Stock looks undervalued considering solid growth ops, share price correction

研报英文原文证据摘录

Stock looks undervalued considering solid growth ops, share price correction

kely rise on investments to increase

production capacity, we look for profit margins to improve on volume growth,

an improved product mix thanks to cabling, and price hikes to reflect tighter

supply/demand conditions. The company also expects contact probe sales to

double the FY3/26 level, which should drive profit growth. Although earnings

have been sluggish in the industrial applications business, we think the

company’s overall OP target is conservative given the minimal impact from

the Middle East conflict. We forecast strong OP growth of 14.0% YoY in

FY3/28 and 8.8% YoY in FY3/29.

WATCH: Profit expansion in communication & components businessAnalyst Hideto Tani

+81 3 6202 8615 hideto.tani@mizuho-sc.com FY3/27 guidance for the communication & components business calls for

Senior Analyst Hiroshi Matsuda OP of ¥10.2b (up 39.7% from ¥7.3b in FY3/26), driving companywide OP+81 3 6202 8419 hiroshi.matsuda@mizuho-sc.com

growth. In particular, our focus is on volume growth for e-Ribbon® in light of

Click here for ESG on rising data center demand, improvement in the product mix from the launch

our entire coverage of cable-based products, and volume growth for contact probe pins.

MEASURE: Price objective of ¥17,000 based on EV/EBITDA of 13x

We upgrade our investment rating to Buy and lift our price objective to

¥17,000. We roll forward our valuation base year to FY3/28 but continue

to apply a fair-value EV/EBITDA multiple of around 13x (see our previous

report). Our price objective equates to a PER of 21.5x and a PBR of 4.0x on

our FY3/28 estimates.

Consolidated results and forecasts Share Price: ¥14,370 (19 Jun) 52wks: H ¥19,570 L ¥7,000

Term Sales YoY OP YoY RP YoY NP YoY EPS PER EV/EBITDA