SAKURA internet Finally demonstrating full potential [Erratum]

Research evidence excerpt

SAKURA internet Finally demonstrating full potential [Erratum]

. Following today’s announcement, we are revising our forecasts as follows: 1) 03/28E 283.1 362.9 28 56.8

the number of acquired Rubin units from 800 to 1,040; 2) annual sales from ¥14.0bn to 03/29E 740.1 834.2 13 102.5

¥17.3bn; and 3) the utilisation start-up ratio for Rubin in Q1 FY3/28 from 33% to 66%.

Noritaka Tsutsumi, CFA

Analyst

Q: How have UBS's forecasts changed? noritaka.tsutsumi@ubs.com

For FY3/27, we are lowering our sales forecast and raising our OP forecast. We also are +81-3-5208 6221

raising our earnings forecasts from FY3/28. The main factors behind the FY3/27 revisions

Kenji Yasui

are: 1) raising our quarterly H100/H20 discount rate assumptions by around 2-15%; 2) a Analyst

¥0.7bn downward revision for cloud infrastructure sales, including Sakura Cloud; and 3) kenji.yasui@ubs.com

a review of costs such as product CoGS. However, we are raising our forecasts from +81-3-5208 6211

FY3/28 due to changed assumptions for Rubin. We continue to see scope for an upward

revision to FY3/27 earnings guidance. We are revising up our EPS estimates from ¥113

to ¥147 for FY3/27, ¥283 to ¥363 for FY3/28, and from ¥740 to ¥834 for FY3/29.

Valuation: Entering a new stage

We are raising our price target to ¥6,870 (previously ¥5,980). Our PT is based on a

FY3/28E EV/EBITDA of 8X (8X). We apply a 5% discount to the average multiple of 8.4X

for major GPU cloud service providers. We reiterate that Sakura Internet is moving

toward realising the ideal model for GPU CS, in which abundant profit generated by

high utilisation rates is allocated to additional investment in GPU chips. The results were

announced at 12:30pm, and the share price closed up 6.9% versus the previous day.