Improved department store earnings momentum, eye on supermarket business reforms

Research evidence excerpt

Improved department store earnings momentum, eye on supermarket business reforms

nd, the supermarket business

Absolute and TOPIX-relative share price is moving to establish a new business style, either for customers focused on

high-value added products or one for price-conscious consumers to adapt

to diverging consumer trends while standardizing operations. Our focus

remains on progress with structural reforms in the supermarket business.

WATCH: Next medium-term plan

H2O Retailing’s long-term business vision through FY3/31 targets OP of at

least ¥35.0b–¥40.0b and ROE of at least 8%, and calls for the company to

focus on growing its overseas customer businesses, including inbound tourist

demand, as well as establish a business structure as a “communication

retailer”. We are watching for the details of the company’s next MTP, set toSenior Analyst Toshio Takahashi

+81 3 6202 8325 toshio.takahashi@mizuho-sc.com start in FY3/28, with a particular focus on its capital policy.

Senior Analyst Hideya Asaeda+81 3 6202 8598 hideya.asaeda@mizuho-sc.com MEASURE: Raising our price objective to ¥2,500

We raise our price objective to ¥2,500, which is based on a PBR of about

Click here for ESG on 0.8x on our FY3/28 BPS estimate. This reflects changes to our earnings

our entire coverage forecasts and the rolling forward of our valuation base year from FY3/27 to

FY3/28 since we are now in a new fiscal year. As before, our price objective

references the stock’s average PBR for the past two years (about 0.8x).

Consolidated results and forecasts Share Price: ¥2,523.5 (18 May) 52wks: H ¥2,619 L ¥1,844

Term Sales YoY OP YoY RP YoY NP YoY EPS PER EV/EBITDA

(¥m ) (%) (¥m ) (%) (¥m ) (%) (¥m ) (%) (¥) (x) (x)

FY3/25 681,759 3.7 34,830 33.0 35,909 28.8 34,842 59.1 295.5 – –