May MLCC trade data remained strong YoY; Goldman Sachs maintains Buy ratings on leading Japanese electronic components companies

Overview

This report tracks Japan Ministry of Finance May MLCC trade data and, together with feedback from Murata Mfg.'s recent conference call, evaluates demand momentum in Japan's electronic components sector. MLCC export price, volume, and value all declined sequentially in May, but still rose clearly YoY, with export value up 19% YoY. Goldman Sachs believes the sequential decline was mainly a seasonal shipment impact caused by the Golden Week holiday, while industry order trends remain at very high levels.

Core views

The core view is that YoY growth in the MLCC industry remains strong, demand for AI/DC applications continues to be robust, and signs of recovery in automotive applications are strengthening; in the near term, 1Q earnings themselves are less important than orders, book-to-bill, the July-September outlook, and product mix improvement in 2H. Goldman Sachs maintains Buy ratings on Murata Mfg., Taiyo Yuden, and TDK.

Analysis framework

The report uses a combination of monthly trade data tracking and company fundamental validation: it first compares the MoM and YoY changes in MLCC export ASP, export volume, and export value in MOF statistics, then uses statements from Murata Mfg.'s conference call regarding AI/DC and automotive application orders to validate demand trends, and combines target prices, valuation methods, and risk disclosures to form its investment view.

Methodology notes

• Industry trackingMOF trade data tracking

  Assess industry conditions through MoM and YoY changes in MLCC export ASP, export volume, and export value.

  May sequential data was disrupted by the Golden Week holiday, so the report places greater emphasis on YoY growth and company order feedback to distinguish seasonal shipment effects from real demand changes.

• Valuation methodsEV/GCI vs. CROCI/WACC

  Derive target prices using the EV/GCI and CROCI/WACC framework, with a premium to industry multiples.

  Target prices for Murata Mfg. and Taiyo Yuden are based on FY3/29E EV/GCI vs. CROCI/WACC and apply an 80% premium to the sector 10x multiple; TDK uses a similar framework and applies a 10% premium to the sector average EV/DACF multiple.

• Factor analysisGS Factor Profile

  Compare stocks' characteristics versus the market and sector peers in terms of growth, financial returns, valuation multiples, and composite percentile ranking.

  GS Factor Profile uses analyst forecast metrics to calculate percentiles for growth, financial returns, and valuation multiples, and uses a composite percentile to help understand a stock's investment characteristics.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Murata Mfg. (6981.T)

  Core covered company, Buy rating maintained, and noted as CL.

  Strengths

  Strong AI/DC orders, a strengthening recovery in automotive applications, and AI server MLCCs may bring higher ASP and product mix improvement.

  Weaknesses

  1Q earnings may be affected by the timing of sales recognition, and near-term reported earnings may not fully reflect demand trends.

  Comparison

  12-month target price ¥12,600; latest closing price in the target price history table ¥8,711.

  Risks

  Declining smartphone production, worsening MLCC supply-demand balance, yen appreciation.

• Taiyo Yuden (6976.T)

  Japanese MLCC and electronic components-related name, Buy rating maintained.

  Strengths

  Benefits from YoY growth in the MLCC industry, AI/DC demand, and industry product mix improvement.

  Weaknesses

  Sensitive to smartphone demand and the MLCC supply-demand cycle.

  Comparison

  12-month target price ¥21,200; latest closing price in the target price history table ¥14,975.

  Risks

  Weaker-than-expected smartphone demand, worsening MLCC supply-demand balance, yen appreciation.

• TDK (6762.T)

  Covered Japanese electronic components name, Buy rating maintained.

  Strengths

  Benefits from improving electronic components demand and growth in high-value-added applications.

  Weaknesses

  Valuation premium is lower than the 80% sector multiple premium assumption used for Murata Mfg. and Taiyo Yuden.

  Comparison

  12-month target price ¥4,600; latest closing price in the target price history table ¥3,715.

  Risks

  Declining smartphone production, rising input costs, yen appreciation.

Key data

• May MLCC average export priceMoM -3%; YoY +11%From Japan Ministry of Finance May trade statistics.
• May MLCC export volumeMoM -10%; YoY +7%Goldman Sachs believes the sequential decline was affected by the Golden Week holiday.
• May MLCC export valueMoM -12%; YoY +19%YoY growth remains at a relatively high level.
• Murata Mfg. target price¥12,60012-month target price; rating is Buy.
• Taiyo Yuden target price¥21,20012-month target price; rating is Buy.
• TDK target price¥4,60012-month target price; rating is Buy.

Impact & implications

The report is positive on Japan's electronic components sector. If AI server MLCC demand continues to lift product mix and ASP, while the recovery in automotive applications continues, earnings expectations and valuation support for Murata Mfg., Taiyo Yuden, and TDK could strengthen. In the short term, investors should avoid overinterpreting May's sequential decline and instead focus more on order strength, book-to-bill, and management tone for 2H.

Risks

• Smartphone production or demand may decline.
• MLCC supply-demand dynamics may deteriorate.
• Yen appreciation may weaken earnings or valuation support.
• Rising input costs, especially posing a risk to TDK.
• May sequential data was affected by long holidays; if it does not recover in subsequent months, it may indicate demand is weaker than currently judged.

What to watch

• April-June book-to-bill ratio.
• July-September company outlook.
• Management tone on 2H demand and product mix.
• Whether AI server MLCCs bring higher ASP and significant product mix improvement.
• Discussion around price increases for similar products as visibility improves toward 2027.
• The continuity of MLCC export volume, average price, and value in subsequent monthly MOF trade data.