JFE Holdings (5411): Cut PO to ¥1,700; domestic steel spread weakness persists; reiterate Underperform

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JFE Holdings (5411): Cut PO to ¥1,700; domestic steel spread weakness persists; reiterate Underperform

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JFE Holdings (5411)

Cut PO to ¥1,700; domestic steel spread

weakness persists; reiterate Underperform

Reiterate Rating: UNDERPERFORM | PO: 1,700 JPY | Price: 1,765 JPY

11 May 2026

Lower PO from ¥1,750 to ¥1,700; reiterate Underperform Equity

Despite an upgraded outlook for India-related steel earnings, we revise down earnings

forecasts due to a deterioration in steel margin assumptions driven by rising costs for

materials and auxiliary inputs, and accordingly lower our price objective. Given the rising Key Changes

contribution of India-related steel earnings (around one-third of net profit in FY3/27), we (¥) Previous Current

raise the valuation multiple applied to the price objective. In addition, from the start of Price Obj. 1,750.00 1,700.00

the new fiscal year, we shift the earnings base year for price objective calculation to the 2027E Rev (m) 4,672,000.0 4,856,000.0

following fiscal. The stock is valued at FY3/28 P/E of 9.5x (previously FY3/27 P/E of 2028E Rev (m) 4,577,000.0 4,805,000.0

10.0x; FY3/28 P/E was 8.7x). Our Underperform rating is based on the expectation that, 2029E Rev (m) NA 4,707,000.0

despite growth in India-related steel earnings, overall performance will fall short of 2027E EPS 175.23 205.93

consensus due to weakness in domestic operations. 2028E EPS 200.69 179.21

2029E EPS NA 201.21

Earnings forecasts lowered: steel spreads deteriorating 2027E EBITDA (m) 495,000.0 493,000.0

2028E EBITDA (m) 535,000.0 510,000.0amid higher material costs

Business income, excluding inventory valuation effects, is revised down to ¥173.0bn 2029E EBITDA (m) NA 535,000.0

from ¥210.0bn for FY3/27, and to ¥210.0bn from ¥235.0bn for FY3/28.