Yaskawa Electric (6506.T): First take; orders beat expectations, but revenue and OP miss significantly, mainly due to core system overhaul

Research evidence excerpt

Yaskawa Electric (6506.T): First take; orders beat expectations, but revenue and OP miss significantly, mainly due to core system overhaul

Goldman Sachs Yaskawa Electric (6506.T)

current buoyancy of the market and the strength of inquiries, we believe this reflects the

timing of order bookings and the relatively limited contribution from semiconductors in

mainland China, and view the shortfall as within the margin of error. We expect a

catch-up in 2Q. Robot orders were strong, driven primarily by semiconductors, with

mainland China, Japan, the US, South Korea, and Taiwan all performing well.

The company also provided commentary on order momentum specifically within the

semiconductor segment. In the MC business, semiconductor-related orders rose by

more than 200% yoy and more than 16% qoq. Semiconductor robots saw growth of

141% yoy and 55% qoq, reflecting very strong momentum. Semiconductor-related

orders in the MC business include not only servo motors but also inverters for vacuum

pump applications, and the company noted that the value of semiconductor-related

orders reached a record high. The share of semiconductor robots within total robot

orders has also risen from the previous level of around 10% to 15%.

Our view

Given that strong order trends had raised expectations for a corresponding

improvement in earnings, the core system-related issues are likely to be perceived as a

negative surprise in the near term, even though the company emphasized that these are

temporary in nature. The company noted that the worst is behind it and that production

and revenue recognition are improving steadily on a month-by-month basis. It said it is

targeting a full normalization from August onward and aims to recover the opportunity

losses incurred in 1Q.