Analyst Note| Jason Kondo |
Wide-moat Yaskawa Electric’s fiscal 2021 first-quarter earnings ending in May were in line with our expectations, but we were particularly surprised at the record orders worldwide, which we believe will lead to peak quarterly sales in the second quarter. We raise our fair value estimate to JPY 4,800 from JPY 4,600, from mainly adjusting our near-term revenue and operating margin estimates to account for higher sales of AC servo motors and robots in fiscal 2021, from record quarterly orders. Despite this, our revised fair value estimate continues to imply that Yaskawa Electric’s shares are overvalued. While high quarterly orders in China likely alleviated some market concerns over slowdown in the region, we continue to maintain our assumption that the current momentum of orders/sales will slow down in the second half of current fiscal year. Considering this factor as well as our medium-term expectations remaining intact, our fair value estimate revision is limited.