Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– LY Corporation- LY Corporation(4689.T) (4689.T)

Strong media presence, e-commerce growth opportunities, PayPay margin expansion

PRICE TARGET ¥500 OVERWEIGHT THESIS

EV/EBITDA 7.0x (2-year fwd) ▪Earnings Outlook: In addition to the

SOTP: Media: We apply the midpoint of the standard 2-year forward EV/EBITDA range for continued expansion of the LINE media

media companies (5–10x). Commerce: We apply the midpoint of the standard 2-year forward business, the company is shifting its e-

EV/EBITDA range for e-commerce companies (5–15x). Strategic Businesses: We apply the commerce strategy from prioritizing GMV

midpoint of the standard 2-year forward EV/EBITDA range for fintech companies (5–15x). growth to monetization. Strategic

businesses deliver strong revenue and profit ¥518

growth, supporting continued double-digit

Consensus Price Target Distribution ¥420.00 ¥650.00 profit growth at the consolidated level.

MS PT

Low single-digit YoY growth.Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates ▪Media:

Search ads remain challenging due to

customer attrition, but LINE Account ads

contribute to revenue expansion. Commerce:

RISK REWARD CHART Mid-single-digit YoY growth. Strategic

changes are driving both growth and margin

improvement, with the membership

JPY program also contributing. Strategic

¥800¥800(+69.28%)¥800(+69.28%)(+69.28%) Businesses: Led by PayPay, with continued

margin expansion.

Consensus Rating Distribution

83% Overweight

¥473¥473¥473 ¥500¥500(+5.80%)¥500(+5.80%)(+5.80%) 17% Equal-weight

400 0% Underweight

MS Rating

200 ¥300¥300(-36.52%)¥300(-36.52%)(-36.52%) Source: Refinitiv, Morgan Stanley Research

0 Risk Reward Themes

JUL '25 JAN '26 JUL '26 JUL '27

Disruption: Positive