Expecting growth to continue on bolstered production, Best Alternative strategy

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Expecting growth to continue on bolstered production, Best Alternative strategy

5 June 2026

Mizuho Securities Equity Research Autos and Auto Parts

Price Objective Change

Yokohama Rubber (5101)

Rating: Buy Price Objective ¥7,100 ¥8,500

Spotlight: We expect profit growth for ACT: Stock undervalued given growth prospects despite worsening

both existing tire and OHT businesses environment

(see pages 4–6). We reiterate our Buy rating on the stock of Yokohama Rubber. While profits

should be squeezed by an increase in raw materials prices due to the

Share price (4 Jun) ¥6,913 situation in the Middle East and other factors, we still believe there is aImplied upside +23%

high likelihood of sustained growth, driven by emerging benefits from theTSE Segment Prime

company’s strategies to date (the Best Alternative strategy and initiatives

Major indicators (E = Mizuho estimates) to bolster production). While the company has already received high marksMarket capitalization (¥b) 1,150.30

Shares outstanding (m) 166.40 within the sector, we think the stock is still undervalued trading at a PER of

Potential share dilution (m) – 8.5x on our FY12/26 EPS estimate.Daily turnover (thou, mo. avg.) 1,167.95

Foreign ownership (%, 12/25) 20.9 KNOW: Expecting profit growth to continue for existing tire and OHTDPS(¥, 12/26E) 245.0

Dividend Yield(%, 12/26E) 3.5 businesses

Payout ratio(%, 12/26E) 30.3 We expect FY12/26 business profit (BP) to reach ¥192.8b, above guidanceEquity ratio(%, 12/26E) 55.2

BPS(¥, 12/26E) 7,170.4 (¥188.0b). We think the Middle East situation will pull down profits by about

PBR(x, 12/26E) 1.0 ¥40b more than guidance expects in the form of higher raw materials, energy,ROE(%, 12/26E NP basis) 11.8

ROA(%, 12/26E Pretax basis) 9.7 and marine transportation costs.