While Casio Struggles With Weaker China Sales, Rich Dividends Support Shares

We revise our fair value estimate of no-moat Casio Computer to JPY 1,900 from JPY 2,000 for three major reasons. First, we cut the watch sales forecast in China as we incorporate the impact of restrictions and cancellation of marketing activities associated with the lockdown. Second, we cut our sales and operating margin assumptions for music instruments. The music instruments business has a relatively high revenue exposure in Europe, including Russia, and thus is the most heavily affected by the conflict. We also estimate that this business is mostly damaged by the increasing material costs. Third, we have lowered our revenue forecasts for the system equipment segment, due to the slower recovery of the domestic economy and slower progress in building up new business pillars. As a result, our operating income forecasts for fiscal 2022 (financial year ending March 2023) and 2023 (ending in March 2024) are revised to JPY 29 billion and JPY 35 billion from JPY 35 billion and JPY 39 billion, respectively.