In today’s briefing:
- Kyocera (6971 JP): Strong Performance Unlikely to Last
- Seiko Epson (6724) | Home Printing Running Out of Ink
- A Policy Shift from Simply Maintaining Corporate Performance to How to Raise Added Value Is Needed
Kyocera (6971 JP): Strong Performance Unlikely to Last
- It is hard to see how Kyocera can avoid a significant slowdown in sales and earnings growth given the weakness in electronics markets and the overall economy.
- R&D and capital spending continue to rise, putting pressure on margins and offsetting gains from the weak yen.
- Valuations are not compelling. Watch out as the share price drops back from its recent high.
Seiko Epson (6724) | Home Printing Running Out of Ink
- Seiko Epson has been one of the better performing tech stocks during 2022
- We believe that the stock benefited from COVID-related stay-at-home demand for printers
- We now turn Bearish as the Covid boost should dissipate, while the PC market has taken a turn for the worse
A Policy Shift from Simply Maintaining Corporate Performance to How to Raise Added Value Is Needed
- OP margins for listed companies haven’t increased notably, with maximum of 5% since FY 2008. Meanwhile, real income has continued declining, and there has been trend to reduce labor costs.
- The negative aspect is illustrated by the low level of employee engagement in a company that has managed to maintain operating margin at current level by keeping labor costs low.
- Inadequate investment by both companies and employees has hindered the expansion of value-added. For expanding added value, shift to investment in human resources is needed along with wage increases.
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