Taiyo Yuden (6976) - Worth Watching on the Broadcom / Qualcomm Situation

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Equity Bottom-Up

We revise our fair value estimate for <a href="https://www.smartkarma.com/entities/9924" target="_blank" data-smartkarma-citation="entities:9924:1">Taiyo Yuden Co Ltd (6976 JP)</a> to JPY 2,100 from JPY 2,000, as we consider that growth of multilayer ceramic capacitors, or MLCC, will exceed our original forecast. We expect that robust MLCC demand, which is driven by the auto digitalization, will continue in the midterm. Meanwhile, growth on the supply side will be limited, owing to constraints on resources, such as equipment and engineers. Therefore, we forecast that MLCC’s supply-demand balance will remain tight, and thus the average selling price will be favorable to suppliers. On the other hand, we lowered the forecast of band pass filters, as we are more concerned about the sluggish smartphone demand in China. As a result, our operating income forecast is raised to JPY 195 billion from JPY 180 billion for fiscal 2018 (financial year ending March 2018), and to JPY 235 billion from JPY 220 billion for fiscal 2019. While we do not assign an economic moat rating to the company, we believe that Taiyo Yuden will benefit from the long-term growth of MLCC.Analyst: Kazunori Ito

We revise our fair value estimate for Taiyo Yuden Co Ltd (6976 JP) to JPY 2,100 from JPY 2,000, as we consider that growth of multilayer ceramic capacitors, or MLCC, will exceed our original forecast. We expect that robust MLCC demand, which is driven by the auto digitalization, will continue in the midterm. Meanwhile, growth on the supply side will be limited, owing to constraints on resources, such as equipment and engineers. Therefore, we forecast that MLCC’s supply-demand balance will remain tight, and thus the average selling price will be favorable to suppliers. On the other hand, we lowered the forecast of band pass filters, as we are more concerned about the sluggish smartphone demand in China. As a result, our operating income forecast is raised to JPY 195 billion from JPY 180 billion for fiscal 2018 (financial year ending March 2018), and to JPY 235 billion from JPY 220 billion for fiscal 2019. While we do not assign an economic moat rating to the company, we believe that Taiyo Yuden will benefit from the long-term growth of MLCC.Analyst: Kazunori Ito

Taiyo Yuden Growth on Handsets and Autos Will Continue to Improve Product Mix; Raise FVE to 2,100