FOOD & LIFE COMPANIES: Growth Story in China has only Just Begun

Research evidence excerpt

FOOD & LIFE COMPANIES: Growth Story in China has only Just Begun

IdeaM

RiskRisk RewardReward– FOOD-&FOODLIFE COMPANIES& LIFE(3563.T)COMPANIES (3563.T)

Core name in Japan’s export of conveyor belt sushi

PRICE TARGET ¥13,000 OVERWEIGHT THESIS

Our ¥13,000 PT applies P/E of 38x to F9/27e EPS of ¥348.2. The target multiple is a 30% We appreciate the combination of growth in

premium to the F27e avg. of 29x for 15 listed restaurant stocks with market cap of ¥100bn or overseas Sushiro business with stable

higher. growth in the domestic business. Overseas

The 30% premium is the avg. at which the stock traded from F9/20 to F9/22, and we think it Sushiro business in Hong Kong, mainland

is justified by the strength of domestic and overseas operations compared with industry China, and Thailand are achieving higher

peers. margins than domestic operations,

supporting expectations for 2-digit profit

¥10,174 growth over the medium to long term

Consensus Price Target Distribution ¥7,700.00 ¥13,000 driven by overseas expansion.

MS PT We think a valuation premium over other

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates restaurant names is warranted and rate the

stock OW.

RISK REWARD CHART

Consensus Rating Distribution

JPY 91% Overweight

9% Equal-weight

¥16,000¥16,000(+54.22%)¥16,000(+54.22%)(+54.22%)

0% Underweight

16000 MS Rating

Source: Refinitiv, Morgan Stanley Research

¥13,000¥13,000(+25.30%)¥13,000(+25.30%)(+25.30%)

¥10,375¥10,375¥10,375 Risk Reward Themes

8000 ¥10,000¥10,000(-3.61%)¥10,000(-3.61%)(-3.61%) Secular Growth: Positive

View descriptions of Risk Rewards Themes here

MAY '25 NOV '25 MAY '26 MAY '27

Key: Historical Stock Performance Current Stock Price Price Target

BULL CASE ¥16,000 BASE CASE ¥13,000 BEAR CASE ¥10,000

P/E 46x P/E 38x P/E 29x