Goldman Sachs: Japan Industrials — Hong Kong Investor Survey, Yaskawa 1Q, and Japan Steel Works MTP Feedback; Focus on Execution and Pricing
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Key Views
Goldman expects the semiconductor-driven FA cycle to persist through CY2027–2028, while general-industry orders may peak in CY2026 and machine-tool orders could turn slightly negative year-on-year in CY2027. Investor interest split roughly 70% FA and 30% aerospace & defense, versus Goldman's pre-visit assumption of 90/10. Yaskawa's earnings miss, attributed to ERP issues, prompted broader scrutiny of execution risk across FA names; Goldman favors Keyence among upcoming reporters.
Japan Steel Works raised its Materials & Engineering FY3/29 operating-profit target from ¥8 bn (15% margin) to ¥16 bn (20%). Investors were mildly disappointed as consensus already neared this level, but Goldman views pricing and fixed-cost pass-through assumptions as conservative, seeing significant upside.
Outlook
Goldman remains overweight FA into the September-quarter earnings season, expecting continued consensus upgrades. Keyence reports July 28 post-close—a key read on FA pricing.
Recommended Securities
Buy ratings maintained: Mitsubishi Heavy Industries (¥3,758), Japan Steel Works (¥7,719), AeroEdge (¥1,605), SKY Perfect JSAT (¥2,481), Keyence (¥75,590), and Yaskawa Electric (¥5,450, Conviction List).