TDK "Raising price target to reflect AI-driven benefits [Erratum]" (Buy) Hirata

研报英文原文证据摘录

TDK "Raising price target to reflect AI-driven benefits [Erratum]" (Buy) Hirata

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driven by higher unit prices due to technological innovation as well as by gains in market share.

EVIDENCE Major HDD manufacturer Seagate has discussed AI benefits more often on recent conference calls

(link). As capacity per drive rises, the number of heads and suspensions per unit is also up. After the

sharp HDD industry correction in 2023, suspension sector production capacity has fallen, including

via lower-tier firms exiting, leading to tightening supply-demand conditions. In passive components,

TDK said orders are strong as it is using excess capacity previously allocated to EV applications to start

producing high-voltage products for AI data centres. Meanwhile, the acquisition of a Malaysian

battery firm has enabled TDK to establish a production base for mid-sized batteries outside China.

WHAT´S PRICED IN? Until end-March, TDK shares had been weighed down by strong concerns over demand weakness in

smartphones and PCs. Guidance announced at the FY3/26 results was stronger than the market

expected, leading investors to begin recognizing HDDs and passive components as beneficiaries of

AI. That said, some investors remain cautious because small batteries generate the majority of profit.

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Value drivers (FY3/28E, ¥bn) Passive OP Sensor OP Magnetic OP Energy Application OP

¥6,900 upside 136.6 45.6 70.6 341.0

¥4,950 base 106.9 29.5 69.5 303.0

¥2,500 downside 93.5 22.8 28.9 221.2

Source: UBS estimates

Company Description Founded in 1935 as world's first maker of ferrite cores, strong in material technologies, TDK makes