1Q results: Buyback signals confidence in earnings and cash generation

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KIOXIA (285A)

1Q results: Buyback signals confidence in

earnings and cash generation

Reiterate Rating: BUY | PO: 90,000 JPY | Price: 46,500 JPY

01 August 2026

Raise PO to ¥90,000 and reiterate Buy

While 2Q guidance may have fallen short of the expectations of the more bullish

investors, we view it as broadly within the expected range. Following the results

announcement, we make minor revisions to our earnings estimates and raise our price

objective (PO) to ¥90,000 from ¥87,500, while maintaining our applied P/E multiple of

9.5x our FY3/27 EPS estimate. We expect NAND industry capex to remain disciplined

through the use of long-term contracts, supporting stable ASPs through 2028. Combined

with the start of meaningful shareholder returns from end-FY3/27 and the potential for

flexible share buybacks, we reiterate our Buy rating on Kioxia.

Estimate 2Q ASP up 19% QoQ, bit growth 14% QoQ

Kioxia’s 1Q OP came in at ¥1.326tn (vs. our estimate of ¥1.385tn and the Visible Alpha

[VA] consensus of ¥1.380tn). According to the company, ASP rose approximately 70%

QoQ, while bit growth was in the low single-digit percentage range QoQ. Management

noted that a low-single-digit percentage portion of bit shipments was deferred into 2Q

due to delays in air freight transportation.

The company's 2Q guidance calls for revenue of ¥2.39tn, up 35% QoQ (vs. the VA

consensus of ¥2.427tn), and OP of ¥1.90tn (vs. ¥1.937tn). Following the results, we

estimate 2Q OP of ¥1.918tn, assuming ASP growth of 19% QoQ and bit growth of 14%

QoQ. We also understand that pricing negotiations have been completed for roughly half

of projected 2Q bit sales as of today.

Announces ¥800bn share buyback

The company announced a share buyback program of up to ¥800bn, equivalent to 5.5%

of shares outstanding. Management cited two key reasons: 1) the recent share-price

decline has created an attractive opportunity to enhance EPS; and 2) improving earnings

are expected to generate excess cash. We view the buyback positively as a signal of

management's confidence in the company's earnings outlook.

Estimates (¥)

EPS

EPS Change (YoY)

BPS

Valuation

P/E

P/B

EV/ EBITDA*

Free Cash Flow Yield*

3/25A

3/26A

…