Still a Buy; ROE still improving as domestic operations perform solidly

Research evidence excerpt

Still a Buy; ROE still improving as domestic operations perform solidly

3/27 and from ¥115.1b to ¥116.4b in FY3/28. In the finance business, we

expect Saison Fundex’s real estate-backed loans and guarantee business

to continue to perform well. In the parent’s investment loans business, we

envisage a continued decline in the loan balance due to early repayments,

but we expect rising interest rates to limit the decline in earnings. (See page

2 for more on this.)

WATCH: Growth appetite shown in next medium-term plan

Credit Saison plans to roll out a new medium-term plan in FY3/28. During

the earnings call held on the day of the results announcement, the company

noted that it aims to achieve discontinuous growth even in domesticSenior Analyst Naruhiko Sakamaki

+81 3 6202 8476 naruhiko.sakamaki@mizuho-sc.com operations, and it appears to be seeking investment opportunities in Japan.

The company still has some of the initial investment budget in its current

Click here for ESG on medium-term plan, and we believe it now has greater capacity for investment

our entire coverage on a risk-weighted basis than when it formulated its medium-term plan, due

to the slow pace of growth overseas. For the next medium-term plan, we will

focus on the likelihood of achieving accelerated growth in Japan, in addition

to overseas operations (the target of initiatives under the current plan).

MEASURE: Price objective of ¥5,570 based on PBR

Our ¥5,570 price objective is based on our end-FY3/27 BPS estimate

(¥5,659) and a target PBR of 0.98x (previously 1.01x). The target PBR is

based on our average ROE estimate of 9.8% for our five-year forecast period

to reflect the company’s medium-term growth prospects. Our price objective

equates to a PER of 10.3x on our FY3/27 EPS estimate (¥538).