The Point for Asia Pacific

Research evidence excerpt

The Point for Asia Pacific

Daikin Industries (6367.T) - How much of a catalyst is another hot summer in

Europe?

FY3/27 guidance assumes local currency sales growth in Europe of +6% YoY, and

at ¥180/€ we estimate Europe will comprise 17% of HVAC revenue. This is the

second-largest market after the Americas (42%) and is similar in size to Asia

(including China). With summer temperatures again hitting record highs there is a

growing debate about the need for ACs in European countries where diffusion

rates are low, not just in homes but also schools, hospital wards, transport

systems, etc. Daikin HVAC sales break down to 35% residential, 25% commercial,

10% applied, 15% heat pumps, and 10% cold chain. We wonder if Daikin will put

more emphasis on higher-margin commercial/applied sales from here. However,

the overall OPM in Europe is only expected to be c5% this year, due partly to the

low utilization at Daikin's new heat pump plant in Poland.

Graeme McDonald

Leader Drive (688017.SS) - Shifting Focus to Humanoid Robot from Industrial

Robot; Buy

We believe that Leader Drive (LD) is gradually switching its business focus from

industrial robot to humanoid robot (and cobot), which is evidenced by the fact that

1) LD formed a humanoid robot joint JV with Minth (425.HK, covered by Kyle Wu) in

the US in Feb-26 and 2) LD established a humanoid precision components JV with

SKF (SKFb.ST, covered by Klas Bergelind) in China in Jul-26. For industrial robot,

LD targets the “Big Four” and less price sensitive clients so that it is no longer the

largest harmonic reducer supplier to Estun (002747.SZ/2715.HK), China’s largest

industrial robot maker. We are positive about LD’s strategy shift as the humanoid

robot joint is an evolving market with less competition and faster growth