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

Shimadzu (7701 JP): Conservative Guidance

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

Shimadzu has dropped back 14% after hitting an all-time high of ¥4,450 on February 22, creating an opportunity to buy the shares on projected valuations that are within their historical ranges.Strong demand in China and cost cutting enabled a 5% year-on-year increase in sales and a 30% increase in operating profit in the three months to December. Annual operating profit and the operating margin should reach new highs in FY Mar-21.Management has not abandoned low-margin business segments as some activist investors recommend, but it has rationalized its operations and increased relatively high margin service revenues. Continued sales growth as the global economy recovers from COVID-19 should lead to operating and net profit growth close to 25% over the next two years.

Shimadzu has dropped back 14% after hitting an all-time high of ¥4,450 on February 22, creating an opportunity to buy the shares on projected valuations that are within their historical ranges.Strong demand in China and cost cutting enabled a 5% year-on-year increase in sales and a 30% increase in operating profit in the three months to December. Annual operating profit and the operating margin should reach new highs in FY Mar-21.Management has not abandoned low-margin business segments as some activist investors recommend, but it has rationalized its operations and increased relatively high margin service revenues. Continued sales growth as the global economy recovers from COVID-19 should lead to operating and net profit growth close to 25% over the next two years.

Shimadzu (7701 JP): Buy into the Sell-Off

Shimadzu Corp

Shimadzu (7701 JP): Buy into the Sell-Off