Tier-2 Contractors: Focus on Infron eer HD, Kumagai Gumi, Penta-Ocean Construction

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Tier-2 Contractors: Focus on Infron eer HD, Kumagai Gumi, Penta-Ocean Construction

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Earnings Forecasts, Price Targets, What's Changed Summary,

Valuation Comparison

Exhibit 1: Price targets

Price target Target P/E Target EPS

Ticker Company Rating New Old New Old New Old Change to Valuation Approach,, Rationale for Change

1719 Hazama Ando Equal-weight 1,950 1,950 12.4 13.0 157.8 149.3 Ourin anPTunrevisedis 12.4x priceour F3/28etarget.adj EPS of Y157.8. We raise earnings forecasts, but trim our target P/E, resulting

1808 Haseko Equal-weight 3,100 3,100 11.0 10.9 283.4 283.0 Our PT is 11x our F3/28e EPS of Y283.4. Despite raising our earnings forecasts slightly, we keep our price

target unchanged.

1820 Nishimatsu Construction Equal-weight 6,000 6,000 11.9 11.9 504.0 504.0 Our PT is 11.9x our F3/28e adj. EPS of Y504, with both our EPS forecast and price target unchanged.

1860 Toda Underweight 1,300 1,150 13.2 13.5 98.6 86.0 OurexplainsPT isour13.2xpriceourtargetF3/28eincrease.adj. EPS of Y98.6. We raise our earnings forecasts (including EPS), which

1861 Kumagai-Gumi Overweight 2,250 2,200 14.0 14.0 159.5 155.5 OurpricePTtargetis 14xincrease.our F3/28e EPS of Y159.5. We raise our earnings forecasts (including EPS), which explains our

1893 Penta-Ocean Construction Overweight 2,500 2,400 16.1 16.6 155.2 144.6 Ourour pricePT istarget16.1x increase.our F3/28e EPS of Y155.2. We raise our earnings forecasts (including EPS), which explains

5076 INFRONEER Holdings Overweight 3,150 2,850 13.4 12.9 235.2 219.5 Our PT is 13.4x our F3/28e EPS of Y235.2 (fully diluted; factors for preferred dividends). We raise our

earnings forecasts (including EPS) and target P/E, fueling our price target hike.

Source: Company data, Morgan Stanley Research.

Exhibit 2: Comparison of valuations