Preferences based on simple risk-reward amid an unclear cycle; stay Buy on Kubota: JAPAN MACHINERY: CONSTRUCTION

Research evidence excerpt

Preferences based on simple risk-reward amid an unclear cycle; stay Buy on Kubota: JAPAN MACHINERY: CONSTRUCTION

Equity Research

13 July 2026 | 4:50PM JST

JAPAN MACHINERY: CONSTRUCTION

Preferences based on simple risk-reward amid an unclear cycle; stay Buy

on Kubota

The construction machinery sector is currently in a phase of structurally poor Takeru Adachi

+81(3)4587-4067 |

visibility where entirely different cyclical phases co-exist depending on end demand, takeru.adachi@gs.com

Goldman Sachs Japan Co., Ltd.

making it difficult to uniformly determine the direction of the sector as a whole.

Yuichiro IsayamaWhile macroeconomic tailwinds, such as the easing of US tariffs announced in June, +81(3)4587-9806 |

are acting to support earnings, stock selection remains difficult, as companies yuichiro.isayama@gs.comGoldman Sachs Japan Co., Ltd.

showing clear visibility on their earnings direction are limited, primarily due to Takato Enoki

fluctuations in demand. In this report, we summarize the demand environment for +81(3)4587-1739takato.enoki@gs.com|

each end market, and update our earnings estimates and views for the companies in Goldman Sachs Japan Co., Ltd.

our coverage.

General construction: Upturn in inventory cycle a tailwind, underlying end demand

the focus

Looking at construction demand trends, particularly for the largest market of North

America, firmness in certain sectors such as data centers is attracting attention. At

the same time, US construction investment has been trending mostly flat from the

end-FY2024 level, even before adjusting for inflation. While it remains at a

historically high level, slight downside risks are beginning to be recognized, rather

than a scenario of significant upside in construction investment from here, due to