Investor Feedback on Our FA Foundation Report & Yaskawa Results Implications: Factory Automation | Japan

Research evidence excerpt

Investor Feedback on Our FA Foundation Report & Yaskawa Results Implications: Factory Automation | Japan

Idea

July 10, 2026 01:06 PM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MFactory Automation | Japan Takeshi Kitaura

Equity Analyst

Investor Feedback on Our FA Takeshi.Kitaura@morganstanleymufg.comMorgan Stanley Asia Limited+ +81 3 6836-5427

Lisa Jiang

Equity AnalystFoundation Report & Yaskawa Lisa.Jiang1@morganstanley.com +852 2239-1282

Morgan Stanley MUFG Securities Co., Ltd.+Results Implications Takumi Okano

Research Associate

In our Jul 5 FA Foundation Report we maintained an Attractive Takumi.Okano@morganstanleymufg.com +81 3 6836-8411

industry view, upgraded Keyence to OW, downgraded Fanuc to

EW, and kept SMC at EW. Amid ongoing expectations for solid

earnings heading into results, Yaskawa Electric’s results appear

to have somewhat tempered margin expectations.

Factory Automation

Japan

Key Takeaways Industry View Attractive

Market still expects FA industry to be driven by SPE market growth; many

investors expect strong 1Q results.

Positive sentiment toward SMC (EW) was stronger than expected. Investors

appear focused on higher semiconductor exposure and undershoot in hiring pace,

which could slow down fixed-cost increase.

Some expect Keyence (OW) to announce buybacks in 1Q but opinion seems

divided; we expect 4Q announcement.

Investors broadly agreed on our rating of Fanuc (lowered to EW), as well as our

expectation for strong 1Q results from machine tool demand.

Overall, we saw limited pushback against our Attractive industry view for FA

heading into 1Q earnings, with some investors expecting results even stronger than

our forecasts, which are already slightly above consensus. Machine tool orders in