Brief Industrials: Robotics Earnings: Nabtesco and HDS Results Strong; Still No Reason to Own Fanuc and more

In this briefing:

1. Robotics Earnings: Nabtesco and HDS Results Strong; Still No Reason to Own Fanuc
2. Fanuc Bullish Trade Points off of Base Line Support
3. NYT: Property Tax Expense Pressured 4Q18 Earnings to Its Trough in 2018

1. Robotics Earnings: Nabtesco and HDS Results Strong; Still No Reason to Own Fanuc

Following a long period of weakness, robotics related stocks are displaying stronger performance recently as 3Q results have come in weak, but generally done so with management reassurances that this is the bottom.

We had been negative on the sector for some time before turning more constructive in mid January following Yaskawa’s earnings. We concur with the general messaging that this is the bottom based on our analysis of order levels for the companies and regional trend breakdowns. We do not expect a particularly sharp rebound in orders and sales in the near future and believe there is still some risk of these stocks returning toward the lows over the course of the year. However, we believe that the next significant move should be upwards and longer term investors should be looking for entry timings.

2. Fanuc Bullish Trade Points off of Base Line Support

Fanuc Corp (6954 JP) shows increasing signs of a basing process and opportunities on weakness.

Macro retracements display clear synergy with the low at 15,570, suggesting this is a key low.

Use weakness back toward base line support to buy for a medium term rise to press on outlined resistance targets.

Risk lies with the signs of rally fatigue in the near term tactical cycle as the daily RSI fails to confirm recent highs that are knocking on pivotal resistance at 19,000 that acts as the immediate make or break level.

Pivot levels, action points and targets are outlined.

3. NYT: Property Tax Expense Pressured 4Q18 Earnings to Its Trough in 2018

NYT reported 4Q18 net profit of Bt90m (-11%YoY, -24%QoQ), the lowest level in the past eight quarters. The 2018 result was in-line with our forecast.

• A drop in 4Q18 earnings was caused by one-time expense on property tax, which we expected at around Bt10-13m.
• 4Q18 revenue also remained flat at Bt368m (-1%YoY, +3.5%YoY) as number of vehicles that passed through the A5 terminal slightly dropped along the country’s car export unit to 281,853 units (-3%YoY, -5%QoQ).
• The company announced Bt0.30 of annual dividend or equivalent to 5.7% (XD on 3th of May 2019)

We maintain our 2019-20E earnings forecast and still rank NYT as a BUY with a target price of *Bt7.60 based on DCF (8.8%WACC, 1%TG) which implies 20xPE’2019E

*We make no changes to forecast, recommendation, and target price at the time of result announcement.