Raising to Buy on profit upside, expectations for capital utilization shift

研报英文原文证据摘录

Raising to Buy on profit upside, expectations for capital utilization shift

e We raise our forecast for adjusted profit (IFRS basis) to ¥822.5b in FY3/27

(previously ¥711.4b) and ¥847.2b in FY3/28 (¥707.3b). The main changes

to our outlook are as follows: 1) We now expect gains on the sale of

strategic shareholdings to exceed our previous estimate due to an increase

in unrealized gains, and we reflect the company’s stated policy of intensively

reducing strategic shareholdings in FY3/27–FY3/28. (Continued on page 2)

WATCH: Progress with structural reforms in Japan and overseas

In addition to merging its two domestic non-life insurance companies,

MS&AD is also reorganizing its overseas operations to pursue integrated

management across regions. Plus, MS&AD’s information meeting held inSenior Analyst Naruhiko Sakamaki

+81 3 6202 8476 naruhiko.sakamaki@mizuho-sc.com May had a greater-than-usual focus on explaining the life insurance business,

suggesting that the company may be planning to reorganize its life insurance

Click here for ESG on subsidiaries. (Continued on page 2)

our entire coverage MEASURE: Valuation based on FY3/27 dividend yield of 3.1%, adjusted

PER of 14.6x

We set our price objective at ¥5,390, based on cost of capital of 9.9%, a

perpetual growth rate of 6.8%, and a required yield of 3.1% (previously 4.3%).

We also factor in a decline in the number of shares outstanding as a result

of share buybacks. Our perpetual growth rate assumption is based on the

forward ROE and dividend yield for the period covered by our forecasts. Our

price objective equates to a PER of 14.6x our FY3/27 adjusted EPS forecast

of ¥370 (IFRS basis, our standard).

Consolidated results and forecasts Share Price: ¥4,540 (10 Jun) 52wks: H ¥4,557 L ¥3,069

Term Rec. rev.