Kyocera: Raising earnings forecasts on strength in core components

研报英文原文证据摘录

Kyocera: Raising earnings forecasts on strength in core components

ackages used in optical communications and ABF substrates for network switches.

03/28E 117.9 134.8 14 126.2

Meanwhile, we take a cautious view on solutions, where rising memory prices are a

03/29E 128.6 141.4 10 150.1

headwind, expecting results below company guidance in FY3/27. We forecast Q1 (April-

June) OP of ¥29.2bn, broadly in line with the consensus. Shingo Hirata, CFA

Analyst

Focus points for Q1 results shingo.hirata@ubs.com

+81-3-5208 6224

1) Improved profitability in the components business. In passive components and other

areas, focus will be on AVX's productivity and overall pricing trends for passive

components. 2) Whether there is any change in the outlook for AI-related products. At

FY3/26 results, Kyocera explained that it aims to grow its advanced semiconductor and

AI peripheral domain business by 2.8X from FY3/26 to FY3/31. At end-June, the Nikkei

reported that the company would invest ¥650bn in the components business by FY3/31,

but annual investment is to remain at ¥100bn, in line with FY3/27 and FY3/28, and at

around 10% of components business sales, suggesting no sense of overheating. Focus

will be on whether there have been any changes to the outlook for investment or sales.

3) We await H1 results for specific details on management reforms.

Valuation: Neutral rating, changing price target from ¥2,500 to ¥3,830

We are shifting the base year of our price target calculation forward to FY3/28. Our price

target is based on SOTP, assuming average FY3/28 valuations of 30X for core

components and electronic components, and 12X for solutions, and, as previously,

adding in investment securities and net cash. We raised the multiple for the components