Daily Brief Equity Bottom-Up: Yamaha Corp (7951) BIG Buyback May Be Followed By More Later and more

• Yesterday, Yamaha Corp (7951 JP) announced Q3 earnings (results, presentation, metrics), a change in full-year guidance (revs unch’d, OP -10.8%, NP -25%), and a large buyback. 
• 9M Revenue up yoy but China sales slower OP up yoy (audio business, SG&A cuts), but FY revised lower due to restructuring (impairment, retirement expenses). Looks worse than it is.
• The buyback is interesting, and large. And investors should be aware of the modalities. 

• Jack Henry is a best in class operator within the vertical market software space
• They sell operating system software for small and mid-sized banks
• Jack Henry focuses on organic growth and their core product

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• ASML produces lithography systems for printing electronic circuits on chips
• ASML is the only company in the world producing EUV lithography printers
• EUV lithography involves generating light with a very small wavelength and requires complex technology and optics, with challenges in light generation and guiding the light to print circuits on wafers

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• Cautious 2025 outlook: SEAJ and other Japanese SPE firms have toned down 2025 expectations. TEL mentions a flat total end-demand.
• In 2024, spending was concentrated in leading edge (AI) and China. In 2025, Intel and Samsung Logic Capex declines, China should decline. The bright spots are TSMC and HBM Capex.
• Consensus expectations are low, but rightly so. The stock is at average PEx. Neutral territory.

• Received US FDA Approval for both Tarapur & Baddi Facility & moving to regulated market.
• Increase in revenues & margins with the US FDA approvals & Many products are backward integration or import substitution which is expected to boost demand
• US entry to allow product & bottomline expansion and would also focus on increasing market presence from semi-regulated markets along with regulated markets

• The upcoming 1Q25 could be relatively flat or slightly higher than 4Q24, which represents a better start than usual due to seasonal effects.  
• The Dimistry 8400/9400 models have been successful sellers, and a new Dimistry 9500 is expected to be launched after the first half of 2025. (link)
• The China electronic household subsidy program, including smartphone, has resulted in over 8 million sales in shipments within 4 days on Jan 25.

• Top Chinese cloud platforms are supporting DeepSeek as AI changes the landscape of cloud intelligence.
• Meta and Google are pushing forward with smart glasses development, overcoming obstacles in the Asian supply chain.
• SiPh progress is exceeding TSMC’s expectations, heating up the optical communication CPO market earlier than anticipated.

• Record Margins: Q2 OP surged 82% YoY to ¥7.1b, with Japan profitability up and losses narrowing in Fintech and the US.
• US Breakeven Play: Aggressive cost-cutting led to 12ppt margin improvement; if growth stalls, a sale or exit could boost margins by 200bps.
• Fintech Upside: Losses peaked last year, with 16ppt OPM improvement; breaking even could add 400bps to group margins.

• Pretty good Dec-24 quarter (1Q25), ~10% above expectations. Decent Mar-25 (2Q25) guidance, ~5% above expectations. The stock is down after hours, because?
• FY25, I estimate Mobile revenues up ~10% YoY, Auto ~30%, IoT ~20%. QCOM said that Licensing revenues will be flat. Total revenue growth ~12% YoY, I expect similar for FY26.
• Conclusion: nothing exciting, management reiterates big non-mobile revenue targets by 2029 (US$22bn) but downside from Apple Modem ending in 2027. In the meantime the stock is properly valued.

• Ramkrishna Forgings (RMKF IN) reported Q3 FY25 revenue growth of 8% and volume up 13.9%, alongside new capacity expansions and Rs. 697 crore in new orders.
• These robust results and strategic capacity boosts underscore RKFL’s resilience, positioning it for sustainable growth amid raw material and market headwinds.
• Investors should see the mixed Q3 performance as a sign of proactive investments that could translate into significant long-term value.