Tokyo Gas: Need for tangible efforts to achieve 9% ROE target

Research evidence excerpt

Global Markets Research

Tokyo Gas

19 August 2026

9531.T 9531 JP / EQUITY: JAPAN UTILITIES

Need for tangible efforts to achieve 9% ROE target

Improvement in energy solution segment earnings looks key

We retain our Neutral rating, expect residential city gas sales volume to remain

weak

We revise our earnings estimates for Tokyo Gas in view of 27/3 Q1 results. We lower our

adjusted EPS forecasts (which exclude the impact of pension actuarial differences) for

27/3 onward), mostly to reflect a downward revision to our outlook for residential city gas

sales volume. The LNG spot price in Asia (Platts JKM (Japan/Korea Marker) LNG futures

price) has been high since tensions mounted in the Middle East in March (Figure 1),

resulting in increased JLC gains*. However, profits fell y-y at the energy solution segment,

which has been causing problems for the company. Thus, the segment did not contribute

to profit growth in Q1. We also find it hard to envision any significant growth in residential

city gas sales volume, as usage per household has been falling because of weatherrelated factors and the shift to nuclear families. We calculate our ¥6,750 target price by

multiplying our 28/3 adjusted EPS forecast of ¥399.4 by the Russell/Nomura Large Cap

Index (ex financials) average P/E of 16.9x, retaining our Neutral rating. We lower our

target price by just under 10% to reflect both the downward revision to our adjusted EPS

forecast and a decline in the benchmark P/E multiple. We think any reassessment of the

stock will require energy solution segment profit growth in line with the medium-term

business plan, and tangible efforts to achieve the 29/3 ROE target of 9%.

Rating

Remains

Neutral

Target price

Reduced from 7,460

JPY 6,750

Closing price

JPY 6,051

18 August 2026

+11.6%

Implied upside

Relative performance chart

*The difference between the Japan Liquefied Natural Gas Cocktail (JLC) price and the

company's LNG import price

Source: LSEG, Nomura

We lower our 27/3 adjusted recurring profit forecast by 15%

We forecast 27/3 adjusted recurring profits (excluding the impact of pension actuarial

differences) of ¥109.5bn (down 28% y-y). This is ¥18.6bn (15%) lower than our previous

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