Changing our view on pricing strategy; expecting GPM to rise

Research evidence excerpt

Changing our view on pricing strategy; expecting GPM to rise

ny’s

market share to rise as a result of competitive pricing.

Absolute and TOPIX-relative share price

KNOW: Environment to aid price hikes by SPE makers

We understand that not only Tokyo Electron, but also other SPE

manufacturers are raising prices. They appear to be hiking prices to differing

degrees and with differing strategies, which makes it difficult to quantify

pricing across the board. However, semiconductor manufacturers with high

capex levels are benefiting from profit growth driven by rising chip prices, and

we believe some benefits from this will also flow back to SPE manufacturers

under the current environment. We see positive implications for many SPE

manufacturers in the short term. From a medium/long-term perspective, our

Senior Analyst Yoshitsugu Yamamoto focus is on whether the company has put in place an internal framework for+81 3 6202 8169 yoshitsugu.yamamoto@mizuho-

sc.com lifting ASP (pricing based on its competitive strength).

WATCH: Creation of market share growth story Click here for ESG on We are encouraged by the increased likelihood of GPM improvement, and our entire coverage would be even more upbeat if a clear scenario for market share expansion

were to emerge. (See page 2 for more on this.)

MEASURE: Target FY3/28 PER of 30x

We raise our price objective from ¥56,000 to ¥70,000 to reflect our upwardly

revised earnings forecasts. As before, we derive our price objective by

applying a PER of 30x to our FY3/28 EPS estimate. Our new price objective

equates to a PER of 22x based on our peak EPS forecast for the current

cycle (FY3/29).

Consolidated results and forecasts Share Price: ¥72,760 (15 Jun) 52wks: H ¥74,800 L ¥19,870

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