Forecasting guidance hike with 1Q results release, reiterate Buy rating

Research evidence excerpt

Forecasting guidance hike with 1Q results release, reiterate Buy rating

ng-term growth potential and strong earnings momentum. Absolute and TOPIX-relative share price

KNOW: Expecting NP to rise by ¥49.5b YoY in FY3/27

We forecast FY3/27 NP of ¥420.0b (up ¥49.5b YoY). By segment, we expect

NP to rise by ¥14.1b YoY in green infrastructure thanks largely to gains by

the renewable energy business centering on Europe, increase by ¥10.2b

in circular economy on the dropping out of the one-time impairment loss at

the North American recycling business Radius last year and the recovery of

lithium prices, increase by ¥10.0b in Africa as a result most notably of higher

auto sales volume, and rise by ¥6.0b in mobility.

WATCH: Auto sales volume, memory-related businessSenior Analyst Kanako Mizuno

+81 3 6202 8130 kanako.mizuno@mizuho-sc.com Production in the Middle East has been reduced, but if the excess capacity

from this is redirected to supply Africa, it could be a positive the company.

Click here for ESG on Our focus is on higher profits in the digital solutions segment from the rise

our entire coverage in lithium prices.

MEASURE: ROE-based PBR, dividend yield, and buyback expectations

Our price objective is based on the average (C) of our price objective

estimates using (A) ROE-based PBR and (B) dividend yield, with a premium

(D) to reflect our share-buyback expectations. We arrive at our new price

objective of ¥8,480 by taking (C) ¥7,510, which is the average of (A) ¥7,445

and (B) ¥7,576, and applying (D) a 12.9% premium. See Figure 1 for more

details. We roll forward the valuation period from FY3/27–FY3/28 to FY3/28–

FY3/29 for the average ROE and DPS estimates used to calculate our price

objective.