q and raised OP guidance from ¥30bn to ¥40bn but this is still far from Consensus’ ¥51bn. While we believe guidance is conservative and expect the company to get close to ¥50bn in OP, the likelihood of a large beat of consensus appears small and market expectations seem to have gotten ahead of themselves.

Omron – Recovery Ahead but More Than Priced In

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

We asked Keyence about the impact of COVID-19 on their business. They were not terribly helpful.<ul>
<li>Management expects market conditions to revert to pre-COVID normal as the economy recovers. They see no material change in their business mix, growth drivers or competition. </li>
<li>Their business in China began to recover in the three months to June. Sales in all other regions were down, although activity has picked up recently with the easing of travel restrictions.</li>
<li>As usual, they provided no guidance. </li>
</ul>The share price is sticking near the all-time high reached a month ago. Valuations suggest profit taking is in order. So do economic factors. It took three years for operating profit to recover from the Lehman Shock.

We asked Keyence about the impact of COVID-19 on their business. They were not terribly helpful.
Management expects market conditions to revert to pre-COVID normal as the economy recovers. They see no material change in their business mix, growth drivers or competition. 
Their business in China began to recover in the three months to June. Sales in all other regions were down, although activity has picked up recently with the easing of travel restrictions.
As usual, they provided no guidance. 
The share price is sticking near the all-time high reached a month ago. Valuations suggest profit taking is in order. So do economic factors. It took three years for operating profit to recover from the Lehman Shock.

Omron reported 4Q results that were down 20% and 26% YoY at the revenue and OP lines respectively, largely due to the sale of its Automotive Electronic Components (AEC) unit to Nidec. On a like for like basis results were still down 7% and 17% respectively with the deterioration in profitability exacerbated due to the continued weakness in its Electronic and Mechanical Components (EMC) business. The biggest concern though is the deterioration in sales in China, and if this is a precursor of what is to come in other regions then there is substantial risk to the FA sector overall.

Omron reported 4Q results that were down 20% and 26% YoY at the revenue and OP lines respectively, largely due to the sale of its Automotive Electronic Components (AEC) unit to Nidec. On a like for like basis results were still down 7% and 17% respectively with the deterioration in profitability exacerbated due to the continued weakness in its Electronic and Mechanical Components (EMC) business. The biggest concern though is the deterioration in sales in China, and if this is a precursor of what is to come in other regions then there is substantial risk to the FA sector overall.

Omron – Results Beat but China Sales Trend Is the COVID Concern

Japan

OMRON Corporation manufactures electronic components, equipment and systems used for factory automation. The Company provides products and services in a variety of fields including industrial automation, electronic components, automotive electronics, social systems such as ticket gate machines and traffic control, and healthcare.

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Omron Corp (6645 JP)

Omron – Momentum More Than Priced In

Omron beat consensus on results and posted guidance that was above consensus on both the revenue and OP lines. Nevertheless, valuations are...

Mio Kato

Omron - Improving Margins, but Priced Above Its Potential

Omron's Industrial Automation and Healthcare businesses continue to drive upward revisions in OP guidance but with margins already at high levels...

Mio Kato

Omron – Recovery Ahead but More Than Priced In

Omron revised guidance up significantly from ¥30bn to ¥40bn. While we believe the company should reach closer to ¥50bn, this is still probably less...

Mio Kato

Keyence (6861 JP): Back to the Future?

xxx xxx Keyence expects market conditions to revert to normal as the economy recovers.But that wouldn’t put a time frame on that and, since it’s...

Scott Foster

Omron – Results Beat but China Sales Trend Is the COVID Concern

Omron reported 4Q results that were down 20% and 26% YoY at the revenue and OP lines respectively, largely due to the sale of its Automotive...

Mio Kato

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