Daiichi Life Group (8750): Downgrade to Neutral on valuation; growth depends too much on M&A

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Daiichi Life Group (8750): Downgrade to Neutral on valuation; growth depends too much on M&A

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Daiichi Life Group (8750)

Downgrade to Neutral on valuation; growth

depends too much on M&A

Rating Change: NEUTRAL | PO: 1,940 JPY | Price: 1,812 JPY

23 June 2026

Downgrade to Neutral on a narrower gap to PO

Equity

The competitive environment in Japan remains challenging, with growth increasingly

dependent on future M&A and earnings improvement from recent investments, implying

higher risk. Management expects that, of the increase needed to lift adjusted profit from Key Changes

¥560bn in FY3/27 to ¥700bn in FY3/31 under the medium-term plan, ¥100bn must come (¥) Previous Current

from M&A, implying existing businesses to grow to only ¥600bn. Slow growth of Inv. Opinion C-1-7 C-2-7

existing business reflects continued declines in insurance-related profit in domestic life, Inv. Rating BUY NEUTRAL

offsetting spread improvement. In addition, Dai-ichi Life Group’s post-tax net capital

gains (¥227bn in FY3/27 guidance) are assumed broadly flat at around ¥200bn from Natsumu Tsujino, CFA >>

FY3/28 onward, limiting earnings growth. While the company is a leader in improving Research Analyst

capital efficiency through equity reductions and has raised dividend payout ratio from 3- BofAS+81 3 6225-8720Japan

year average adj profit to 50% from FY3/27, one year earlier than its original plan, we natsumu.tsujino@bofa.com

see limited scope for further increases near term given strong investment needs. With

the gap to our DDM-based price objective (PO) narrowing, we downgrade to Neutral.

Stock Data

PO maintained at ¥1,940, and our earnings forecast

We continue to use a DDM with a 4.75% discount rate. Our adjusted profit forecasts are Price 1,812 JPY