Housing Fixtures: Housing Fixtures Update: Remain Focused on Relatively Undervalued Rinnai

Research evidence excerpt

Housing Fixtures: Housing Fixtures Update: Remain Focused on Relatively Undervalued Rinnai

Idea

June 8, 2026 06:41 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MHousing Fixtures | Japan Ryo Yagi

Equity Analyst

Housing Fixtures Update: Ryo.Yagi@morganstanleymufg.com +81 3 6836-8938

Remain Focused on Relatively

Undervalued Rinnai Housing Fixtures

Japan

Despite high interest in their growth potential, demand remains Industry View In-Line

subdued in overseas markets (US, China, Europe). We think the What’s Changed

Sanwa Holdings (5929.T) From To

industry will continue to lack much appeal from a macro top- Price Target ¥4,100 ¥3,800

down standpoint, but that names with profit growth TOTO (5332.T) From To

expectations/lower valuations may draw attention. Price Target ¥4,800 ¥6,100

Rinnai (5947.T) From To

Key Takeaways Price Target ¥5,200 ¥5,000

US pre-owned housing demand is not greatly improved, China demand for both LIXIL (5938.T) From To

Price Target ¥1,700 ¥1,600

new and existing homes is subdued, and Europe demand remains mostly soft too.

Domestically, remodeling demand is healthy but new-build demand weak.

Stock selection: Rinnai (OW)>Sanwa (EW)>TOTO (EW)>LIXIL (EW)>Noritz (UW)

Rinnai: We cut our forecasts but see the stock as undervalued on P/E with mid-term

growth via higher profits in the US and Japan and future earnings prospects not

priced in. But we do think near-term impacts from inventory correction/weak

demand in China and low demand/rising costs in the US are reflected. 13.3x P/E on

our F3/27e EPS (June 5 close) is relatively low, and we see rising expectations of

earnings growth lifting the shares. Also note possible share buybacks in F3/27.

Sanwa HD: US demand, important for the share price, is subdued and does not