Kyocera Earnings: Lifting Our Midterm Growth Forecasts On Aggressive Capital Expenditure Plan

We lift Kyocera’s fair value estimate to JPY 8,200 per share from JPY 7,900, as we raise our revenue growth assumption due to the company’s aggressive investment strategy. Meanwhile, we lower our fair value estimate per ADR to $59 from $62 due to the weaker Japanese yen. Although we believe the financial targets in the newly announced midterm plan seem too aggressive, we are impressed by Kyocera’s aggressive investment strategy in growth areas. In the past, Kyocera often invested at the peak of the cycle and suffered from overcapacity when demand cooled. However, in this midterm plan, investment plans are determined based on a long-term outlook amid the weak demand, giving the impression that management decisions are being made more quickly than before. Kyocera’s share price has risen 23% since the beginning of the year, and we believe shares are currently fairly valued.