Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

Risk Reward - Kao (4452.T)Top PickRisk Reward – Kao (4452.T)

Diversified portfolio to show resilience amid headwinds of higher material costs

PRICE TARGET ¥3,600 OVERWEIGHT THESIS

F12/27e EPS ¥167 x P/E 21x With raw-material inflation increasingly seen

Target multiple in line with the long-term historical average P/E. While the company has as a risk, Kao’s relative ability to pass

already demonstrated solid earnings momentum, we incorporate the appeal of its ability to through costs in its Chemicals business, a

reaccelerate topline growth and drive 10% OP CAGR on a medium‑term basis. reacceleration in cosmetics growth, and

further room for price hikes in Japan’s

¥3,682 household & personal care market could

Consensus Price Target Distribution ¥3,100.00 ¥4,150.00 help underpin earnings stability. We expect

MS PT continued price increases in Japan and

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates upside potential to FY26 sales growth in

domestic Fabric & Home Care and

Cosmetics. We also expect momentum in

RISK REWARD CHART Europe/US hair care to improve through

FY26, with the impact more likely to

¥4,650¥4,650(+37.41%)¥4,650(+37.41%)(+37.41%) become visible in 2H. We also see potential

JPY for volume growth in the US Chemicals

business.

¥3,600¥3,600(+6.38%)¥3,600(+6.38%)(+6.38%) Consensus Rating Distribution

¥3,384¥3,384¥3,384

3000 69% Overweight

31% Equal-weight

¥2,850¥2,850(-15.78%)¥2,850(-15.78%)(-15.78%)

0% Underweight

2000 MS Rating

Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

0 Pricing Power: Positive

JUL '25 JAN '26 JUL '26 JUL '27 Secular Growth: Positive

Key: Historical Stock Performance Current Stock Price Price Target Self-help: Positive

View descriptions of Risk Rewards Themes here