This article examines the backdrop to the sharp declines in Murata Manufacturing's and Taiyo Yuden's share prices by comparing expectations for growing AI demand, bill-to-book ratios and the scale of capital investment. It also compares the difference between long-term perspectives and short-term movements from the standpoint of the two companies' business structures.
Share prices of Murata Manufacturing and Taiyo Yuden rose sharply from the beginning of the year on expectations for growing MLCC demand from AI servers and data centers, but plunged after passing their peaks. The declines are analyzed as having resulted not from deterioration in the companies' individual results, but from external factors such as concerns over the flow of funds and rising interest rates.
At the same time, both companies reported strong first-quarter results, with revenue growth often outpacing profit growth. The sustainability of AI investment and changes in the financing environment are being closely watched as factors behind the share price adjustments.
The bill-to-book ratio is an indicator of the relationship between future orders and sales. It stood at 1.34 for Murata Manufacturing, 1.58 for Taiyo Yuden and 1.72 for Taiyo Yuden's capacitor business, a high level. Investment decisions should not be based on the bill-to-book ratio alone; capital investment, capacity utilization and profit margin trends should also be considered.
Taiyo Yuden has greater dependence on capacitors, while Murata Manufacturing is investing in peripheral components beyond MLCCs to strengthen its overall capabilities. Although demand fluctuations may have a greater impact on Taiyo Yuden, Murata is expected to offer greater long-term stability due to its scale and capacity for investment.
In conclusion, Murata Manufacturing is considered to have the advantage from a long-term investment perspective. Investors are advised to continue monitoring five areas: orders and the bill-to-book ratio, conversion of orders into sales, capital investment and production capacity, capacity utilization and profit margins, and funding and power constraints.