Yamaha Motor (7272.T): Model Update

We fine-tune our forecasts following Q3 results. We forecast OP of ¥265bn this FY and ¥290bn next FY. For FY12/27, we expect profit growth driven by restructuring effects in outdoor land vehicles (OLVs) and volume expansion in the robotics business. We also anticipate stable growth in the motorcycle business. We see the marine business benefiting from large outboard motor launches, but we expect a plateau in profits, as demand remains stagnant. In the robotics business, new orders for AI apps are a catalyst, but we think profitability warrants some caution. Management made bullish comments on profit growth in FY12/27 at Q3 results, and we think new-FY guidance for OP could be ¥300bn or more. In the near term, we expect guidance expectations to support the share price. We maintain our Neutral rating and ¥1,900 target price.