Independent Insight Provider, Japanese equities, LightStream Research

Scott Foster

Independent Insight Provider, 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.

Equity Bottom-Up

Hamamatsu Photonics Kk / Equity Bottom-Up

<ul>
<li>At 25x management's earnings guidance for next fiscal year and 24x guidance for FY Sep-25, the company's medium-term growth potential appears to have been discounted.</li>
<li>Capex is set to double, taking depreciation from 5.9% to 8.4% of sales, but projected price/cash flow multiples for the same two years are fairly high at 17x and 16x.</li>
<li>FY Sep-23 guidance has been cut. Profits are likely to be down YoY in 2H. Take profits and wait.</li>
</ul>


At 25x management's earnings guidance for next fiscal year and 24x guidance for FY Sep-25, the company's medium-term growth potential appears to have been discounted.
Capex is set to double, taking depreciation from 5.9% to 8.4% of sales, but projected price/cash flow multiples for the same two years are fairly high at 17x and 16x.
FY Sep-23 guidance has been cut. Profits are likely to be down YoY in 2H. Take profits and wait.


Hamamatsu Photonics (6965 JP): Next Three Years in the Price

<ul>
<li>As expected, FY Sep-22 results were ahead of guidance. Management is forecasting further growth this fiscal year, but guiding for a YoY decline in operating profit in 2H.</li>
<li>In addition, the depreciation of the yen, which added 5% to sales at 17% to operating profit last fiscal year, has reversed, economies have weakened and interest rates are up.</li>
<li>We continue to recommend profit taking. We would like to buy the shares at ¥6,000 - 15% down from the Dec. 9 close. </li>
</ul>


As expected, FY Sep-22 results were ahead of guidance. Management is forecasting further growth this fiscal year, but guiding for a YoY decline in operating profit in 2H.
In addition, the depreciation of the yen, which added 5% to sales at 17% to operating profit last fiscal year, has reversed, economies have weakened and interest rates are up.
We continue to recommend profit taking. We would like to buy the shares at ¥6,000 - 15% down from the Dec. 9 close. 


Hamamatsu Photonics (6965 JP): Earning Momentum Fading

<ul>
<li>Every so often, sudden shocks reduce Hamamatsu Photonics' usually high valuations. This is one of those times. </li>
<li>Valuations are starting to look attractive compared with their 5-year ranges. But not compared with their 10-year ranges.</li>
<li>Strong 1Q results support FY Sep-22 guidance. Management's 3-year sales and profit forecast would be reasonable in a normal operating environment. But the environment is not normal. </li>
</ul>


Every so often, sudden shocks reduce Hamamatsu Photonics' usually high valuations. This is one of those times. 
Valuations are starting to look attractive compared with their 5-year ranges. But not compared with their 10-year ranges.
Strong 1Q results support FY Sep-22 guidance. Management's 3-year sales and profit forecast would be reasonable in a normal operating environment. But the environment is not normal. 


Hamamatsu Photonics (6965 JP): Choose an Entry Point Carefully

Smartkarma Research Team, Smartkarma

Smartkarma Research

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<p>On our next Webinar, we are thrilled to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/scott-foster" target="_blank" data-smartkarma-citation="accounts:1134" rel="noopener">Scott Foster</a>, who will present his hand-picked ideas in Japan's IT sector. </p>
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<h3>The webinar will be hosted on Wednesday, 27 October 2021, 17:00 SGT/HKT.</h3>
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<div>
<p>Scott Foster is a securities analyst who has been covering electronics, precision equipment &amp; robotics, engineering, construction, transport, and other sectors for more than 25 years in Japan and 3 years in Korea.</p>
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On our next Webinar, we are thrilled to welcome back Insight Provider Scott Foster, who will present his hand-picked ideas in Japan's IT sector. 

The webinar will be hosted on Wednesday, 27 October 2021, 17:00 SGT/HKT.

Register for the Webinar here




Scott Foster is a securities analyst who has been covering electronics, precision equipment &amp; robotics, engineering, construction, transport, and other sectors for more than 25 years in Japan and 3 years in Korea.



<p>Hamamatsu Photonics hit a new high of ¥7,050 last February, but hasn't regained the ¥7,000 level since then despite raising FY Sep-21 profit guidance by more than 20% after strong 1H results. </p><p>In a positive scenario, profits could continue to rise at double-digit annual rates for another two years, but this, too, appears to be in the price.</p><p>At 50x management's EPS guidance for FY Sep-21 and 39x our EPS estimate for FY Sep-23, the larger risk appears to be on the downside.</p><p>Potential negatives include the diversion of record profits into higher than usual R&amp;D spending, a downturn in sales to the semiconductor industry when the current investment boom comes to an end, and a slowdown in demand for PCR testing equipment.</p>

Hamamatsu Photonics hit a new high of ¥7,050 last February, but hasn't regained the ¥7,000 level since then despite raising FY Sep-21 profit guidance by more than 20% after strong 1H results. In a positive scenario, profits could continue to rise at double-digit annual rates for another two years, but this, too, appears to be in the price.At 50x management's EPS guidance for FY Sep-21 and 39x our EPS estimate for FY Sep-23, the larger risk appears to be on the downside.Potential negatives include the diversion of record profits into higher than usual R&amp;D spending, a downturn in sales to the semiconductor industry when the current investment boom comes to an end, and a slowdown in demand for PCR testing equipment.

Hamamatsu Photonics (6965 JP): Fully Valued, Take Profits

Japan

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HORIBA, Ltd., manufactures and markets measuring instruments and analyzers.  The Company's main product lines are scientific analyzers, environment monitoring, medical analyzers, engine emission analyzers, and semiconductor test equipment. Horiba operates worldwide.

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OMRON Corporation manufactures electronic components, equipment and systems used for factory automation. The Company provides products and services in a variety of fields including industrial automation, electronic components, automotive electronics, social systems such as ticket gate machines and traffic control, and healthcare.

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Huagong Tech Co., Ltd. manufactures laser equipment, laser false-proof products, sensitive electronic components, optical telecommunication products, and biopharmaceuticals.  The Company also develops computer software and provides computer system integration services.

Vishay Intertechnology, Inc. manufactures a broad line of passive and discreet active electronic components, particularly resistors, capacitors, inductors, diodes, and transistors.  The Company's products are utilized in computers, telephones, televisions, automobiles, household appliance, medical equipment, satellites, and military and aerospace equipment.

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Shenzhen Sunlord Electronics Co, Ltd. (002138 CH)

Innolux Corporation manufactures TFT-LCD, LCD models and LCD monitors. The company also provides research, development, manufacturing and retails business.

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Synnex Technology International (2347 TT)

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HAMAMATSU PHOTONICS K.K. manufactures electron tubes, semiconductors, and image processors.  The Company's products include photosensitive electronic tubes, optical/image sensors, X-ray related products, laser related products, photodiodes, light-emitting diodes (LED) and video camera used for measuring equipment.

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Hamamatsu Photonics Kk (6965 JP)

Hamamatsu Photonics (6965 JP): Next Three Years in the Price

After hitting a new high and forming a double top, the shares are dropping back. Profit forecast through Sep-25 looks discounted. Capex doubling,...

Scott Foster

Hamamatsu Photonics (6965 JP): Earning Momentum Fading

Earning momentum is fading as the yen strengthens, economies weaken, interest rates rise and company outlays grow. The share price has started to...

Scott Foster

Hamamatsu Photonics (6965 JP): Choose an Entry Point Carefully

Share price down 27% since January, bringing valuations down to acceptable levels. But guidance may be optimistic and multiple compression would...

Scott Foster

Smartkarma Webinar | Japan IT Picks

Join us for a session with Insight Provider Scott Foster, who will present his hand-picked ideas in Japan's IT sector.

Smartkarma Research

Hamamatsu Photonics (6965 JP): Fully Valued, Take Profits

The shares have not regained the ¥7,000 level reached last February despite a large upward revision to FY Sep-21 guidance. Valuations would still...

Scott Foster

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