Rohm (6963 JP): Strength in SiC Devices Enhances Gearing to Auto Electrification

2020 High Conviction: ROHM- Potential for Margin Expansion; 5G and CASE Are Key Demand Drivers

Rohm (6963 JP): Looking to Recovery with SiC Technology and a 10% Buyback

Renesas: Past the Bottom but Expect an L, Not U-Shaped Recovery

Rohm Buyback, CB (Debt), and Capital Restructuring - The Headline Is Better Than The Fact

Renesas – Short-Term Gains May Be Exhausted

Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

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

<p>This is our first look at <a href="https://www.smartkarma.com/entities/rohm-co-ltd" target="_blank" data-smartkarma-citation="entities:2953:1" rel="noopener">Rohm Co Ltd (6963 JP), </a>a semiconductor company. Our key points are:</p>
<ul class="">
<li>ROHM mainly manufactures ICs and Discrete Semiconductor devices.</li>
<li>Its closest rivals seem to be private companies- hence, we compared the company to its most appropriate peers in the semiconductor industry: <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP), </a><a href="https://www.smartkarma.com/entities/sanken-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:6073:1" rel="noopener">Sanken Electric (6707 JP), </a><a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata Manufacturing (6981 JP), and </a><a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a>.</li>
<li>The current decline in revenue and OP is similar across peers, given weakening demand conditions as explained in relation to Renesas in <a href="https://www.smartkarma.com/insights/renesas-short-term-gains-may-be-exhausted" target="_blank" data-smartkarma-citation="insights:34669" rel="noopener">Renesas – Short-Term Gains May Be Exhausted</a> by Mio Kato.</li>
<li>ROHM follows the same trend as Sanken and has mostly outperformed Renesas on revenue performance YoY.</li>
<li>A U-Shaped recovery on revenue may be expected, similar to consensus estimates for Sanken, as opposed to the L-shaped recovery we expect for Renesas (<a href="https://www.smartkarma.com/insights/renesas-past-the-bottom-but-expect-an-l-not-u-shaped-recovery" target="_blank" data-smartkarma-citation="insights:31584" rel="noopener">Renesas: Past the Bottom but Expect an L, Not U-Shaped Recovery</a>).</li>
<li>Long-term growth prospects are attractive, with product development plans that focus on the automotive semiconductor market, which seems to be the strongest growth driver for semiconductor companies.</li>
<li>Our quantamental analysis on segmental profitability indicates significant potential for margin expansion, over the long term.</li>
<li>OPM is likely to recover by FY03/21, and the trend after is likely to be steady increases rather than huge jumps.</li>
<li>It has a strong balance sheet, as discussed in SmartKarma ( <a href="https://www.smartkarma.com/insights/rohm-buyback-cb-debt-and-capital-restructuring-the-headline-is-better-than-the-fact" target="_blank" data-smartkarma-citation="insights:34619" rel="noopener">Rohm Buyback, CB (Debt), and Capital Restructuring - The Headline Is Better Than The Fact</a> by <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy, </a><a href="https://www.smartkarma.com/insights/rohm-6963-jp-long-term-investment-in-automotive-industrial-ics-1" target="_blank" data-smartkarma-citation="insights:17585" rel="noopener">Rohm (6963 JP): Long-Term Investment in Automotive &amp; Industrial ICs (1)</a><a href="https://www.smartkarma.com/profiles/scott-foster" target="_blank" data-smartkarma-citation="accounts:1134" rel="noopener">Scott Foster</a><a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener"> by </a>Insights).</li>
<li>Trades at 30.3x FY03/20E, close to its 86<sup>th</sup> percentile. However, on a relative basis (especially with Sanken), we feel that the company is reasonably valued and could prove to be a worthy investment over the long term.</li>
</ul>

This is our first look at Rohm Co Ltd (6963 JP), a semiconductor company. Our key points are:

ROHM mainly manufactures ICs and Discrete Semiconductor devices.
Its closest rivals seem to be private companies- hence, we compared the company to its most appropriate peers in the semiconductor industry: Renesas Electronics (6723 JP), Sanken Electric (6707 JP), Murata Manufacturing (6981 JP), and Novatek Microelectronics Corp (3034 TT).
The current decline in revenue and OP is similar across peers, given weakening demand conditions as explained in relation to Renesas in Renesas – Short-Term Gains May Be Exhausted by Mio Kato.
ROHM follows the same trend as Sanken and has mostly outperformed Renesas on revenue performance YoY.
A U-Shaped recovery on revenue may be expected, similar to consensus estimates for Sanken, as opposed to the L-shaped recovery we expect for Renesas (Renesas: Past the Bottom but Expect an L, Not U-Shaped Recovery).
Long-term growth prospects are attractive, with product development plans that focus on the automotive semiconductor market, which seems to be the strongest growth driver for semiconductor companies.
Our quantamental analysis on segmental profitability indicates significant potential for margin expansion, over the long term.
OPM is likely to recover by FY03/21, and the trend after is likely to be steady increases rather than huge jumps.
It has a strong balance sheet, as discussed in SmartKarma ( Rohm Buyback, CB (Debt), and Capital Restructuring - The Headline Is Better Than The Fact by Travis Lundy, Rohm (6963 JP): Long-Term Investment in Automotive &amp; Industrial ICs (1)Scott Foster by Insights).
Trades at 30.3x FY03/20E, close to its 86th percentile. However, on a relative basis (especially with Sanken), we feel that the company is reasonably valued and could prove to be a worthy investment over the long term.


ローム：非対称的な機会、量子分析は利益率拡大の可能性を示唆

ROHM Co Ltd

ローム：非対称的な機会、量子分析は利益率拡大の可能性を示唆