Another Quarter of Record Robot Orders for Fanuc, While CNC Demand Faces Headwinds

We raise Fanuc’s fair value estimate to JPY 28,000 from JPY 27,000, after adjusting our near-term companywide revenue assumptions, based on stronger-than-expected robot demand. Robot segment orders in the December quarter continued to be at record levels, growing 18.5% year on year, supported by electric vehicle, or EV, automation demand. We now project companywide revenue will grow by 14.5% and 1.0% year on year in fiscal 2022 and 2023 (ending March) respectively, after raising our robot sales growth assumptions to 29% and 12%, from 22% and 8%, in the same period. Further, we think Fanuc’s longer-term prospects for robots remain strong and are underestimated by the market, as its businesses are supported by secular drivers, like EV production automation and increasing robot adoption in nontraditional fields like food. As such, we think Fanuc is undervalued.