BBSP Equity Asia Weekly Research - 23 May 2018

Raising Murata Manufacturing's FVE to JPY 24,000; Price Hike of MLCC Will Be Higher than Anticipated

Adding TDK to Our Best Ideas List; Growth of Electronic Components Per Auto Is Underestimated

Raising TDK's FVE to JPY 11,000; More Confidence on the Growth of MLCC and Rechargeable Batteries

TDK's Robust Results Suggest Long-Term Growth of Passive Components and Rechargeable Batteries

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Morningstar, Inc.

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Equity Bottom-Up

<p>We raise our fair value estimate for <a href="https://www.smartkarma.com/entities/18847" target="_blank" data-smartkarma-citation="entities:18847:1">TDK Corp (6762 JP)</a> to JPY 11,500 from JPY 11,000, as we believe growth in multilayer ceramic capacitors, or MLCCs, will exceed our previous view. We revise our operating income forecast for fiscal 2022 (financial year ending March 2022) to JPY 170 billion from JPY 165 billion, as we have raised our revenue growth assumption for MLCCs to 9.0% from 7.5% per year. Over the past two decades, demand for MLCCs has been driven by increasing numbers of digital…</p>

We raise our fair value estimate for TDK Corp (6762 JP) to JPY 11,500 from JPY 11,000, as we believe growth in multilayer ceramic capacitors, or MLCCs, will exceed our previous view. We revise our operating income forecast for fiscal 2022 (financial year ending March 2022) to JPY 170 billion from JPY 165 billion, as we have raised our revenue growth assumption for MLCCs to 9.0% from 7.5% per year. Over the past two decades, demand for MLCCs has been driven by increasing numbers of digital…

Raising TDK’s FVE to JPY 11,500; Robust Demand From Auto Continues to Drive Growth in MLCCs