Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Securities analyst covering electronics, precision equipment & robotics, engineering, construction, transport and other sectors for more than 25 years in Japan and 3 years in Korea. Permanent resident of Japan.

Senior Technology Analyst, Japanese Equities

Fujitsu (6702 JP): At Risk of Short-Term Profit Taking

Fujitsu (6702 JP): Horizon Scandal Blows Up

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

Fujitsu hit a new high of ¥17,680 on April 30 and at the May 7 close of ¥16,760 was still up 68% from its 52-week low.FY Mar-21 results (OP up 26% on a 7% decline in revenues) and apparently reasonable valuations (16x EPS guidance for FY Mar-22 and 2.3x book value) have helped support the share price.But the news out of the UK is not good.Regarding the Post Office scandal caused by the flawed Horizon computer system supplied by Fujitsu, which UK Prime Minister Boris Johnson called the "one of the biggest miscarriages of justice in our history", the BBC reports that:"So far, nobody at the Post Office or Fujitsu has been held accountable, although the High Court judge said he would refer Fujitsu to the Director of Public Prosecutions for possible further action because he had 'grave concerns' about the evidence of the company's employees." "Asked if other parties - such as the Horizon's developers, Fujitsu - should be held accountable, Ms Page [Barrister representing the aggrieved parties] added: 'I think there will be malicious prosecution claims.... hundreds and hundreds of them.'"The investigation and legal proceedings seem likely to continue for months if not longer. Fujitsu's reputation and a considerable amount of money are at issue.

Fujitsu hit a new high of ¥17,680 on April 30 and at the May 7 close of ¥16,760 was still up 68% from its 52-week low.FY Mar-21 results (OP up 26% on a 7% decline in revenues) and apparently reasonable valuations (16x EPS guidance for FY Mar-22 and 2.3x book value) have helped support the share price.But the news out of the UK is not good.Regarding the Post Office scandal caused by the flawed Horizon computer system supplied by Fujitsu, which UK Prime Minister Boris Johnson called the "one of the biggest miscarriages of justice in our history", the BBC reports that:"So far, nobody at the Post Office or Fujitsu has been held accountable, although the High Court judge said he would refer Fujitsu to the Director of Public Prosecutions for possible further action because he had 'grave concerns' about the evidence of the company's employees." "Asked if other parties - such as the Horizon's developers, Fujitsu - should be held accountable, Ms Page [Barrister representing the aggrieved parties] added: 'I think there will be malicious prosecution claims.... hundreds and hundreds of them.'"The investigation and legal proceedings seem likely to continue for months if not longer. Fujitsu's reputation and a considerable amount of money are at issue.

Fujitsu (6702 JP): Reputation at Risk in UK Post Office Scandal

Fujitsu Ltd

Fujitsu (6702 JP): Reputation at Risk in UK Post Office Scandal