Still plenty of catalysts; reiterating Buy rating

Research evidence excerpt

Still plenty of catalysts; reiterating Buy rating

hares includes treasury stock looking high at 32%, we expect most of this growth to come from orders

Absolute and TOPIX-relative share price already received (see Figure 5). We think significant delays in projects will

be limited and therefore see a comparatively high probability of our forecasts

being achieved. (More on page 2)

WATCH: Focusing on MVNO business

In preparation for the discontinuation of analog line usage in March 2029,

prefectural police departments across Japan are pushing ahead with the

transition of 70,000 traffic signals to digital communication, and Nippon Signal

provides these services as an MVNO operator. This is a recurring revenue

business, and while losses are likely in the initial phase of operations due

to the drag from depreciation charges for the installed signal equipment,Analyst Yosuke Saika

+81 3 6202 8549 yosuke.saika@mizuho-sc.com profitability should be extremely high once declining-balance depreciation

ends after five years. For FY3/29, the final transition year, we forecast sales

Click here for ESG on of around ¥3.0b and a turn to operating profit and then expect a steady

our entire coverage acceleration in profitability improvement in subsequent years as the burden

of depreciation lessens.

MEASURE: Applying PER of just over 13x to our FY3/27 EPS forecast

Our price objective of ¥2,200 is based on a PER of just over 13x and our

FY3/27 EPS forecast. We lower our fair-value multiple from 15x previously

due to expectations for the gradual pricing in of growth prospects for FY3/27

onward.

Consolidated results and forecasts Share Price: ¥1,585 (7 Jul) 52wks: H ¥1,809 L ¥1,008

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

(¥m ) (%) (¥m ) (%) (¥m ) (%) (¥m ) (%) (¥) (x) (x)