Kyocera's Resilient Product Portfolio Mitigates Economic Slowdown; Raising FVE to JPY 8,800

While other tech companies will probably suffer for the next few quarters as a result of weaker shipments of smartphones and PCs, we forecast Kyocera’s earnings to remain relatively resilient, thanks to its diversified product portfolio and smaller exposure to the Chinese smartphone market. As a result, Kyocera's components business can fully benefit from the weaker yen. We've raised our operating income forecast to JPY 185 billion from JPY 173 billion for fiscal 2022 and to JPY 210 billion from JPY 190 billion for fiscal 2023, as we revised our midterm foreign-exchange assumptions to JPY 128 from JPY 112 per $1 and to JPY 135 from JPY 130 per EUR 1. We lift our fair value estimate to JPY 8,800 per share from JPY 7,700. Meanwhile, due to the weaker yen, our U.S. ADR fair value estimate declines to $65 from $68. We retain our view that demand for auto digitalization and semiconductors will deliver solid growth for Kyocera, and we believe the shares are undervalued.