Still expect strong growth on maintenance, modernization; market-share upside

Research evidence excerpt

Still expect strong growth on maintenance, modernization; market-share upside

dance

Payout ratio(%, 3/27E) 52.8 We raise our FY3/27 OP forecast to ¥13.4b, partly reflecting higherEquity ratio(%, 3/27E) 62.6

BPS(¥, 3/27E) 164.2 assumptions for 1) modernization and repair sales (given the 4Q FY3/26

PBR(x, 3/27E) 9.8 strong performance of the businesses) and company-wide GPM; but also forROE(%, 3/27E NP basis) 32.6

ROA(%, 3/27E RP basis) 30.9 2) depreciation, owing to greater investment in core systems. On a YoY basis,

Note: No. of shares includes treasury stock we expect a) greater net growth in maintenance units (from 12,790 units to

Absolute and TOPIX-relative share price 14,950 units excluding M&A), and b) further growth in modernization units

and higher average selling price (ASP). We think guidance is cautious as

usual and thus see upside for both sales and OP. We forecast a corporate

tax rate of 33.9% (FY3/26 rate: 30.9%) due to a higher statutory effective tax

rate and dropout of prior-year one-offs.

WATCH: Net rise in maintenance units; higher modernization ASPs

For now, we await 1Q results to see 1) whether the increase in sales staff

drives a larger net increase in maintenance units, and 2) the sustainability and

scale of ongoing modernization ASP increases supported by robust demand.

On the first point, we note maintenance sales headcount rose from about 120Analyst Masanobu Nagao

+81 3 6202 8296 masanobu.nagao@mizuho-sc.com at end-2Q FY3/26 to about 130 at end-3Q, and 146 at end-4Q, and apparently

Senior Analyst Takeshi Tanaka reached about 160 as of the 21 May results briefing.+81 3 6202 8657 takeshi.tanaka@mizuho-sc.com

MEASURE: Applying PER of about 40x to our FY3/28 EPS forecast

Click here for ESG on We raise our price objective to ¥2,400.