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.

Equity Bottom-Up

<ul>
<li>Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.</li>
<li>It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.</li>
<li>Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.</li>
</ul>


Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.
It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.
Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.


Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Event-Driven

<ul>
<li>We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. </li>
<li>Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. </li>
<li>This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.</li>
</ul>


We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. 
Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. 
This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.


Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

<ul>
<li>Sales, profits and profit margins continued to rise in 3Q, led by IC and discrete semiconductor sales for automotive and industrial applications.</li>
<li>FY Mar-22 guidance looks conservative, but management left it unchanged out of a sense of caution.</li>
<li>Having dropped 21% since November, the share price should now recover based on the fundamentals. </li>
</ul>


Sales, profits and profit margins continued to rise in 3Q, led by IC and discrete semiconductor sales for automotive and industrial applications.
FY Mar-22 guidance looks conservative, but management left it unchanged out of a sense of caution.
Having dropped 21% since November, the share price should now recover based on the fundamentals. 


Rohm (6963 JP): Buy into the Tech Sell-Off

Concern over the potential impact of the COVID surge in Southeast Asia on back-end assembly operations proved unfounded as results for the six months for September came in well above guidance, with profits and profit margins rising substantially in 2Q.2Q sales were up 28% year-on-year led by 50% growth in Automotive and 46% growth in other Industrial applications. FY Mar-22 guidance was raised, with management now expecting a 64% increase in operating profit on a 22% increase in sales.On a medium-term view, Rohm's leading position in SiC (silicon carbide) power devices used in electric vehicle inverters should support continued sales growth and margin expansion. At 17x our EPS estimate for FY Mar-24, we see 30% potential upside to a ¥13,500 price target.

Concern over the potential impact of the COVID surge in Southeast Asia on back-end assembly operations proved unfounded as results for the six months for September came in well above guidance, with profits and profit margins rising substantially in 2Q.2Q sales were up 28% year-on-year led by 50% growth in Automotive and 46% growth in other Industrial applications. FY Mar-22 guidance was raised, with management now expecting a 64% increase in operating profit on a 22% increase in sales.On a medium-term view, Rohm's leading position in SiC (silicon carbide) power devices used in electric vehicle inverters should support continued sales growth and margin expansion. At 17x our EPS estimate for FY Mar-24, we see 30% potential upside to a ¥13,500 price target.

Rohm (6963 JP): Strong 2Q Led by Automotive

Rohm has dropped to the bottom of its recent trading range, presumably on concerns over the impact of COVID-19 on semiconductor assembly &amp; test in Southeast Asia and the ongoing disruption of auto production. However,<ol>
<li>Guidance looks conservative. 1Q operating and net profit were 31% and 34% of FY Mar-22 full-year guidance, respectively.</li>
<li>COVID infections in Southeast Asia have dropped back from recent peaks. </li>
<li>Rohm is a leading producer of Silicon Carbide wafers and power devices for Electric Vehicles. It is geared to both the recovery and technological advance of the auto industry.</li>
</ol>With 38% upside to our ¥13,500 price target, we regard Rohm as a Buy both on a trading basis and as a longer-term investment.

Rohm has dropped to the bottom of its recent trading range, presumably on concerns over the impact of COVID-19 on semiconductor assembly &amp; test in Southeast Asia and the ongoing disruption of auto production. However,
Guidance looks conservative. 1Q operating and net profit were 31% and 34% of FY Mar-22 full-year guidance, respectively.
COVID infections in Southeast Asia have dropped back from recent peaks. 
Rohm is a leading producer of Silicon Carbide wafers and power devices for Electric Vehicles. It is geared to both the recovery and technological advance of the auto industry.
With 38% upside to our ¥13,500 price target, we regard Rohm as a Buy both on a trading basis and as a longer-term investment. 

Rohm (6963): Buy for Auto & COVID Recovery

Japan

ROHM COMPANY LIMITED manufactures custom linear integrated circuits and semiconductor devices for use primarily in consumer electronics.  The Company has plants and sales offices worldwide.  Rohm's subsidiaries include Wako Electric and Apollo Electronics.

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ROHM Co Ltd (6963 JP)

Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

Rohm will probably not acquire Toshiba's power device business. Instead, it will keep working with NEDO to expand its own capabilities. Down 24%...

Scott Foster

Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

We believe a listing of Toshiba's device business would not create an especially attractive security for investors and that a sale to a domestic...

Mio Kato

Rohm (6963 JP): Buy into the Tech Sell-Off

The share price dropped 21% with the tech sell-off while sales rose, margins expanded and conservative guidance was left unchanged. Buy for long...

Scott Foster

Rohm (6963 JP): Strong 2Q Led by Automotive

1H results ahead of guidance despite COVID concerns and FY Mar-22 guidance raised. Automotive to lead medium-term growth with Rohm a leader in SiC...

Scott Foster

Rohm (6963): Buy for Auto & COVID Recovery

Shares down to bottom of trading range, but guidance looks conservative, COVID and auto supply chain disruption easing, and company strong in SiC...

Scott Foster

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