Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

Equity Bottom-Up

<ul><li>Longsys-Kingston JV delay and uncertain future of Shanghai plant sale causing concern in the semiconductor industry.</li><li>Kaynes SemiCon secures India's first paying OSAT customer, reaching a significant milestone in advanced semiconductor packaging.</li><li>Evalue sets ambitious goal to dominate Taiwan's EV charging market with 30% share by 2026, while AWS sparks cloud battle in SEA.</li></ul>

Longsys-Kingston JV delay and uncertain future of Shanghai plant sale causing concern in the semiconductor industry.Kaynes SemiCon secures India's first paying OSAT customer, reaching a significant milestone in advanced semiconductor packaging.Evalue sets ambitious goal to dominate Taiwan's EV charging market with 30% share by 2026, while AWS sparks cloud battle in SEA.

Tech Supply Chain Tracker (27-Aug-2024): Longsys-Kingston venture stalls, Shanghai sale uncertain.

Japan Specialist

Mark Chadwick

<ul>
<li>Fanuc reported slightly better-than-expected Q1 sales and OP forecasts, mainly due to a recovery in sales of FA equipment</li>
<li>Fanuc's results are consistent with a bottoming out of Japan's machine tool orders in the first half of the year</li>
<li>We turn bullish on the stock given the cyclical bottoming out of orders and margins. However, the stock is still not "cheap" and the company faces a number of challenges</li>
</ul>


Fanuc reported slightly better-than-expected Q1 sales and OP forecasts, mainly due to a recovery in sales of FA equipment
Fanuc's results are consistent with a bottoming out of Japan's machine tool orders in the first half of the year
We turn bullish on the stock given the cyclical bottoming out of orders and margins. However, the stock is still not "cheap" and the company faces a number of challenges


Fanuc (6954) | Improved Orders and Margins Amid Long-Term Challenges

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Fanuc was up 4.7% this past week as the market reacted to a slight uptick in orders and transparently conservative guidance.</li>
<li>The book-to-bill ratio remained below 1.0 in 4Q of FY Mar-24, but was up from 3Q, which appears to have been the low point in the cycle.</li>
<li>Inflation and ongoing inventory adjustments indicate a slow recovery, but demand for automation  from traditional markets and new opportunities in aerospace and other industries should support long-term growth.</li>
</ul>


Fanuc was up 4.7% this past week as the market reacted to a slight uptick in orders and transparently conservative guidance.
The book-to-bill ratio remained below 1.0 in 4Q of FY Mar-24, but was up from 3Q, which appears to have been the low point in the cycle.
Inflation and ongoing inventory adjustments indicate a slow recovery, but demand for automation  from traditional markets and new opportunities in aerospace and other industries should support long-term growth.


Fanuc (6954 JP): Guidance Points Down, but the Market Sees Recovery

<ul>
<li>Fanuc reported a -7% decline in revenue for FY3/24 and 26% decline in operating profit. </li>
<li>The market will be disappointed by guidance for a further fall on the top line and 15% decline in profits as margins hit an all time low</li>
<li>The valuation of 30x EV / EBIT suggests the market was hoping for a turnaround in profits this year. That recovery has now been pushed back</li>
</ul>


Fanuc reported a -7% decline in revenue for FY3/24 and 26% decline in operating profit. 
The market will be disappointed by guidance for a further fall on the top line and 15% decline in profits as margins hit an all time low
The valuation of 30x EV / EBIT suggests the market was hoping for a turnaround in profits this year. That recovery has now been pushed back


Fanuc (6954) | Profitability Problems Persist

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Nomura Research Institute / Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nomura-research-institute-ltd" target="_blank" data-smartkarma-citation="entities:18129:1" rel="noopener">Nomura Research Institute (4307 JP)</a> and <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a> will replace <a href="https://www.smartkarma.com/entities/nippon-paper-industries-co-l" target="_blank" data-smartkarma-citation="entities:557:1" rel="noopener">Nippon Paper Industries Co L (3863 JP)</a> and <a href="https://www.smartkarma.com/entities/dic-corp" target="_blank" data-smartkarma-citation="entities:7343:1" rel="noopener">Dic Corp (4631 JP)</a> in the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>'s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!) </li>
<li>Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.</li>
</ul>



Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX). 

Fast Retailing (9983 JP)'s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!) 
Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.


Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

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)

Tech Supply Chain Tracker (27-Aug-2024): Longsys-Kingston venture stalls, Shanghai sale uncertain.

Longsys-Kingston JV delayed, Kaynes SemiCon secures India's first paying OSAT customer, Evalue targets Taiwan EV market dominance, AWS vs. cloud...

Tech Supply Chain Tracker

Fanuc (6954) | Improved Orders and Margins Amid Long-Term Challenges

Fanuc's Q1 results show improvement in sales and operating profit forecasts, underpinned by a turnaround in Japan's machine tool orders. Bullish...

Mark Chadwick

Fanuc (6954 JP): Guidance Points Down, but the Market Sees Recovery

Fanuc's share price has risen on conservative guidance based on unrealistic exchange rates. Orders appear to have hit bottom while an aerospace...

Scott Foster

Fanuc (6954) | Profitability Problems Persist

The market will be disappointed by guidance for a further fall on the top line and 15% decline in profits as margins hit an all time low

Mark Chadwick

Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Nomura Research Institute and Ryohin Keikaku replace Nippon Paper and DIC in the Nikkei 225. Fast Retailing will be capped (and probably again in...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Tech Supply Chain Tracker (27-Aug-2024): Longsys-Kingston venture stalls, Shanghai sale uncertain.

Longsys-Kingston JV delayed, Kaynes SemiCon secures India's first paying OSAT customer, Evalue targets Taiwan EV market dominance, AWS vs. cloud...

Tech Supply Chain Tracker

Fanuc (6954) | Improved Orders and Margins Amid Long-Term Challenges

​Fanuc's Q1 results show improvement in sales and operating profit forecasts, underpinned by a turnaround in Japan's machine tool orders. Bullish...

Mark Chadwick

Fanuc (6954 JP): Guidance Points Down, but the Market Sees Recovery

Fanuc's share price has risen on conservative guidance based on unrealistic exchange rates. Orders appear to have hit bottom while an aerospace...

Scott Foster

Fanuc (6954) | Profitability Problems Persist

The market will be disappointed by guidance for a further fall on the top line and 15% decline in profits as margins hit an all time low

Mark Chadwick

Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Nomura Research Institute and Ryohin Keikaku replace Nippon Paper and DIC in the Nikkei 225. Fast Retailing will be capped (and probably again in...

Brian Freitas

Fanuc's Q1 results show improvement in sales and operating profit forecasts, underpinned by a turnaround in Japan's machine tool orders. Bullish...