Recovery Faster Than Expected Led by Auto and Data Center Demand; Lift Panasonic’s FVE to JPY 1,500

We lift no-moat Panasonic’s earnings forecasts and raise our fair value estimate to JPY 1,500 from JPY 1,400, as a result of the stronger-than-expected demand for electronic components and devices, driven by the recovery in capital investment in a wide range of industries, such as autos, data centers, and semiconductors. Furthermore, as a result of its structural reforms, Panasonic succeeded in building up a more profitable corporate structure than before and recorded a 5.8% operating margin for the June quarter, which is higher than 0.3% of the previous year and 3.0% of the year before. While we view Panasonic’s shares as lacking near-term catalysts, we believe they are slightly undervalued.