Results. Renishaw’s FY19 results slightly undershot the bottom end of its guidance ranges (£574m revenue v £580-600m range, £103.9m adjusted PBT v £105-120m), although we have amended the latter to £105.8m, excluding asset impairment and GMP equalisation charges. The group has very little visibility, but it maintains a dialogue with potential customers. Guidance was first introduced in January, at a level below consensus, and it was subsequently reduced twice as customers’ indicated purchases failed to materialise. We have cut our EPS estimates by 9% and 10% for FY20E and FY21E. Markets. Renishaw has blamed a lack of follow-on orders from Far Eastern consumer electronics customers for much of the downturn in business, and has noted the strength of activity in its additive manufacturing, automation (flexible gauging) and fixturing product lines in Metrology, along with the spectroscopy and medical dental products in Healthcare. However, we note that Japanese machine tool orders are down by approximately 30% (in Yen) in the calendar year to date, and that this is likely to have affected Renishaw’s related products. Strengths. Renishaw is relentlessly focused on developing technologies with the potential for strong adoption in manufacturing and medical markets (its substantial in-house production brings first-hand insight into possible areas for growth), and protecting and monetising the resulting IP. Its pricing power supports gross margins at the top end of the range among UK industrials. The company is also strongly cash generative and has over £100m of net cash. Our view. Renishaw has a long-term strategy that has been very successful so far, and we agree that its sales drivers are robust on that timescale. On a one-year view, however, we consider the shares vulnerable to de-rating. Sell.