jp morgan equity research
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www.jpmorganmarkets.com
Asia Pacific Equity Research
14 August 2015
Fuji Electric (6504)
NeutralPrevious: Overweight
6504.T, 6504 JT
Downgrade to Neutral on Achievement of Price TargetPrice: 557
Price Target: 570
Japan Equity Research
Electronics/Precision & Industrial
Hisashi Moriyama AC
(81-3) 6736-8601
Bloomberg JPMA MORIYAMA
JPMorgan Securities Japan Co., Ltd.
YTD 1m 3m 12m
Abs 15.1% 8.8% -3.3% 8.8%
Rel -3.4% 5.4% -7.3% -23.4%
Fuji Electric Co., Ltd. (Reuters: 6504.T, Bloomberg: 6504 JT)
2014/3 2015/3 2016/3 E 2017/3 E 2018/3 E
Sales ( mn) 759,911 810,678 850,000 914,000 966,000
Operating Profit ( mn) 33,136 39,316 46,000 50,000 55,500
Recurring Profit ( mn) 36,731 43,139 47,000 51,000 56,500
Net Profit ( mn) 19,582 27,978 29,700 32,100 37,550
EPS () 27.40 39.15 41.56 44.92 52.54
BPS () 317.88 447.24 484.60 525.32 573.67
ROE 9.3% 10.2% 8.9% 8.9% 9.6%
P/E (x) 20.3 14.2 13.4 12.4 10.6
P/BV (x) 1.8 1.2 1.1 1.1 1.0
EV/EBITDA (x) 9.4 7.7 7.2 4.6 4.7
Source: Company data, Bloomberg, J.P. Morgan estimates.
Company Data
Price () 557
Date Of Price 12 Aug 15
Market Cap ( bn) 398.08
Market Cap ($ bn) 3.20
Shares O/S (mn) 715
52-week Range () 617-421
TOPIX 1,665.75
DPS () 10.00
Dividend Yield 1.8%
ROE 8.9%
Price Target () 570
Price Target End Date 30-Dec-16
See page 9 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
400
500
600
700
Aug-14 Nov-14 Feb-15 May-15 Aug-15
Price Performance
6504.T share price ()
TOPIX (rebased)
Operating profit beat guidance by around 2 billion in April-June, mainly thanks
to cost cutting. Earnings were strong in the power electronics segment, which
includes drive systems, thanks to growth in demand for inverters, servos and
rotary equipment. Profit was down marginally in electronic devices, because of a
decline in the number of auto models in which the companys power devices were
used and the macro-economic slowdown in China. Fixed costs will rise
temporarily this fiscal year due to investment in the new technology development
facility at Suzuka. While we expect earnings to remain strong, the share price is
already within our target range, so we downgrade the stock to Neutral.
Earnings beat in April-June due to cost cutting: Earnings were strong in the
power generation and social infrastructure segment (20% of operating profit);
declined in the industrial infrastructure segment (27%), due to an absence of big
power transformer projects; were strong in the power electronics segment
(21%); declined in semiconductors in the electronic devices segment (22%) but
rose in disk media due to the situation at customers; and declined in Japan but
rose in China in the food and beverage distribution segment (19%).
Investing in medium-term growth of power electronics: R&D spending is
budgeted to grow by 4.4 billion overall in FY2015, due to forward looking
investment in the new technology development facility at Suzuka. Of the 7.9
billion growth budgeted for capital expenditure, 3.1 billion will go on power
electronics. Management posits this fiscal year as a period of forward looking
investment in improving the competitiveness of power electronics. Demand for
mega-solar systems had declined, but we see strong latent demand in the thermal
power generation, geothermal and hydropower businesses.
Maintain price target of 570; downgrade to Neutral: Our price target
equates to an FY2015 EV/EBITDA of 7.2x based on our forecasts (P/E of
13.7x). It derives from a sum-of-the-parts methodology that discounts the
average FY2015 EV/EBITDA of 7.4x (previously 8.1x) by 0.2pt (0.9pt) to allow
for the risks of slowdowns in orders and the macro-economy. We also extend
the period for our achievement of our price target from December 2015 through
December 2016.
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2Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Fuji Electric (6504)
Company Profile
Japans fourth-largest heavy electrical equipment
manufacturer. Established in 1923. Focusing on
environment/energy-related equipment such as power
generation equipment (thermal, geothermal), inverters, power
semiconductors).
FY2014 Sales Composition
%
Source: J.P. Morgan estimates. *Excluding Eliminations.
Investment Thesis Risk Analysis
Upside Scenario to Target Price/Rating
Earnings from inverters and power semiconductors could
overshoot thanks to accelerated Capex in Asia and China.
Downside Scenario to Target Price/Rating
Earnings from power semiconductors could undershoot
owing to increased competition and inventory
adjustments.
Operating Profit Forecasts: J.P. Morgan versus Consensus
billion
J.P. Morgan Consensus
FY2015E 46.0 41.7
FY2016E 50.0 46.7
Source: J.P. Morgan estimates, Bloomberg.
Valuation
Maintain price target of 570. Our price target equates to an
FY2015 EV/EBITDA of 7.2x based on our forecasts (P/E of
13.7x). It derives from a sum-of-the-parts methodology that
discounts the average FY2015 EV/EBITDA of 7.4x
(previously 8.1x) by 0.2pt (0.9pt) to allow for the risks of
slowdowns in orders and the macro-economy. We also
extend the period for our achievement of our price target
from December 2015 through December 2016.
Assumptions & Sensitivity Metrics (Impact on FY2015 Profits)
Factor Company J.P.Morgan Impact
Assumption OP (mn)
/$ rate 115 120 1/$ 90
/Euro rate 125 132 1/Euro 70
Source: Company
Peer Valuations Based on Bloomberg Consensus
Bloomberg Market Cap P/E(x) P/B(x) ROE(%)
Company name Ticker Currency Price Date ($mn) 15E 16E 17E 15E 16E 17E 15E
Fuji Electric Co Ltd 6504 JT JPY 557 Aug-12 3,346 13.2 12.0 11.0 1.28 1.18 1.07 10.0
Hitachi Ltd 6501 JT JPY 770 Aug-12 29,930 10.9 9.8 9.0 1.16 1.06 0.97 10.5
Toshiba Corp 6502 JT JPY 370 Aug-12 12,627 -1833.2 8.4 7.7 1.28 1.07 0.96 4.7
Mitsubishi Electric 6503 JT JPY 1,341 Aug-12 23,170 12.5 11.7 11.0 1.44 1.31 1.20 12.0
Rockwell Automation ROK US USD 115.84 Aug-12 15,535 17.5 16.6 15.2 5.88 5.46 5.15 32.8
Siemens SIE GR EUR 96.25 Aug-12 76,056 14.9 13.8 12.6 2.49 2.31 2.09 20.5
Schneider Electric SU FP EUR 60.73 Aug-12 32,006 15.4 13.8 12.5 1.69 1.63 1.54 10.6
Source: Bloomberg. Note: Market caps are calculated using forex rates as of August 12.
Energy and
Social infra
25%
Industrial
Infrastructure
23%
Power
Electronics
21%
Electronic
Devices
16%
Food &
Beverage
Distribution
13%
Others
7%
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3Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Figure 1: Sales by Segment (Annual)
million, %
2014/3 2015/3 2016/3E 2016/3E 2017/3E 2017/3E 2018/3E 2018/3E 2016/3CoE 2016/3CoE
old new old new old new 4/27 7/30
Sales by segment
Power & Social Infrastructure 152,321 169,200 176,600 178,100 189,000 187,900 202,000 192,900 176,600 178,100
Power Plant 71,600 79,500 88,300 88,300 95,000 95,000 100,000 100,000 88,300 -
Social Engineering Systems 30,500 40,600 38,900 40,400 40,000 40,400 48,000 40,400 38,900 -
Social Information 50,300 49,100 52,000 49,400 54,000 52,500 54,000 52,500 49,400 -
Industrial Infrastructure 189,548 191,400 208,600 209,100 220,000 220,400 238,000 238,400 208,600 209,100
Transmission and Distribution 51,200 53,600 58,400 58,400 60,000 60,000 65,000 65,000 58,400 -
Machinery and Electronics 41,700 42,100 52,200 52,600 55,000 55,400 55,000 55,400 52,200 -
Instrumentation and Control 43,600 42,100 35,500 35,500 40,000 40,000 50,000 50,000 35,500 -
Equipment Construction 53,100 55,500 62,600 62,600 65,000 65,000 68,000 68,000 62,600 -
Power Electronics 174,745 200,900 219,500 219,500 228,000 228,700 238,000 238,700 219,500 219,500
Drive 69,900 78,400 85,600 85,600 90,000 90,000 95,000 95,000 85,600 -
Power Supply 33,200 40,200 57,100 57,100 60,000 60,700 65,000 65,700 57,100 -
ED&C Components 71,600 82,400 76,800 76,800 78,000 78,000 78,000 78,000 76,800 -
Electronic Devices 123,049 137,189 137,300 135,300 159,000 159,000 171,000 171,000 137,300 135,300
Semiconductor 99,700 108,400 111,200 109,200 132,000 132,000 143,000 143,000 111,200 -
Magnetic Disks 23,400 28,800 26,100 26,100 27,000 27,000 28,000 28,000 26,100 -
Food & Beverage Distribution 120,056 119,113 120,000 120,000 133,000 133,000 140,000 140,000 120,000 120,000
Vending Machines 74,400 72,700 64,800 62,800 75,000 73,000 80,000 78,000 64,800 -
Store Distribution 45,600 46,500 55,200 57,200 58,000 60,000 60,000 62,000 55,200 -
Others 59,998 61,203 61,400 61,400 60,000 60,000 60,000 60,000 61,400 61,400
Elimination -59,808 -68,300 -73,400 -73,400 -75,000 -75,000 -75,000 -75,000 -73,400 -73,400
Total Sales 759,911 810,678 850,000 850,000 914,000 914,000 974,000 966,000 850,000 850,000
YoY 1.9% 6.7% 4.9% 4.9% 7.5% 7.5% 6.6% 5.7% 4.9% 4.9%
Power & Social Infrastructure -2.9% 11.1% 0.8% 5.3% 7.0% 5.5% 6.9% 2.7% 0.8% 5.3%
Industrial Infrastructure -4.6% 1.0% 5.3% 9.2% 5.5% 5.4% 8.2% 8.2% 5.3% 9.2%
Power Electronics 17.8% 15.0% 19.2% 9.3% 3.9% 4.2% 4.4% 4.4% 19.2% 9.3%
Electronic Devices 8.3% 11.5% 0.1% -1.4% 15.8% 17.5% 7.5% 7.5% 0.1% -1.4%
Food & Beverage Distribution 7.1% -0.8% 0.7% 0.7% 10.8% 10.8% 5.3% 5.3% 0.7% 0.7%
Others -1.0% 2.0% 0.3% 0.3% -2.3% -2.3% 0.0% 0.0% 0.3% 0.3%
Elimination 34.5% 14.2% 14.3% 7.5% 2.2% 2.2% 0.0% 0.0% 14.3% 7.5%
Source: Company data, J.P. Morgan estimates, segment breakdowns are J.P. Morgan estimates
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4Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Figure 2: OP by Segment (Annual)
million, %
2014/3 2015/3 2016/3E 2016/3E 2017/3E 2017/3E 2018/3E 2018/3E 2016/3CoE 2016/3CoE
old new old new old New 4/27 7/30
OP by segment
Power & Social Infrastructure 7,659 7,800 9,000 9,000 10,000 10,000 11,500 11,500 8,400 8,900
Industrial Infrastructure 9,624 11,100 12,500 12,500 13,500 13,500 14,500 14,500 12,500 13,000
Power Electronics 5,331 7,600 9,600 9,600 10,000 10,000 11,000 11,000 9,600 9,600
Electronic Devices 6,472 8,071 10,300 10,300 12,000 12,000 14,000 14,000 10,300 9,300
Semiconductor 5,800 7,300 8,300 8,300 10,000 10,000 12,000 12,000 8,300 -
Magnetic Disks 600 800 2,000 2,000 2,000 2,000 2,000 2,000 2,000 -
Food & Beverage Distribution 8,047 8,527 8,800 8,800 9,000 9,000 9,000 9,000 8,500 8,500
Others 1,912 1,882 1,900 1,900 2,000 2,000 2,000 2,000 1,900 1,900
Elimination -5,909 -5,676 -6,100 -6,100 -6,500 -6,500 -6,500 -6,500 -6,100 -6,100
Total OP 33,136 39,316 46,000 46,000 50,000 50,000 55,500 55,500 45,000 45,000
OPM by segment
Power & Social Infrastructure 5.0% 4.6% 5.1% 5.1% 5.3% 5.3% 5.7% 6.0% 4.8% 4.8%
Industrial Infrastructure 5.1% 5.8% 6.0% 6.0% 6.1% 6.1% 6.1% 6.1% 6.0% 6.0%
Power Electronics 3.1% 3.8% 4.4% 4.4% 4.4% 4.4% 4.6% 4.6% 4.4% 4.4%
Electronic Devices 5.3% 5.9% 7.5% 7.6% 7.5% 7.5% 8.2% 8.2% 7.5% 7.5%
Semiconductor 5.8% 6.7% 7.5% 7.6% 7.6% 7.6% 8.4% 8.4% - -
Magnetic Disks 2.6% 2.8% 7.7% 7.7% 7.4% 7.4% 7.1% 7.1% - -
Food & Beverage Distribution 6.7% 7.2% 7.3% 7.3% 6.8% 6.8% 6.4% 6.4% 7.1% 7.1%
Others 3.2% 3.1% 3.1% 3.1% 3.3% 3.3% 3.3% 3.3% 3.1% 3.1%
Elimination 9.9% 8.3% 8.3% 8.3% 8.7% 8.7% 8.7% 8.7% 8.3% 8.3%
Total OPM 4.4% 4.8% 5.4% 5.4% 5.5% 5.5% 5.7% 5.7% 5.3% 5.3%
OP breakdown
Power & Social Infrastructure 23% 20% 20% 20% 20% 20% 21% 21% 19% 19%
Industrial Infrastructure 29% 28% 27% 27% 27% 27% 26% 26% 28% 28%
Power Electronics 16% 19% 21% 21% 20% 20% 20% 20% 21% 21%
Electronic Devices 20% 21% 22% 22% 24% 24% 25% 25% 23% 23%
Semiconductor 90% 90% 18% 18% 20% 20% 22% 22% 18% 18%
Magnetic Disks 10% 10% 4% 4% 4% 4% 4% 4% 4% 4%
Food & Beverage Distribution 24% 22% 19% 19% 18% 18% 16% 16% 19% 19%
Others 6% 5% 4% 4% 4% 4% 4% 4% 4% 4%
Elimination -18% -14% -13% -13% -13% -13% -12% -12% -14% -14%
Source: Company data, J.P. Morgan estimates, segment breakdowns are J.P. Morgan estimates
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5Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Figure 3: Income Statement (Annual)
million, %
2014/3 2015/3 2016/3E 2016/3E 2017/3E 2017/3E 2018/3E 2018/3E 2016/3CoE
old new old new old new 7/30
Sales 759,911 810,678 850,000 850,000 914,000 914,000 974,000 966,000 850,000
COGS 579,857 609,376 646,750 634,000 694,910 681,200 738,310 717,300
GP 180,055 201,302 203,250 216,000 219,090 232,800 235,690 248,700
SG&A 146,918 161,985 157,250 170,000 169,090 182,800 180,190 193,200
Total OP 33,136 39,316 46,000 46,000 50,000 50,000 55,500 55,500 45,000
Non-OP 7,170 8,321 4,800 5,500 4,800 5,500 4,800 5,500
Non-OP expense 3,576 4,499 3,800 4,500 3,800 4,500 3,800 4,500
RP 36,731 43,139 47,000 47,000 51,000 51,000 56,500 56,500 45,000
Extra ordinary profit 913 7,703 0 0 0 0 0 0
Extra ordinary loss 3,907 5,123 2,000 2,000 2,000 2,000 2,000 2,000
Pre tax income 33,737 45,719 45,000 45,000 49,000 49,000 56,500 56,500
Taxes 11,982 14,918 13,500 13,500 14,700 14,700 16,950 16,950
Minority interest 2,172 2,822 1,800 1,800 2,200 2,200 2,000 2,000
Net profits 19,582 27,978 29,700 29,700 32,100 32,100 37,550 37,550 29,000
% to Sales
COGS 76.3 75.2 76.1 74.6 76.0 74.5 75.8 74.3
GP 23.7 24.8 23.9 25.4 24.0 25.5 24.2 25.7
SG&A 18.5 18.5 18.5 20.0 18.5 20.0 18.5 20.0
Total OP 4.4 4.8 5.4 5.4 5.5 5.5 5.7 5.7 5.3
RP 4.8 5.3 5.5 5.5 5.6 5.6 5.8 5.8 5.3
Pre tax income 4.4 5.6 5.3 5.3 5.4 5.4 5.8 5.8
Net profits 2.6 3.5 3.5 3.5 3.5 3.5 3.9 3.9 3.4
Effective tax rate (%) 35.0 32.6 30.0 30.0 30.0 30.0 30.0 30.0
YoY(%)
Sales 1.9 6.7 4.9 4.9 7.5 7.5 6.6 5.7 4.9
COGS 13.7 11.8 1.0 7.3 7.8 7.8 7.6 6.8
SG&A 7.8 10.3 -2.9 4.9 7.5 7.5 6.6 5.7
Total OP 50.7 18.7 17.0 17.0 8.7 8.7 11.0 11.0 14.5
RP 42.8 17.4 9.0 9.0 8.5 8.5 10.8 10.8 4.3
Pre tax income 103.0 35.5 -1.6 -1.6 8.9 8.9 15.3 15.3
Net profits -25.7 42.9 6.2 6.2 8.1 8.1 17.0 17.0 3.7
Source: Company data, J.P. Morgan estimates
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6Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Investment Thesis, Valuation and Risks
Fuji Electric (6504) (Neutral; Price Target: 570)
Investment Thesis
Our focus is on how the company can cultivate unique growth areas in the
geothermal and thermal power fields and whether it can further develop and cultivate
business in unique product areas as it has done in the food & beverage distribution
segment.
Valuation
Maintain price target of 570. Our price target equates to an FY2015 EV/EBITDA of
7.2x based on our forecasts (P/E of 13.7x). It derives from a sum-of-the-parts
methodology that discounts the average FY2015 EV/EBITDA of 7.4x (previously
8.1x) by 0.2pt (0.9pt) to allow for the risks of slowdowns in orders and the macro-
economy. We also extend the period for our achievement of our price target from
December 2015 through December 2016.
Risks to Rating and Price Target
Upside Scenario to Target Price/Rating
Earnings from inverters and power semiconductors could overshoot thanks to
accelerated capex in Asia and China
Downside Scenario to Target Price/Rating
Earnings from power semiconductors could undershoot owing to increased
competition and inventory adjustments
-
7Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Fuji Electric (6504): Summary of Financials
Income statement in millions 2015/3 2016/3E 2017/3E 2018/3E Cash Flow statement in millions 2015/3 2016/3E 2017/3E 2018/3E
Revenues 810,678 850,000 914,000 966,000 Operating CF 51,459 17,503 190,395 -17,762
Cost of revenue -579,076 -605,000 -651,200 -687,300 D&A 33,615 29,000 30,000 30,000
Operating expenses -771,361 -804,000 -864,000 -910,500 Net change in working capital -17,808 -56,497 111,395 -104,262
EBITDA 69,616 75,000 80,000 85,500 Investment CF -22,750 -22,400 -20,000 -20,000
Depreciation -30,300 -29,000 -30,000 -30,000 Capex -29,000 -36,900 -30,000 -30,000
Operating profit (EBIT) 39,316 46,000 50,000 55,500 Net change in investments -4,020 0 0 0
Other income 5,796 3,300 3,300 3,300 Free cash flow 22,476 -18,328 161,463 -46,712
Other expenses -1,947 -800 -800 1,200 Financing CF -33,828 2,000 2,000 2,000
Pretax income 45,719 45,000 49,000 56,500 Net debt (cash) 125,271 130,225 -40,171 -2,410
Abnormal items (net) 2,580 -2,000 -2,000 -2,000 Change in Net debt (cash) -40,208 4,954 -170,396 37,761
Income taxes -14,918 -13,500 -14,700 -16,950
Minorities -2,822 -1,800 -2,200 -2,000
Net income - GAAP 27,978 29,700 32,100 37,550
Diluted shares outstanding (mn) 715 715 715 715
Balance Sheet in millions 2015/3 2016/3E 2017/3E 2018/3E Ratio Analysis 2015/3 2016/3E 2017/3E 2018/3E
Total assets 904,522 896,059 1,123,380 1,077,554 Gross Margin 24.8% 25.4% 25.5% 25.7%
Cash and cash equivalents 31,953 28,999 201,395 165,634 EBITDA margin 8.6% 8.8% 8.8% 8.9%
Trade receivable 237,631 244,799 273,955 274,312 ROCE 5.7% 6.7% 6.8% 7.0%
Other current assets 55,773 50,000 50,000 50,000 Return on equity (ROE) 10.2% 8.9% 8.9% 9.6%
Net Tangible fixed assets 174,953 182,853 182,853 182,853 D/E ratio 45.1% 42.4% 39.8% 37.2%
Net intangible fixed assets 15,295 7,500 7,500 7,500 Div payout ratio 23.0% 24.1% 26.7% 26.6%
Investments/other assets 251,201 250,000 250,000 250,000
Total liabilities 555,590 520,427 718,648 638,272
Short term debt 68,095 70,095 72,095 74,095
Other short term liabilities 186,005 188,916 277,129 309,794
Long term debt 89,129 89,129 89,129 89,129
Other long term liabilities 61,713 91,008 91,008 91,008
Minority interests 29,296 29,296 29,296 29,296
Total Equity 348,932 375,632 404,732 439,282
Source: Company data and J.P. Morgan estimates
Note: in millions (except per-share data).Fiscal year ends Mar
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8Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
JPM Q-Profile
Fuji Electric Co., Ltd. (JAPAN / Industrials)As Of: 07-Aug-2015 [email protected]
Local Share Price Current: 545.00 12 Mth Forward EPS Current: 43.57
PE (1Yr Forward) Current: 12.5x P/E Relative to Japan Index Current: 0.82
Earnings Yield (& Local Bond Yield) Current: 8% Dividend Yield (Trailing) Current: 1.75
ROE (Trailing) Current: 11.91 Price/Book (Value) Current: 1.4x
Summary
Fuji Electric Co., Ltd. 3074.97 As Of:
JAPAN 13.57261 TICKER 6504 JP Local Price: 545.00
Industrials Electrical Equipment EPS: 43.57
Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg
12mth Forward PE 12.51x 0.00 50.00 15.90 17.56 36.62 -1.51 -100% 300% 27% 40%
P/BV (Trailing) 1.38 0.28 2.09 1.15 1.21 1.91 0.51 -79% 52% -17% -12%
Dividend Yield (Trailing) 1.75x 0.00 7.43 1.60 1.71 3.88 -0.47 -100% 323% -9% -3%
ROE (Trailing) 11.91 -22.48 20.37 5.00 4.08 21.34 -13.17 -289% 71% -58% -66%
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, JPMorgan Quantitative & Derivative Strategy
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r/0
1
Jan
/02
Oct/0
2
Ju
l/0
3
Ap
r/0
4
Jan
/05
Oct/0
5
Ju
l/0
6
Ap
r/0
7
Jan
/08
Oct/0
8
Ju
l/0
9
Ap
r/1
0
Jan
/11
Oct/1
1
Ju
l/1
2
Ap
r/1
3
Jan
/14
Oct/1
4
Ju
l/1
5
-10.0x
0.0x
10.0x
20.0x
30.0x
40.0x
50.0x
60.0x
Ju
l/0
0
Ma
r/0
1
Nov/0
1
Ju
l/0
2
Ma
r/0
3
Nov/0
3
Ju
l/0
4
Ma
r/0
5
Nov/0
5
Ju
l/0
6
Ma
r/0
7
Nov/0
7
Ju
l/0
8
Ma
r/0
9
Nov/0
9
Ju
l/1
0
Ma
r/1
1
Nov/1
1
Ju
l/1
2
Ma
r/1
3
Nov/1
3
Ju
l/1
4
Ma
r/1
5
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
Jul/00
Mar/
01
No
v/0
1
Jul/02
Mar/
03
No
v/0
3
Jul/04
Mar/
05
No
v/0
5
Jul/06
Mar/
07
No
v/0
7
Jul/08
Mar/
09
No
v/0
9
Jul/10
Mar/
11
No
v/1
1
Jul/12
Mar/
13
No
v/1
3
Jul/14
Mar/
15
P/B Trailing P/B Forward
-25.00
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
Jul/00
Mar/
01
Nov/0
1
Jul/02
Mar/
03
Nov/0
3
Jul/04
Mar/
05
Nov/0
5
Jul/06
Mar/
07
Nov/0
7
Jul/08
Mar/
09
Nov/0
9
Jul/10
Mar/
11
Nov/1
1
Jul/12
Mar/
13
Nov/1
3
Jul/14
Mar/
15
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Jul/00
Mar/
01
No
v/0
1
Jul/02
Mar/
03
No
v/0
3
Jul/04
Mar/
05
No
v/0
5
Jul/06
Mar/
07
No
v/0
7
Jul/08
Mar/
09
No
v/0
9
Jul/10
Mar/
11
No
v/1
1
Jul/12
Mar/
13
No
v/1
3
Jul/14
Mar/
15
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Jul/00
Mar/
01
No
v/0
1
Jul/02
Mar/
03
No
v/0
3
Jul/04
Mar/
05
No
v/0
5
Jul/06
Mar/
07
No
v/0
7
Jul/08
Mar/
09
No
v/0
9
Jul/10
Mar/
11
No
v/1
1
Jul/12
Mar/
13
No
v/1
3
Jul/14
Mar/
15
-
9Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research
analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per
KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or
intervention.
Important Disclosures
Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for
compendium reports and all J.P. Morgancovered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406,
or e-mailing [email protected] with your request. J.P. Morgans Strategy, Technical, and Quantitative
Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-
0406 or e-mail [email protected].
Date Rating Share Price
(Y)
Price Target
(Y)
15-May-07 OW 532 700
08-Jun-07 OW 573 770
03-Aug-07 OW 496 720
07-Feb-08 OW 363 580
03-Apr-08 N 424 460
12-May-08 N 399 430
31-Jul-08 N 301 350
30-Sep-08 N 241 280
04-Nov-08 N 142 230
25-Dec-08 N 128 190
14-Feb-09 N 115 155
02-Nov-09 N 166 180
09-Jan-10 N 167 210
29-Jan-10 OW 180 300
10-May-10 N 267 300
23-Jun-10 N 276 320
08-Oct-10 N 210 210
02-Dec-10 OW 226 290
28-Jan-11 OW 251 300
07-Oct-11 OW 200 245
28-Oct-11 OW 237 275
17-Jan-12 N 206 190
10-Jul-12 N 179 179
01-Feb-13 N 214 200
26-Mar-13 N 286 270
26-Apr-13 N 332 280
28-Jun-13 N 329 330
26-Jul-13 N 372 410
25-Oct-13 N 412 435
26-Oct-13 N 420 450
09-Jun-14 OW 472 570
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
0
187
374
561
748
935
1,122
Price(Y)
Sep
06
Mar
08
Sep
09
Mar
11
Sep
12
Mar
14
Sep
15
Fuji Electric (6504) (6504.T, 6504 JT) Price Chart
OW Y720 N Y430N Y230 OW Y300 OW Y300 N Y190 N Y280N Y435
OW Y770 N Y460N Y280N Y155 N Y210N Y320OW Y290 OW Y275 N Y270N Y410
OW Y700OW Y580N Y350N Y190 N Y180N Y300N Y210 OW Y245N Y179N Y200N Y330N Y450OW Y570
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage May 15, 2007.
-
10
Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analysts (or the analysts teams) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stocks expected total return is
compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear
in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research
website, www.jpmorganmarkets.com.
Coverage Universe: Moriyama, Hisashi: Canon (7751) (7751.T), Disco (6146) (6146.T), FUJIFILM Holdings (4901) (4901.T), Fuji
Electric (6504) (6504.T), HOYA (7741) (7741.T), Hitachi (6501) (6501.T), Hitachi High-Technologies (8036) (8036.T), Konica Minolta
(4902) (4902.T), Mitsubishi Electric (6503) (6503.T), Nikon (7731) (7731.T), Ricoh (7752) (7752.T), Seiko Epson (6724) (6724.T),
Tamron (7740) (7740.T), Tokyo Electron (8035) (8035.T), Toshiba (6502) (6502.T)
J.P. Morgan Equity Research Ratings Distribution, as of June 30, 2015
Overweight
(buy)
Neutral
(hold)
Underweight
(sell)
J.P. Morgan Global Equity Research Coverage 44% 43% 13%
IB clients* 51% 48% 38%
JPMS Equity Research Coverage 45% 47% 9%
IB clients* 71% 66% 57%
*Percentage of investment banking clients in each rating category.
For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table
above.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered
companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst
or your J.P. Morgan representative, or email [email protected].
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-
11
Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong and/or J.P. Morgan Broking (Hong Kong) Limited (CE
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-
12
Asia Pacific Equity Research
14 August 2015
JPMorgan Securities Japan Co., Ltd.
Hisashi Moriyama
(81-3) 6736-8601
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Copyright 2015 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or
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Fuji Electric (6504)Company ProfileValuation
Investment Thesis, Valuation and Risks