On Tuesday, Morgan Stanley (NYSE:MS) adjusted its stance on FCC Co Ltd (7296:JP), upgrading the stock from Underweight to Equalweight and raising the price target to ¥2,300, up from the previous ¥2,000. The revision follows FCC's reported sales and operational profit (OP) growth in the first quarter of fiscal year 2025.
FCC Co Ltd, which operates in the automotive and motorcycle sectors, experienced a significant uptick in its financial performance. The company's motorcycle business saw sales increase by 15.0% year-over-year to ¥28.8 billion and operational profit more than doubled to ¥3.1 billion, achieving a 10.6% operating profit margin (OPM). The automotive sector also reported a healthy sales growth of 12.5% to ¥35.3 billion and a 19.8% rise in operational profit to ¥2.6 billion, with a 7.4% OPM.
The firm's overall profit climbed by ¥1.9 billion compared to the same period last year. This increase was attributed to a combination of factors: a ¥1.5 billion boost from sales and product mix, a ¥500 million benefit from reduced depreciation costs, and a ¥900 million positive impact from foreign exchange effects. These gains were slightly offset by a ¥200 million rise in research and development expenses and a ¥700 million increase in other expenses, including those related to quality.
The analyst highlighted the motorcycle business's robust performance, particularly emphasizing the demand growth in India and Indonesia as a key driver for the stronger results. The company's ability to capitalize on these markets has been a significant factor in its improved financial metrics.
Morgan Stanley's updated rating and price target reflect the firm's assessment of FCC's recent financial outcomes and the underlying drivers of its performance. The increased target price suggests a more optimistic outlook for the company's stock value moving forward.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.