We raise profit forecasts on improved sales outlook: We forecast rise in orders, but note risk of order placement delays

Research evidence excerpt

We raise profit forecasts on improved sales outlook: We forecast rise in orders, but note risk of order placement delays

Global Markets Research

15 July 2026Toda

1860.T 1860 JP / EQUITY: JAPAN CONSTRUCTION

RatingWe raise profit forecasts on improved sales

Remains Neutraloutlook

Target price

Increased from 1,390 JPY 1,740We forecast rise in orders, but note risk of order placement delays

Closing price JPY 1,505.5We raise our forecasts and retain our Neutral rating 14 July 2026

We raise our earnings forecasts for Toda in light of 26/3 results and follow-up research,

Implied upside +15.6%while retaining our Neutral rating. We raise our profit forecasts for 27/3 onwards, having

raised our sales outlook to reflect strong orders, especially at the construction business in

Japan. We retain our target price calculation methodology, but factor in the upward

revision to our 27/3 EPS forecast and the rise in the benchmark Russell/Nomura Large

Relative performance chartCap (ex financials) average P/E, and accordingly obtain our new target price of ¥1,740 by

multiplying our 27/3 EPS forecast of ¥123.9 by a P/E of just over 14x. However, we

increase the discount we apply to the Russell/Nomura Large Cap (ex financials) average

from 25% to 30% to reflect the likelihood that 27/3 earnings will include one-time gains on

the sale of strategic shareholdings.

We forecast sales growth of 16% in 27/3, but operating profit growth of only 5%

because of deteriorating margins

We raise our 27/3 sales forecast from ¥687.0bn to ¥750.0bn (up 16% y-y) to reflect better-

than-expected orders for building construction and civil engineering projects in Japan in

26/3 Q4, and expected contributions from city-center redevelopment projects. However,