Anritsu (TYO: 6754) - Fundamental Investment Case

Anritsu is a top three global supplier of mobile testing and measuring equipment. It also produces testing equipment, which it mainly supplies to food manufacturers.

Despite the company’s best efforts to highlight attendant risks, 1Q earnings bore the hallmarks of an accelerating and sustainable 5G upcycle. Rapid 1Q 3/20 earnings growth was achieved via continued robust 5G demand. Anritsu’s highest 1Q OP in 7 years sits in stark contrast to its outlook for a FY 3/20 OP decline.

Whilst the company cites the ongoing decline of LTE business, macro trade issues and the impending entry of Rohde & Schwarz into 5G as risk factors justifying its original FY estimates, its logic is increasingly at odds with robust fundamentals