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Keyence Corp 6861

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Keyence Showed Larger-Than-Expected Top-Line Decline for Q1 Fiscal 2020 but Maintain FVE

Jason Kondo Equity Analyst

Analyst Note

| Jason Kondo |

Keyence showed larger-than-expected declines for the first quarter of fiscal 2020, where quarterly revenue declined 18% year on year for the first quarter, with sales declining globally except in a few regions such as China. We maintain our fair value estimate for Keyence at JPY 38,000, but revise our revenue projection for fiscal 2020 to a 5% decline from 5.6% growth, as we now assume Keyence’s top-line recovery at the companywide level will start later during the second half of the current fiscal year at moderate levels. We continue to believe Keyence would be able to undergo top-line recovery at a faster pace than other Japanese factory automation, or FA, companies like wide-moat Fanuc, as its FA solutions tend to be based on its sensors and machine vision equipment. This is on the assumption that when capital-related constraints are loosened, many manufacturers will likely start with smaller-scale investments (such as with sensors) initially to deal with social distancing from the COVID-19 pandemic.

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Company Profile

Business Description

Keyence Corporation develops and sells factory automation sensors, vision systems, barcode readers, laser markers, measuring instruments, and digital microscopes. The company has a fabless business model where manufacturing of its products is outsourced to qualified contract manufacturing companies, while it focuses on product planning and development of its products. It serves customers in automotive, metals/machining, glass, semiconductor, plastic, food, pharmaceutical, steel, and other industries. Keyence was founded in 1972 and is headquartered in Osaka, Japan.

1-3-14, Higashi-nakajima, Higashi-Yodogawa
Osaka, 533-8555, Japan
T +81 663791111
Sector Technology
Industry Scientific & Technical Instruments
Most Recent Earnings Jun 30, 2020
Fiscal Year End Mar 20, 2020
Stock Type
Employees 8,419