Lift Forecasts for Micro Thin (AI Transceivers)

研报英文原文证据摘录

Lift Forecasts for Micro Thin (AI Transceivers)

IdeaM

Investment summary

F3/26 Results Recap

F3/26 RP of ¥136.7bn (+79% YoY) beat the consensus for ¥121bn and guidance/our

forecast for ¥120bn. Against our forecast, the Metals segment outperformed, driven by

market factors. F3/27 guidance calls for RP of ¥93bn (-32% YoY), below the consensus for

¥114bn. Guidance is also ~¥10bn below our prior forecasts for each of the Engineered

Materials and Metals segments. In Engineered Materials, we had forecast +¥5bn YoY RP

growth, driven by copper foil, but the company guides for flat profit due to higher HQ

costs and other factors. However, we think the company's assumptions for MicroThin and

HVLP-related price hike effects and sales volumes (+13% YoY) are relatively conservative.

In Metals, the company assumes variances in copper smelting operations and the lead raw

material mix will be worse than we do. Guidance for RP excluding one-time factors to

decline (from ¥97.8bn in F3/26 to ¥85.4bn in F3/27) left a poor impression, and the share

price showed a stronger corrective tone post-results.

Focus points for Mitsui Kinzoku

Near-term focus points: We see scope for growth in HVLP demand for NVIDIA's Rubin.

Reports of front-loaded shipments among Asian competitors also suggests to us that

demand is firm. We therefore expect Mitsui Kinzoku to hike its conservative guidance at

the time of F3/27 1Q results. However, we caution that this may still be lower than the

consensus. While several copper foil manufacturers are capable of producing products up

to HVLP4, we understand Mitsui Kinzoku is the only one to have established mass

production capabilities for HVLP5, suggesting technical barriers are high for higher added-

value products.