First Read: Sekisui House "Market environment uncertainty, assessment the focus"

研报英文原文证据摘录

First Read: Sekisui House "Market environment uncertainty, assessment the focus"

h subsidiary integration.

01/28E 468.2 372.3 -20 383.3

01/29E 516.1 471.1 -9 447.0

Has the company outlook/guidance changed? (FY1/27)

The company maintained FY1/27 OP guidance of of ¥350bn (+2.5% yoy). While Jimmy Qiu

Analystperformance was generally in line with expectations as of Q1, the company's plan does

jimmy.qiu@ubs.com

not factor in the impact from the conflict in the Middle East, which had yet to manifest

+852-3712 4827

when the plan was first formulated. However, if the impact of rising material costs due

to the situation in the Middle East remains limited to several billion yen, management Kazufumi Takeuchi

Analystnoted during today's earnings call that in addition to favourable property divestments

kazufumi.takeuchi@ubs.com

within the urban redevelopment businesses, there was the potential of achieving better- +81-3-5208 6269

than-expected terms in US rental housing divestments. The company is also aiming to

transition to a business model that ensures solid exits, including divestments to funds.

However, with the quantitative outlook for the financial impact of the Middle East

situation remaining uncertain, we will continue to closely monitor developments.

Valuation:

Our price target of ¥4,350 (unchanged) is based on estimated NAV of ¥3,417 (previously

¥3,230) and a premium of 27.3% (previously 34.7%) derived from forecast ROE of

13.6% through FY1/31 (previously 14.0% through FY1/30) and COE of

10.5% (10.4%). The significant EPS forecast revisions in the upper-right figure reflect

our assumption of a delayed recovery in the US housing market and incorporate a shift

to the growth platform-building phase outlined in the medium-term plan, which pushes