Kirin Holdings "Q1 FY12/26 results: the stock is likely to be relatively..."

研报英文原文证据摘录

Kirin Holdings "Q1 FY12/26 results: the stock is likely to be relatively..."

basis and does not include any offsetting

12/27E 246.2 216.6

measures from here. We thus think earnings could run ahead of guidance.

12/28E 232.5 228.6

Q: What were the most noteworthy areas in the results? Rei Ihara

A: As noted above, the key takeaway was the generally resilient top line across regions. Analyst

rei.ihara@ubs.comWhile the company will need to lift prices to address upcoming cost inflation, this result

+81-3-5208 6227

should somewhat alleviate concerns. Another point of interest was slide 5 of the briefing

materials, which highlighted disposal gains and losses linked to structural reforms in Atsushi Seki

each business as a key full-year variance factor. Management indicated at the FY12/25 Analyst

atsushi.seki@ubs.com

results that there would be no portfolio reshuffling on the scale of the Four Roses

+65 6495 6860

divestment, but this suggests to us there could be ongoing, albeit smaller-scale, portfolio

reviews that may generate cash inflows. Ryunosuke Watanabe

Associate Analyst

ryunosuke.watanabe@ubs.com

Valuation: the share price could react somewhat positively

+81-3-5208 6243

Although the anticipated upward revision to guidance did not materialize, the strong Q1

results mean downside to current guidance appears low despite cost pressures from the

Middle East situation. As such, we expect a slightly positive share price reaction. Our

price target of ¥2,700 is derived using an SOTP approach and is also supported by the

historical correlation between PBR and ROE. The current PBR of 1.6X appears to price in

a medium-term ROE of around 12.5%, in line with our FY12/28 ROE forecast of 12.5%,

suggesting limited upside.