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

Rohm (6963 JP): Looking to Recovery with SiC Technology and a 10% Buyback

Rohm (6963): Weak 2Q Before Long-Term Recovery

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​01 - Rohm, Shionogi..

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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

After peaking at ¥12,140 on January 21, Rohm has run into profit taking. Is this justified?Operating profit was up 38.8% year-on-year on a 5.8% increase in sales in the three months to December and FY Mar-21 sales and operating profit guidance were raised by 5.9% and 39.1%, respectively.The large size of the upward revision can be attributed to overly cautious previous guidance, strong demand for semiconductors for auto and IT applications, high capacity utilization and cost cutting.On a3-year view, rising demand for the company's silicon carbide power devices for electric vehicles should support a return to peak operating profit.Last August, we wrote that patient investors could be rewarded with a doubling of the share price. At ¥11,100, the shares are up 64% since then. Potential upside to our target is now 22%.

After peaking at ¥12,140 on January 21, Rohm has run into profit taking. Is this justified?Operating profit was up 38.8% year-on-year on a 5.8% increase in sales in the three months to December and FY Mar-21 sales and operating profit guidance were raised by 5.9% and 39.1%, respectively.The large size of the upward revision can be attributed to overly cautious previous guidance, strong demand for semiconductors for auto and IT applications, high capacity utilization and cost cutting.On a3-year view, rising demand for the company's silicon carbide power devices for electric vehicles should support a return to peak operating profit.Last August, we wrote that patient investors could be rewarded with a doubling of the share price. At ¥11,100, the shares are up 64% since then. Potential upside to our target is now 22%. 

Rohm (6963): Big Upward Revision, Significant Upside Potential Remains

ROHM Co Ltd

Rohm (6963): Big Upward Revision, Significant Upside Potential Remains