Focusing on new management’s efforts to improve capital efficiency; still a Buy

Research evidence excerpt

Focusing on new management’s efforts to improve capital efficiency; still a Buy

8.6 through FY3/28). We now forecast FY12/27 OP of ¥45.4b, higher than theROA(%, 3/26E RP basis) 6.1

Note: No. of shares includes treasury stock company’s new medium-term OP target (¥45.2b). Nichirei’s recent top-level

meeting reaffirmed our view that M&A in the foods business will remain a Absolute and TOPIX-relative share price

theme in Europe, where the company has established an operational base

for temperature-controlled logistics, so we will be watching developments.

KNOW: Forecasting FY12/26 OP in line with guidance

Our new FY12/26 OP forecast (¥33.8b) matches guidance (¥33.8b; see

Figure 11).

WATCH: Domestic price hikes, overseas ops, management talks

Our focus is on penetration of domestic price hikes, overseas operations, and

the results of deliberations on management issues. Alongside 4Q FY3/26

Senior Analyst Hiroshi Saji results (see our 12 May report), the company presented five key management

+81 3 6202 8274 hiroshi.saji@mizuho-sc.com issues under the new management team and plans to disclose results of a

review of the issues with FY12/26 earnings.

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MEASURE: PER of 19x our FY27 EPS estimate our entire coverage

As before, our price objective is based on a PER of about 19x our FY12/27

EPS before goodwill amortization estimate (¥132.47). Our target multiple

references the average FY27 PER of 21.2x (see Figure 3) for the 12 major

processed food companies under our coverage. We also referenced the

forecast FY27 PERs of Nisshin Seifun Group (14.3x) and House Foods

Group (21.1x).

Consolidated results and forecasts Share Price: ¥2,069.5 (10 Jun) 52wks: H ¥2,157 L ¥1,628

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