Briefing: Guidance still conservative despite significant upward revision

Research evidence excerpt

Accessible version

Sumitomo Electric Industries (5802)

Briefing: Guidance still conservative

despite significant upward revision

Maintain Rating: BUY | PO: 4,125 JPY | Price: 2,184 JPY

01 August 2026

Briefing: 1Q Info-communications affected by

construction and equipment issues

Equity

1Q OP came in at ¥97.1bn, exceeding our estimate of ¥88.0bn and consensus of

¥82.7bn. The company raised OP guidance to ¥195bn from ¥167bn for 1H and to

¥450bn from ¥425bn for FY3/27. The revised 1H OP guidance is above consensus of

¥181.1bn and our pre-results estimate of around ¥190bn. Though positive, the earnings

beat was driven largely by strong Electronics performance, benefits from higher copper

prices in Environment & Energy, and increased carbide tool orders in Industrial Materials

& Others due to tungsten shortages. Info-communications OP was ¥27.2bn, below our

estimate of ¥33.2bn.

Info-communications demand solid; guidance conservative

In Info-communications, earnings were affected by prolonged construction work related

to transmission device capacity expansion, equipment issues and polyethylene shortages

in optical cables. However, management said AI server-related demand has strengthened

further versus three months ago. The revised guidance reflects only the 1Q earnings

beat, suggesting potential upside from 2Q onward. The company assumes

¥150/US$ from 2Q. Given the favorable outlook, we maintain Buy.

Estimates (¥)

EPS

EPS Change (YoY)

Consensus EPS (Visible Alpha)

Dividend / Share

BPS

Valuation

P/E

Dividend Yield*

P/B

EV/ EBITDA*

Free Cash Flow Yield*

3/25A

3/26A

3/27E

3/28E

3/29E

Other GAAP

62.12

29.4%

118.44

90.7%

24

734.2

39

879.4

110.59

-6.6%

109.08

42

957.6

137.51

24.3%

131.01

52

1,059.8

160.59

16.8%

156.12

61

1,172.3

35.2x

1.1%

3.0x

15.0x

3.0%

18.4x

1.8%

2.5x

12.5x

3.1%

19.7x

1.9%

2.3x

11.3x

0%

15.9x

2.4%

2.1x

9.4x

2.7%

13.6x

2.8%

1.9x

8.3x

3.8%

* For full definitions of iQ method SM measures, see page 13.

>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst

under the FINRA rules.