Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Suntory- SuntoryBeverage & FoodBeverage(2587.T) & Food (2587.T)

Renewed cost growth, but top line is finding a bottom

PRICE TARGET ¥6,250 OVERWEIGHT THESIS

F12/27e adj. EPS ¥372 x P/E 17x. Adjusted EPS = EPS less trademark amortization. Japan OPM With earnings growth from continued brand

recovery materializes in F12/26, and improvements in overseas OPM and the continued investment and the company’s flexible

strong sales momentum in Asia are expected to drive overall profit growth. We expect the earnings management, we expect continued

market to evaluate SBF as a quality name with stable and sustained profit growth, but we smooth and stable earnings growth over the

apply a discount to the industry average given resurgent cost pressure risk. medium to long term both domestically and

abroad. While risks from higher raw material

¥4,723 costs remain in the near term, we expect

Consensus Price Target Distribution ¥4,000.00 ¥6,250.00 investors to take another look as as topline

MS PT momentum in Japan and Southeast Asia

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates bottoms out and starts to recover, giving

greater visibility on longer-term growth.

While it is slightly disappointing that the

RISK REWARD CHART cash allocation policy is unchanged, we

await further progress as acquisitions would

help resolve the firm’s net cash position.

JPY

¥8,200¥8,200(+77.76%)¥8,200(+77.76%)(+77.76%)

Consensus Rating Distribution

17% Overweight

67% Equal-weight

¥6,250¥6,250(+35.49%)¥6,250(+35.49%)(+35.49%)

6000 17% Underweight

MS Rating

¥4,613¥4,613¥4,613

4000 Source: Refinitiv, Morgan Stanley Research

¥4,200¥4,200(-8.95%)¥4,200(-8.95%)(-8.95%)

2000 Risk Reward Themes

Contrarian: Positive

Secular Growth: Positive