On Wednesday, Jefferies maintained its Buy rating on Kokusai Electric Corp (6525:JP) but lowered the price target to ¥5,400 from ¥6,000. This adjustment follows the company’s recent first-quarter results, which were reported on August 9. The results showed a significant year-over-year increase in operating profit, which totaled ¥17.9 billion, a 348% rise, surpassing consensus expectations.
Kokusai Electric experienced growth in both sales and profit, attributed to a concentration of shipments in China and strong performance in legacy applications.
The company’s first-quarter orders saw a substantial increase, estimated at ¥40.0 billion, which is ¥10.0 billion higher than in the fourth quarter. The robust order book was bolstered by continued high demand from China.
Despite the positive performance, Jefferies has revised its price target for Kokusai Electric due to a valuation change. The firm’s full-year guidance for the fiscal year ending March 2025 remains unchanged, but Jefferies sees potential for an upside. The firm has revised its estimates upward while adjusting the price target to reflect the new valuation.
The report concludes with the analyst’s perspective, stating that although the price target has been reduced, the outlook for Kokusai Electric remains positive with a maintained Buy rating. The analyst believes that the unchanged full-year guidance could offer room for better-than-expected performance in the future.
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