Electronic Components: Connector: Limited profit upside due to rising material cost, smartphone weakness

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Electronic Components: Connector: Limited profit upside due to rising material cost, smartphone weakness

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Electronic Components

Connector: Limited profit upside due to

rising material cost, smartphone weakness

Price Objective Change

25 May 2026

Reiterate cautious stance on the connector sector Equity

We reiterate Underperform on Hirose Electric (6806) and Japan Aviation Electronics Japan

(6807). While a recovery in order trends for general industrial equipment is visible, (1) we Electronics

believe rising prices of materials such as gold and copper will limit profit upside, (2) the

weak trend in the smartphone market continues, and (3) the profit impact from AI server MasashiResearch AnalystKubota >>

related businesses remains small compared with other electronic component makers. BofAS Japan

+81 3 6225 7138

These factors underpin our continued cautious investment stance.

Hazel Xue >>

Hirose (6806): Elevated valuation versus earnings growth ResearchBofAS JapanAnalyst

+81 3 6225 6275

We revise Hirose Electric’s earnings forecasts as shown in Exhibit 1 and change the

price objective (PO) from ¥20,000 to ¥22,000. The base for the PO is a P/E of 21x our

FY3/28 estimate (previously 20x). This reflects a re-rating trend across the electronic

components sector. The recovery in connector orders for general industrial equipment is

the driver behind the upward revision to earnings forecasts and the PO. However, due to Exhibit 1: Reiterate cautious stance on

rising raw material prices and higher personnel costs, upside in margins is limited. Given connectors

that EPS growth over the next five years is likely to remain at 6%, the current share Stocks mentioned in report

price valuation appears elevated. Contribution to earnings from AI server related