SMS: Focus on Initiatives to Improve Corporate Value

Research evidence excerpt

M

Update

August 5, 2026 06:30 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.+

SMS (2175) | Japan

Katsumi Arai

Equity Analyst

Focus on Initiatives to Improve

Corporate Value

Akiho Toyama

Equity Analyst

What’s Changed

SMS (2175.T)

From

To

Price Target

¥1,600

¥2,100

Share price has risen due to SMS's increased focus on corporate

value enhancement, as highlighted during the F3/26 results. We

lift our PT from ¥1,600 to ¥2,100, and continue to monitor

corporate value enhancement initiatives.

Key Takeaways

No change to our full-year forecast, but we lift our PT from ¥1,600 to ¥2,100.

We revise our valuation framework to reflect the stock's re-rating driven by the

company's heightened focus on corporate value enhancement.

Valuation: We raise our PT to ¥2,100, based on our F3/27 EPS forecast of ¥82.8 and

P/E 25x, the average since F3/26 when SMS demonstrated a stronger commitment

to enhancing corporate value. Our previous PT of ¥1,600 was based on our F3/28

EPS forecast of ¥94.6 and P/E 17x, derived from the stock's historical average P/E of

32x since listing (adjusted for one-off losses in F3/26) minus one standard deviation.

The discount reflected lower profitability versus historical levels. Our revised PT

reflects our view that the recent re-rating, driven by heightened focus on corporate

SMS (2175.T, 2175 JP)

Mid Small Cap/Non-Manufacturer | Japan

Stock Rating

Industry View

Price target

Up/downside to price target (%)

Shr price, close (Aug 4, 2026)

Mkt cap, curr, basic (bn)

Div yld (03/27e) (%)

Equal-weight

In-Line

¥2,100

(5)

¥2,206

¥181.1

1.4

Fiscal Year Ending

03/26 03/27e 03/28e 03/29e

Revenue, net (¥bn)

Operating profit (¥bn)*

Recurring profit (¥bn)*

Net income (¥bn)*

EPS, basic (¥)*

Prior EPS, basic (¥)*

EPS (¥)**

Prior EPS (¥)**

P/E, basic*

P/BV, basic

ROE (%)*

EV/EBITDA, basic

64.7

6.8

8.7

(14.3)

(173.7)

NM

5.0

(30.3)

12.6

71.4

7.0

9.2

6.8

82.8

82.5

82.8

82.5

26.6

5.9

25.4

16.7

77.4

8.1

10.5

7.8

95.0

94.6

95.0

94.6

23.2

5.0

25.2

14.9

83.4

9.2

11.8

8.7

106.0

105.5

106.0

105.5

20.8

4.3

24.2

13.4

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

framework

** = Based on consensus methodology

* = GAAP or approximated based on GAAP

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