Keyence (6861.T): We expect robust conditions to continue; reiterate Buy (on CL)

Based on trends in various industry statistics available as of October 7 and the monthly sales trends of related companies, we have revised our estimates (we raise our FY3/27-30 operating profit estimates by an average of +1% from our previous estimates). For Keyence, given our view that a phase has arrived in which the strength of its business model stands out, we reiterate our Buy rating (on CL). We believe that the focus at the time of the 1Q results was on whether Keyence could capture the rapidly expanding AI capex. We had assumed that sensor-related companies would be particularly well positioned, but the scale of the benefits actually realized and the extent of the earnings beat were sufficient to prompt a significant upward revision in market consensus. Our market research conducted to date has also reconfirmed that the strength of Keyence's fundamentals is especially pronounced. We expect the favorable business conditions to continue. Looking ahead to the 2Q results and beyond