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Canon Inc ADR CAJ

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Canon’s Main Products Made a Steady Recovery in the September Quarter: Shares Undervalued

Kazunori Ito Senior Equity Analyst

Analyst Note

| Kazunori Ito |

Canon’s September quarter revenue was 12.7% down from the previous year, which was in line with our forecast of a 12.0% decline, making a steady recovery from a 25.7% decline in the June quarter. While we expect it may still take a few quarters for the demand for copiers and medical systems to fully recover, we are encouraged that its major products made solid progress from the previous quarter. For instance, the revenue of copiers improved to 19.3% down year on year in the September quarter from 40.1% down in the June quarter as people started returning to offices; cameras revenue improved to 16.0% down year on year from 54.6% down in the previous quarter as its brand new full-frame sensor cameras EOS R5 and R6 made a robust launch; and revenue of inkjet printers grew 20.9% year on year, up from 13.9% in the previous quarter because of the increasing home printing demand, owing to the remote working and online education measures. Given the recovery, we believe that Canon’s current share price, which is 0.75 times price/book and has a 4.5% dividend yield, is undervalued.

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Company Profile

Business Description

Canon designs, manufactures, and distributes an extensive range of consumer and electronic products, including copiers, cameras, lenses, and inkjet printers. The company operates four major business segments: office, imaging systems, medical systems, and industry and others. Its global customer base and domestically concentrated operations create inherent currency exposure, which can cause performance to fluctuate. Canon's headquarters and 28 of its 46 manufacturing plants are in Japan, but nearly 80% of revenue is delivered from international markets. The firm has been expanding into new geographies and markets to mitigate this exposure.

30-2, Shimomaruko 3-Chome, Ohta-ku
Tokyo, 146-8501, Japan
T +81 337582111
Sector Technology
Industry Computer Hardware
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 187,041