) (6506.T) in the spring of 2017, I thought it was a good way to play
a long-term trend in factory automation and particularly in the growing
adoption of automation in China. I thought the shares were somewhat
undervalued, but little did I expect the shares to triple in
nine months! Since peaking in January, the shares are down about 30%,
but there is still a wide spread of opinions on the sell-side regarding
the fair value for these shares.
I love the Yaskawa
story, and I do think the company stands to generate a lot of growth
from the automation of Chinese factories. That said, I simply cannot
reconcile today's valuation with any likely earnings/cash flow
trajectory or relative valuation approach. The current average sell-side
price target would seem to require long-term FCF growth in the high
teens on an annualized basis (or a rather low discount rate), while the
current share price works back to a mid-teens growth. Although not
impossible to reach, I don't think that level of expectations leaves
much, if any, room for error or disappointment.
Read more here:
Automating Chinese Factories Has Sent Yaskawa Electric On A Wild Ride
No comments:
Post a Comment