Logistics ops look solid, but profitability in non-logistics ops still an issue

Research evidence excerpt

Logistics ops look solid, but profitability in non-logistics ops still an issue

growth and believe

Absolute and TOPIX-relative share price a further rise in valuations will likely require the non-logistics businesses to

deliver better margins and generate synergies with the logistics business. In

the short term, however, we think major improvement is unlikely.

WATCH: Benefits from structural reforms in the product segment

Alongside FY3/26 results, the company announced measures to improve

profit margins in the product segment. It aims to improve earnings by

consolidating production bases and bringing some products in-house, and it

forecasts an annual profit boost of around ¥650m from FY3/28. We are also

focusing on this as an example of the company improving the profitability of

Analyst Rintaro Fujimoto non-logistics businesses acquired in past M&A deals.

+81 3 6202 8170 rintaro.fujimoto@mizuho-sc.com The company also plans to reorganize its life support and trading & commerce

Senior Analyst Katsuhiko Suzuki+81 3 6202 8632 katsuhiko.suzuki@mizuho-sc.com businesses, which we are hopeful leads to better management efficiency.

MEASURE: Applying PER of about 14x

Click here for ESG on We calculate our price objective based on a PER of around 14x on our

our entire coverage FY3/27 EPS estimate (¥140.4). Our target multiple references the average

forward PER for five 3PL companies based on FY26 Bloomberg consensus

estimates. The company’s high-value-added logistics services such as cold

chain logistics could earn the stock a premium over the five 3PL companies.

However, the profitability of the non-logistics businesses is a discounting

factor, so we believe it is appropriate to value the stock using the average

PER of these five peers.