Q4 Model Update: PT of $28 maintained

Research evidence excerpt

Q4 Model Update: PT of $28 maintained

Japan | Payments, Processors & IT Services

PayPay EquityMayResearch14, 2026

ESTIMATE CHANGEQ4 Model Update: PT of $28 maintained

We update our model following Q4 results and interview with the IR Team, RATING BUY

which is outlined below. Our PT remains at USD28; retain Buy. PRICE $19.69^

PRICE TARGET | % TO PT $28.00 | +42%

Key Points Following Interview: We conducted an interview with the IR team today. The key 52W HIGH-LOW $24.89 - $17.00

points are: 1) Some investors took profits when the shares rose around 50% from the IPO. FLOAT (%) | ADV MM (USD) 98.3% | 23.59

2) Rise in MTU (Monthly transaction users) is a mixture of improvements in user experience,

MARKET CAP $13.3B

benefits of P2P (peer to peer transactions) and rise in merchants. 3) AI will be used in loan

assessments and decrease in call center costs. It is already being used for short term loans to TICKER PAYP

merchants. 4) BoJ (Bank of Japan) rate rise will impact deposits first with around a 40% pass ^Priornoted.trading day's closing price unless otherwise

through and mortgage loans later with a 100% pass through with around a six-month delay. 5)

The dividends will likely be kept at nil as the company invests for long-term growth.

FY (Mar) CHANGE TO JEFe JEF vs CONS

Earnings Estimates: We estimate revenue of ¥457.2bn (consensus: ¥457.9bn, guidance 2026 2027 2026 2027

¥454-462bn) for FY3/27 and adj EBITDA of ¥137.5bn (consensus: ¥132.4bn, guidance OP REV* +2% +2% NA NA

¥134.5-140.5bn). NA NA NA NA

Valuation/Risks: We value PayPay on EV/EBITDA. While the industry average ranges from

*Rev. (B)

10-19x vs PayPay at 24x, we believe PayPay deserves a higher valuation as it has a dominant

position in Japan QR Codes with complementary expansion in card, bank and securities.