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

Screen Holdings (7735 JP): New Orders and Efficiency Gains Greater than Expected

Screen Holdings (7735 JP): Aiming at 2nm Process Technology

Tokyo Electron (8035 JP): Getting Ahead of Itself

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

<p>Tokyo Electron (8035 JP), Japan's top maker of semiconductor and flat panel display production equipment, is 8% off its all-time high, which was reached in July of this year. In our estimation, it is Overbought.</p><p>Screen Holdings, a major competitor in both markets, is 52% below its all-time high, which was reached in November 2017. It is midway between Overbought and Oversold.</p><div>
<p>Screen's sales and operating profit were up sequentially in the three months to September as business activity in China and elsewhere picked up after COVID-19 lockdowns.</p>
<p>We expect remote work and cell phone upgrades to drive demand for Screen's semiconductor, display and printed circuit board production equipment over the next 2-3 years. Gearing to sales and capacity utilization is high.</p>
</div><div><p>Our forecast brings the forward P/E down to 13x our EPS estimate for next fiscal year and 11x our estimate for FY Mar-23. This suggests 44% potential upside to ¥8,000.</p></div><p>Risks include American interference in China's semiconductor investment plans and economic recession triggered by the new wave of COVID-19 infections in America and Western Europe.</p>

Tokyo Electron (8035 JP), Japan's top maker of semiconductor and flat panel display production equipment, is 8% off its all-time high, which was reached in July of this year. In our estimation, it is Overbought.Screen Holdings, a major competitor in both markets, is 52% below its all-time high, which was reached in November 2017. It is midway between Overbought and Oversold.
Screen's sales and operating profit were up sequentially in the three months to September as business activity in China and elsewhere picked up after COVID-19 lockdowns.
We expect remote work and cell phone upgrades to drive demand for Screen's semiconductor, display and printed circuit board production equipment over the next 2-3 years. Gearing to sales and capacity utilization is high.
Our forecast brings the forward P/E down to 13x our EPS estimate for next fiscal year and 11x our estimate for FY Mar-23. This suggests 44% potential upside to ¥8,000.Risks include American interference in China's semiconductor investment plans and economic recession triggered by the new wave of COVID-19 infections in America and Western Europe.

Screen Holdings (7735 JP): A Highly-Geared Laggard to Tokyo Electron

SCREEN Holdings

Screen Holdings (7735 JP): A Highly-Geared Laggard to Tokyo Electron