Analyst Note| Kazunori Ito |
No-moat Kyocera’s December quarter operating income was JPY 18.9 billion, which is materially above our forecast of JPY 22.7 billion, considering the one-time impairment loss of JPY 11.5 billion for the smart energy business. However, our overall impression about the December quarter result is somewhat mixed, as while one business group has exceeded our forecasts, two business groups went below our expectation (and three other groups were broadly in line). That said, we retain our view that solid revenue growth driven by the demand from the auto and smartphone sectors will be mitigated by Kyocera’s fragmented product portfolio. Kyocera’s fair value estimate of JPY 7,300 is maintained, and we view its shares as fairly valued.