Makita Corp

6586: XTKS (JPN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
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Makita Earnings: Hopes for Further Margin Improvement; Fair Value Raised 4% to JPY 5,000

Kangyuxiao Li

Jan 31, 2025

We raise our fair value estimate for narrow-moat Makita to JPY 5,000 per share from JPY 4,790, reflecting its stronger-than-expected margin recovery. The share price is currently under pressure on the back of the macroeconomic environment in key markets such as Germany, which is still weak. However, our midterm outlook for Makita remains intact. We expect the company will gradually improve its operating margin to 13.5% by fiscal 2028, compared with 3.7% and 8.9% in fiscal 2022 and 2023, respectively, as cost reductions continue and the utilization rate gradually picks up. We view Makita's shares as undervalued.

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Makita Corp

Makita Earnings: Hopes for Further Margin Improvement; Fair Value Raised 4% to JPY 5,000

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