Analyst Note| Kazunori Ito |
We fine-tuned no-moat Casio Computer’s earnings forecast and revise our fair value estimate to JPY 2,100 from JPY 2,000. While Casio’s revenue has not fully recovered because of the prolonged pandemic, the company focused on restructuring the organization during this fiscal year. We view that margin expansion of watches, music instruments, and system equipment will be faster than we had anticipated, and thus, raise our operating margin assumption for fiscal 2024 to 14.2% from 13.7% previously. Our new fair value estimate corresponds to 21 times 2021 price/earnings, and we think Casio’s shares are currently fairly valued. Casio’s share price has surged more than 50% from its bottom in March 2020, preceding the recovering fundamentals. For further upside, we believe that the new businesses need to start contributing to Casio’s earnings.