Ferrotec (6890) - Nearly Ready
Even assuming a ¥101/US$ for FY16 (3% impact on OP for every ¥1 move), we see Ferrotec posting a 30-35% YoY improvement in FY16 OP, beating company guidance (+24% YoY), which assumes ¥105/US$. Solar improves from a ¥1.7bn loss (FY15) to a small profit (FY16), we project, boosting OP by the equivalent of 50% YoY. In addition, new high-margin products such as 8-inch IC wafers and CVD-SiC should help offset the strong yen.
Loss-making solar looks set to post its first profit in nearly five years in Q2 FY16, on cost : revenue improvement. Sequential quarterly growth in total earnings can be expected throughout FY16 and into H1 FY17 as solar improves and semiconductor revenues kick in.
While a dramatic FY17 earnings story, divisional OP in FY16 only improves in one of the three main divisions, Photovoltaic (solar); with Equipment-related (semiconductor-related) flattish, and Electronic Devices (heated seats for automobiles) likely to see a 25% drop due to the strong yen. FY17 will see high-margin semiconductor material production go into full gear.
Ferrotec Holdings is a holding company. Co., through its affiliates, is mainly engaged in the development, manufacture and sale of vacuum seals, ceramics, silicon carbide products and others. Co. operates in three principal business segments: semiconductor and other equipment-related, photovoltaic-related, and electronic device. Co.'s principal products are vacuum feedthrough, quarts products, ceramic products for manufacturing devices, photovoltaic cell silicon crystal production equipment, quartz crucibles, silicon products geared for solar cell applications, crucibles, thermo-electric modules used for thermostats, and Ferrofluid-applied products (Ferrofluid seals).
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
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