Tough externals, but upbeat on growth potential and shareholder returns

Research evidence excerpt

Tough externals, but upbeat on growth potential and shareholder returns

17 June 2026

KNOW: Forecasting record-high OP on streamlining, non-Honda sales

growth, consolidation boost (continued from page 1)

There is a risk of a guidance miss in volume terms, but we expect earnings to beat

guidance based on differences in forex assumptions (see below) and Stanley

Electric’s (in our view) conservative assumptions regarding the impact of the Middle

East situation on raw material prices and the extent to which it can pass on higher

costs to customers.

We assume Honda’s global automobile production volume at 3.32m vehicles (down

2% YoY). While we anticipate a major slump in China, we expect higher volume in

North America, partly due to easy YoY comps created by production cuts in FY3/26

due to semiconductor shortages. We assume an exchange rate of ¥160/$ (Stanley

Electric assumes ¥150/$) and estimate that each ¥1 in yen depreciation versus the

dollar (including linked movements against other currencies) boosts full-year OP by

¥300m (0.5% of our FY3/27 OP estimate).

ESG & shareholder returns

Environment

As it works to achieve a sustainable development of society and business, Stanley

Electric provides products that are considered essential to society through its

operations rooted in manufacturing and takes measures to protect the environment

with its basic environmental philosophy, environmental proclamation, and

environmental policy. The company set environmental targets in FY21 to achieve

carbon neutrality, aiming for a 50% reduction in CO2 emissions from its business

activities by FY30 (versus the FY19 level) and to reach carbon neutrality by FY50. The

company declared its support for the Task Force on Climate-related Financial

Disclosures (TCFD) in June 2023.

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