Oki Electric Industry: We keep our Buy rating, hike our target price from ¥4,200 to ¥4,700

研报英文原文证据摘录

Oki Electric Industry: We keep our Buy rating, hike our target price from ¥4,200 to ¥4,700

Global Markets Research

29 June 2026Oki Electric Industry

6703.T 6703 JP / EQUITY: JAPAN INDUSTRIAL ELECTRONICS

RatingWe keep our Buy rating, hike our target price from

Remains Buy¥4,200 to ¥4,700

Target price

Increased from 4,200 JPY 4,700Review of Defense Buildup Program could act as catalyst

Closing price JPY 3,700We reiterate Buy rating, raise target price from ¥4,200 to ¥4,700 26 June 2026

We raise our target price on Oki Electric Industry from ¥4,200 to ¥4,700, having revised

Implied upside +27.0%our earnings forecasts based on its earnings results, new medium-term plan, and our

discussions with management. We obtain our target price of ¥4,700 by multiplying our

end-28/3 BPS forecast of ¥2,374 (previously ¥2,109) by a P/B of 2.0x (unchanged),

referencing P/B and ROE at defense companies (corresponding to a P/E of 19.6x,

Relative performance chartpreviously 17.6x).

The new medium-term business plan, which runs through 32/3 (announced in May 2026),

provided limited quantitative targets by segment, but the company has indicated its

intention to gradually disclose more specific figures going forward. At the same time, the

next Defense Buildup Program is scheduled to be reviewed in December 2026, one year

ahead of schedule, and the main projects for 28/3 are expected to be disclosed in the

defense budget request in August 2026. As Oki Electric's passive sonar systems are

installed in unmanned underwater vehicles (UUVs), we see upside potential for earnings

and valuations if the schedule for the full-fledged rollout of Japanese-made UUVs takes

shape. For our view on defense-related stocks overall, see our 29 June report on the

industrial electronics sector.