The market has been leaning away from and ST HDLtd for weeks, with the share price down about 15% over three months. This quarter’s story is focused on pressure on profitability. Basic earnings per share slipped to ¥44.16 on revenue of ¥71,792m, a softer profit profile than the recent run rate implied by a trailing P/E of 14.6x.

Investors are treating the stock as a value play with a problem. The key question is whether this profit squeeze is a brief interruption in an otherwise steady earnings record or the beginning of a tougher phase for and ST HDLtd.

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