Raising Makita's Fair Value to JPY 5,000 on Hopes of Further Margin Improvement

Makita’s business model emphasizes servicing professionals like carpenters by setting numerous sales and service branches near local specialty hardware stores that sell the company’s power tools and other equipment mainly to tradespeople. As a result, the company can quickly repair and deliver the equipment back to the tradespeople, who demand reliability in both products and service. In the power tools market, we expect Makita to maintain its dominant share of about 60% in Japan while competing for the leading position in Europe with Robert Bosch, where we estimate both have about 20% share. We expect Makita to continue generating about 17% of revenue in Japan and about half of revenue in Europe (including all products) as it leverages its well-recognized brand and service network.