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

Hamamatsu Photonics (6965 JP): Likely to Consolidate Recent Gains

🇯🇵 JAPAN • Results & Revisions 03/​​​19 - Hamamatsu Photonics & Oracle Japan

🇯🇵 JAPAN • Results & Revisions 03/​​​​23 - No Relief for Hisamitsu

🇯🇵 JAPAN • Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​​​09 -Hamamatsu, Secom, Sumitomo Metal Min

Gravity Works As WeWork Doesn't; Now Plan B

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

Hamamatsu Photonics is fully valued but not overvalued, in our estimation. If sales and earnings go to new highs over the next three years as expected, upside potential for the share price could be more than 20%.FY Sep-20 results were above guidance. FY Sep-21 guidance - which is based on conservative foreign exchange rate assumptions and includes a weak 1H - looks conservative. Medical and factory automation related sales should start to recover over the coming year, while semiconductor-related sales continue to grow. On a three-year view, sales and profits should set new highs.Sales in China and other Asian countries outside Japan grew by more than 10% in FY Sep-20 while total sales declined by 3.9%. They should continue to grow while other regions recover.Major investments are nearly complete. Depreciation should peak out and then decline as a percentage of sales over the next three years. So should R&amp;D.  Quarterly gross and operating profit margins appear to have bottomed out.With an operating margin of 12.8% in the three months to June (the COVID bottom) and a good chance of recovery to 20%, ROE headed back toward 10%, positive free cash flow and a sound balance sheet, Hamamatsu remains an attractive long-term investment. Traders should watch for infection points. 1H guidance looks like an easy target.

Hamamatsu Photonics is fully valued but not overvalued, in our estimation. If sales and earnings go to new highs over the next three years as expected, upside potential for the share price could be more than 20%.FY Sep-20 results were above guidance. FY Sep-21 guidance - which is based on conservative foreign exchange rate assumptions and includes a weak 1H - looks conservative. Medical and factory automation related sales should start to recover over the coming year, while semiconductor-related sales continue to grow. On a three-year view, sales and profits should set new highs.Sales in China and other Asian countries outside Japan grew by more than 10% in FY Sep-20 while total sales declined by 3.9%. They should continue to grow while other regions recover.Major investments are nearly complete. Depreciation should peak out and then decline as a percentage of sales over the next three years. So should R&amp;D.  Quarterly gross and operating profit margins appear to have bottomed out.With an operating margin of 12.8% in the three months to June (the COVID bottom) and a good chance of recovery to 20%, ROE headed back toward 10%, positive free cash flow and a sound balance sheet, Hamamatsu remains an attractive long-term investment. Traders should watch for infection points. 1H guidance looks like an easy target.

Hamamatsu Photonics (6965 JP): Fully Valued but Not Over-Valued