Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Consolidated net sales slipped 0.4% to ¥197 billion, while operating income slipped 14.6%, hitting ¥34.9 billion</li>
<li>The yen’s Q3 weakness erased ¥11 billion in unrealised inventory profits, dragging reported operating profit below expectations</li>
<li>Recovery in order book is key positive. However, given the stock's outperformance over the past 3 months, there is less upside. </li>
</ul>


Consolidated net sales slipped 0.4% to ¥197 billion, while operating income slipped 14.6%, hitting ¥34.9 billion
The yen’s Q3 weakness erased ¥11 billion in unrealised inventory profits, dragging reported operating profit below expectations
Recovery in order book is key positive. However, given the stock's outperformance over the past 3 months, there is less upside. 


<ul>
<li>Fanuc’s Q2 operating income surged 25% year-on-year, but the beat was driven by a one-time 9 billion yen unrealized profit, raising concerns about sustainability.</li>
<li>Total orders fell from 198 billion yen to 186 billion yen, with a notable slowdown in Factory Automation orders, particularly in China.</li>
<li>Despite inventory reductions, Fanuc’s inventory/sales ratio remains elevated at 43%; shares down 9% since Q1 and underperforming the broader index for the year.</li>
</ul>


Fanuc’s Q2 operating income surged 25% year-on-year, but the beat was driven by a one-time 9 billion yen unrealized profit, raising concerns about sustainability.
Total orders fell from 198 billion yen to 186 billion yen, with a notable slowdown in Factory Automation orders, particularly in China.
Despite inventory reductions, Fanuc’s inventory/sales ratio remains elevated at 43%; shares down 9% since Q1 and underperforming the broader index for the year.


Fanuc (6954) | Q2 Profit Boost Masked by One-Time Gains

Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Derivatives

<ul>
<li>This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.</li>
<li>The strategy performs well if the Nifty 50 rises <em>and</em> outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.</li>
<li>Leverage increases both the strategy's payoff and probability of success.</li>
</ul>


This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.
The strategy performs well if the Nifty 50 rises and outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.
Leverage increases both the strategy's payoff and probability of success.


EQD | Long Nifty 50 Vs. Short Nikkei 225 - A Relative Value Option Strategy with a Kicker

<ul>
<li>2Q earnings miss and full year guidance cut - negative surprise to the market</li>
<li>Core FA orders down sequentially QoQ; Weak FA negative for overall OPM</li>
<li>Maintain bearish stance as negative YoY Machine Tool orders yet to come. </li>
</ul>


2Q earnings miss and full year guidance cut - negative surprise to the market
Core FA orders down sequentially QoQ; Weak FA negative for overall OPM
Maintain bearish stance as negative YoY Machine Tool orders yet to come. 


Fanuc (6954 JP) – Let the Derating Begin

<ul>
<li>We are bearish on Fanuc. Yaskawa's robotics orders were strong but Fanuc is more correlated with machine tool orders</li>
<li>Machine Tool orders have already turned south and Fanuc is losing momentum in its order growth</li>
<li>If we are right on the cycle, we expect Fanuc to trade down to 2.3x book value, 20% downside risk from here</li>
</ul>


We are bearish on Fanuc. Yaskawa's robotics orders were strong but Fanuc is more correlated with machine tool orders
Machine Tool orders have already turned south and Fanuc is losing momentum in its order growth
If we are right on the cycle, we expect Fanuc to trade down to 2.3x book value, 20% downside risk from here


Fanuc (6954) - Forget Yaskawa...a Slowdown Is Coming

Japan

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

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Fanuc Corp (6954 JP)

Fanuc (6594) | Robots in Reverse

Company's net sales and operating income decreased due to yen's weakness erasing inventory profits, but recovery in order book is a positive sign...

Mark Chadwick

Fanuc (6954) | Q2 Profit Boost Masked by One-Time Gains

Fanuc's Q2 operating income up 25% due to one-time profit, but concerns arise over sustainability. Orders down, inventory/sales ratio high, shares...

Mark Chadwick

EQD | Long Nifty 50 Vs. Short Nikkei 225 - A Relative Value Option Strategy with a Kicker

Option strategy: exploit relative value in implied volatilities combined with directional positioning for a leveraged payoff in a long Nifty 50 vs....

Gaudenz Schneider

Fanuc (6954 JP) – Let the Derating Begin

FA weakness to weigh down on Fanuc's earnings and valuations in the coming quarters. The YoY turn in Machine Tool orders is yet to come, ...

Mark Chadwick

Fanuc (6954) - Forget Yaskawa...a Slowdown Is Coming

The market should ignore the positive read-across from Yaskawa results. Fanuc is more correlated with machine tool orders. We see signs of a...

Mark Chadwick

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52-week Range

Market Cap (USDm)

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Fanuc (6594) | Robots in Reverse

​Company's net sales and operating income decreased due to yen's weakness erasing inventory profits, but recovery in order book is a positive sign...

Mark Chadwick

Fanuc (6954) | Q2 Profit Boost Masked by One-Time Gains

​Fanuc's Q2 operating income up 25% due to one-time profit, but concerns arise over sustainability. Orders down, inventory/sales ratio high, shares...

Mark Chadwick

EQD | Long Nifty 50 Vs. Short Nikkei 225 - A Relative Value Option Strategy with a Kicker

Option strategy: exploit relative value in implied volatilities combined with directional positioning for a leveraged payoff in a long Nifty 50 vs....

Gaudenz Schneider

Fanuc (6954 JP) – Let the Derating Begin

FA weakness to weigh down on Fanuc's earnings and valuations in the coming quarters. The YoY turn in Machine Tool orders is yet to come, ...

Mark Chadwick

Fanuc (6954) - Forget Yaskawa...a Slowdown Is Coming

The market should ignore the positive read-across from Yaskawa results. Fanuc is more correlated with machine tool orders. We see signs of a...

Mark Chadwick

Company's net sales and operating income decreased due to yen's weakness erasing inventory profits, but recovery in order book is a positive sign...

Fanuc's Q2 operating income up 25% due to one-time profit, but concerns arise over sustainability. Orders down, inventory/sales ratio high, shares...