Core Viewpoint - Fanuc Corporation's outlook has improved significantly, with favorable prospects in the Indian and Chinese markets, leading to a bullish stance on the stock [1][2]. Financial Performance - Analysts' consensus for FY 2024 top line estimate has been raised by +2.5% to JPY 804.0 billion, and operating income forecast revised upwards by +5.2% to JPY 150.9 billion [2]. - The company's management has increased FY 2024 revenue and operating profit guidance by +5.1% to JPY 784.3 billion and +8.2% to JPY 143.0 billion, respectively [2]. - Actual Q1 FY 2024 revenue and operating income exceeded sell-side estimates by +3.6% and +4.1%, respectively [2]. Market Performance - The Chinese market was the best performer for Fanuc in Q1 FY 2024, with revenue from China increasing by +11.8% QoQ, while Japan's sales rose by +0.5% QoQ [4]. - The Chinese operations are expected to benefit from significant investments in equipment upgrades by state-owned enterprises, with a projected contribution of 22.7% to Q1 FY 2024 top line [4]. Growth Prospects - Fanuc's Indian market presence is expected to grow, with the company emphasizing the need to elevate its operations in India, where robot penetration is currently low [5]. - The company has a strong market share in India, having operated there since 1992, positioning it well for future growth [5]. Valuation - The stock is currently trading at a discount to fair valuation, with a target P/E multiple of 31.2 times compared to the current consensus FY 2025 P/E ratio of 24.8 times, indicating a potential upside of +26% [7].
Fanuc Corporation: Brighter Outlook With Eyes On China, India