First Read: NSK "FY3/26 results briefing" (Neutral) Sasaki

Research evidence excerpt

First Read: NSK "FY3/26 results briefing" (Neutral) Sasaki

9 41.2

growth in new fields, improvements in its business structure (e.g., pricing and costs), and 03/27E 75.2 62.5

structural reforms. The company aims for OP of ¥42bn for industrial machinery. It aims 03/28E 86.7 77.8

to expand earnings through restructuring at production sites in Japan and Europe,

Tsubasa Sasaki

pricing optimization, and higher sales to the repair, robot, and SPE sectors. It targets OP

Analyst

of ¥30bn at the automotive business. It aims to expand earnings through sales tsubasa.sasaki@ubs.com

expansion for electrification-related products and business structure improvements. +813-5208 6207

Management commented that while the contribution from structural reforms is larger

for industrial machinery, the automotive business has higher earnings growth visibility

due to progress with the adoption of electrification-related products.

NTN management integration agreement based on shared awareness of issues,

complementarity

On management integration with NTN, NSK said the deal was expected to strengthen

competitiveness via synergies rather than being just scale-based expansion, as both

firms have a history of global expansion and strong competitiveness in different product

and business areas. With the bearing industry still facing a challenging operating

environment, NSK emphasized corporate culture differences should not be a major

obstacle to integration as the firms share a common understanding of management

issues and cultures valuing diversity and innovation. NSK said it had released its new MTP

ahead of the management integration for greater results once it goes into effect.

Valuation:Our price target is based on a FY3/28E PER of 16X.