OPM of 30% may become a realistic target

Research evidence excerpt

OPM of 30% may become a realistic target

om TSMC in the advanced logic

Absolute and TOPIX-relative share price space, so sales in this area can be expected to increase going forward; 2)

in the DRAM space, the company gets a large share of orders from Micron,

which looks poised to significantly increase its WFE investments; and 3) as

the 3D-NAND market shifts toward stairless architecture, the company should

see expanded business opportunities for its single-wafer cleaning systems.

In view of these trends, we expect investors’ concerns about a loss of market

share to gradually fade.

WATCH: Whether Screen Holdings can actually move into the

investment recovery stage

One key point to monitor is the pace of increase in fixed costs from FY3/28Senior Analyst Yoshitsugu Yamamoto

+81 3 6202 8169 yoshitsugu.yamamoto@mizuho- onward. Given that the WFE market’s growth pace is accelerating, we think

sc.com there is a strong possibility that Screen Holdings’ growth investments will

accelerate as well. (See page 2 for more.) Click here for ESG on

our entire coverage MEASURE: PER of 25x on our FY3/28 EPS forecast

We raise our earnings forecasts and revise our price objective upward from

¥17,000 (20x PER on our FY3/28 EPS forecast) to ¥25,000 (25x PER on our

FY3/28 EPS forecast). We raise our PER target to 25x because we expect

the company to enter a profit recovery phase from FY3/28 onward, and

we believe the equity market will respond enthusiastically to the possibility

of Screen Holdings’ OPM approaching 30%. Incidentally, our new price

objective of ¥25,000 equates to a PER of 18x on our EPS forecast for FY3/29,

which we expect to mark the peak of the current cycle.

Consolidated results and forecasts Share Price: ¥17,090 (7 Jul) 52wks: H ¥19,770 L ¥5,335