Yaskawa Affected by High Components Costs but Expecting Margin Recovery in 2023; Maintain FVE

We maintain our fair value estimate of Yaskawa Electric at JPY 5,500, but lower our operating margin assumption in fiscal 2022 (ending February), from higher expected costs based on the latest quarter results. Although August quarter operating margin of 12.1% was above previous year's 11.5%, it still fell short of our expectations by about a percentage point, mainly due to motion control margins falling to 13.6% from 15.3%. Motion control was especially affected by high components prices and increased airborne shipments to meet tight deadlines. With this likely to continue affecting the business, we lower our fiscal 2022 motion control margin by 3 percentage points to 14.0%, which is in-line with the revised guidance, and our 2022 operating margin assumption is now 12.2% (on IFRS-basis), compared with12.6% before.