Denso Corp
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
¥1,932.00 | Gvbzcj | Xtcbthccd |
Denso Well Positioned for Medium-Term Margin Expansion, but Expect Near-Term Headwinds
Business Strategy and Outlook
As one of the largest global automotive component suppliers, Denso has a diverse portfolio of products, ranging from traditional powertrain/thermal components for internal combustion engine vehicles to relatively newer technologies such as electrification/mobility-related components. To adapt to a “once in a hundred year” transformation in the automotive industry, the company has been spending high amounts of R&D over the recent years. In Japan, the company has been undergoing various joint development projects with its main original equipment manufacturer customer, Toyota Motor, as well as other components supplier companies in the Toyota Group, to jointly develop various technologies (including semiconductors, electrification, advanced driver-assistance systems) to adapt to increasing competition from this rapid shift in the environment. We expect these initiatives will prevent commoditization of its key technologies, thus allowing the company to maintain its narrow moat.