Japan Aviation Electronics Industry (6807.T): Below expectations: Profit pressure continues from material/fixed costs amid sluggish smartphone growth; maintain Sell

研报英文原文证据摘录

Japan Aviation Electronics Industry (6807.T): Below expectations: Profit pressure continues from material/fixed costs amid sluggish smartphone growth; maintain Sell

Goldman Sachs Japan Aviation Electronics Industry (6807.T)

for future earnings. We maintain our target price of ¥2,000 and our Sell rating

relative to our sector coverage.

Estimate revisions, target price

We lower our FY3/27-FY3/29 operating profit estimates by 2%/2%/2% in light of 1Q

results. We maintain our 12-month target price of ¥2,000 and our Sell rating relative to

our sector coverage.

Exhibit 1: Japan Aviation Electronics Industry: Earnings summary

FY3/27 -Q1 FY3/27

（JPY: Bn） GSE Actual GSE CoE Bloomberg

Old New

Sales 59.3 58.3 242.5 243.5 240.0 237.6

OP 1.0 0.3 9.0 8.8 9.5 10.8

NI 0.7 0.3 6.6 6.5 6.0 7.8

Source: Company data, Goldman Sachs Global Investment Research, Bloomberg

Japan Aviation Electronics Industry

Investment Thesis- Japan Aviation Electronics

Japan Aviation Electronics Industry mainly manufactures connectors for mobile

equipment, automotive, and industrial machinery/infrastructure applications. Among

the connector makers we cover, the company features a relatively high weighting for

mobile equipment applications. In addition to connectors, the company is developing a

user interface solutions (UIS) business, which mainly manufactures automotive

capacitive touch panels, various touch panels for industrial and medical equipment

applications, and control panels, as well as an aerospace business that primarily supplies

flight control systems, sensor packages for oil drilling, and automotive rotation angle

(gyro) sensors. We believe the company’s earnings growth momentum is slowing, given

its strategy for mobile devices has shifted to prioritizing profitability (meaning volume