Sompo Holdings (8630): DPS to grow at 19% CAGR through FY3/31, with long-term undervaluation unchanged

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Sompo Holdings (8630): DPS to grow at 19% CAGR through FY3/31, with long-term undervaluation unchanged

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Sompo Holdings (8630)

DPS to grow at 19% CAGR through FY3/31,

with long-term undervaluation unchanged

Reiterate Rating: BUY | PO: 7,250 JPY | Price: 5,575 JPY

Undervalued on strong DPS growth with additional 25 May 2026

earnings growth ability through M&A Equity

The post-results share price decline reflects reduced expectations for large near-term

share buybacks from capital adjustments. That said, management intends to return Key Changes

capital if it cannot execute sizable M&A. With ESR at a high 270%, the company retains

significant capacity for earnings expansion via acquisitions. Even without relying on this, (¥) Previous Current

the policy to raise the payout ratio from three-year average adjusted profit to 50% by Price Obj. 6,740.00 7,250.00

FY3/31 implies a DPS CAGR of around 20% from FY3/27 to FY3/31. 2027E EPS 549.93 554.36

2028E EPS 646.98 635.22

Profit improvement plan progressing steadily 2029E EPS 791.53 717.37

Plans are being executed swiftly. Of the US$200mn in synergies targeted from the

Aspen integration by FY3/30, 65% already has a clear path to realization, including Natsumu Tsujino, CFA >>

specific measures. The FY3/27 plan incorporates US$60mn of cost reductions, which is ResearchBofAS JapanAnalyst

reflected in company guidance for FY3/27. In FY3/27, the group has already achieved +81 3 6225-8720

¥6.0bn in reinsurance cost savings through group-wide optimization. SJ’s FY3/27 plan natsumu.tsujino@bofa.com

includes ¥8.0bn in claims reductions from claims optimization, along with workforce

rationalization equivalent to 1,000 employees, for a total profit improvement of around

¥15.0bn.