Air-con Market Data and Heat Wave Likely to Improve Sentiment

Research evidence excerpt

Air-con Market Data and Heat Wave Likely to Improve Sentiment

sentiment: Daikin Industries' share price has outperformed the TOPIX by 4% in the past

month (as of 30 June). News flows on the heat wave in Europe in June may have supported Chart 1 - Daikin Industries: Multi-split Air

Conditioner Sales in ChinaDaikin's share price performance. We note that Europe accounted for roughly 20% of Daikin’s (Sales, RMB100mn) Daikin Multi-split Air-con Sales YoY (YoY, %)

100air-con sales in FY3/26, of which France 2%, Germany 1%, Central Europe 2%, Spain 1%, Italy 201816 120

14 603%, and UK 2%. Due to restrictions such as housing structure, regulatory issues, and insufficient 80 12 40

installers, the magnitude of additional sales in FY3/27 alongside the heat wave may not be 108 200

6 -20

4 -40as strong as the market expects, in our view. Potential heat wave in the US in July may also 2 -60

support Daikin's share price performance in the near term, in our view. The US made up 41% 0 1 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3 4 5 6 7 8 91011121 2 3 4 5 -80

of Daikin's air-con sales in FY3/26 (40% of OP). .Source:2021Jefferies 2022estimates2023based on 2024ChinaIOL 2025data 2026

Revising profit forecast: We raise our FY3/27 OP forecast to ¥457bn from ¥443bn. This beats Chart 2 - Daikin Industries: Air-conditioning OP

company guidance of ¥436bn, because a weaker JPY than mgmt's assumptions (¥145/USD by Region

and ¥170/EUR) should offset the impact from potential higher raw material cost than mgmt's 14%

estimate due to an inflationary environment. The revision to our forecast mainly reflects 8% 40%

our weaker JPY assumptions (¥155/USD and ¥180/EUR) than before (¥150 and ¥170). We 14%

estimate Q1 FY3/27 OP of ¥121bn.