Reiterate Buy: Growth reacceleration from FY3/28, with active shareholder returns

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Reiterate Buy: Growth reacceleration from FY3/28, with active shareholder returns

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Obayashi Corporation (1802)

Reiterate Buy: Growth reacceleration from

FY3/28, with active shareholder returns

Reiterate Rating: BUY | PO: 4,000 JPY | Price: 3,085 JPY

Cut PO to ¥4,000 from ¥4,700, reiterate Buy 13 June 2026

Equity

We cut price objective (PO) to ¥4,000 from ¥4,700, but reiterate Buy. While we raise our

FY3/27 EPS forecast by 6% to ¥237.9 from ¥224.7, we lower the applied P/E target to

17x from 21x to reflect greater external uncertainty. We also shift the valuation base Key Changes

year to FY3/27 from FY3/28, as the market is focused on near-term earnings. The 17x (¥) Previous Current

applied P/E implies a c.3% premium to the average for the four major peers, which we Price Obj. 4,700.00 4,000.00

view as justified given our forecast 11% EPS CAGR for FY3/28-29, excluding gains on 2027E Rev (m) 2,690,536.1 2,932,831.2

securities sales, versus the four-peer average of 10%. We reiterate Buy, supported by 2028E Rev (m) 2,786,165.3 3,064,957.8

growth expectations into FY3/28 and a total shareholder return yield of around 5%. 2029E Rev (m) NA 3,202,299.4

2027E EPS 224.70 237.89

Building to drive earnings; ¥40bn annual buybacks forecast 2028E EPS 238.75 241.69

We lift FY3/27-28 forecasts for sales, but largely maintain operating profit (OP) 2029E EPS NA 262.01

forecasts. We forecast FY3/27 OP at ¥192.3bn, down 1.2% YoY, versus consensus at 2027E Op. Profit (m) 192,201.7 192,343.1

¥188.0bn and company guidance at ¥180.0bn. Additional works in both building

construction and civil engineering should drive a 7% upside to company guidance. We Takumi Kasai >>

forecast FY3/28 OP at ¥212.5bn, up 10.5% YoY, versus consensus at ¥214.3bn. We Research Analyst BofAS Japan