Revisiting ratings/TPs: Focus on Japan-US valuation gap in optical stocks and Panasonic’s competitive BBUs; downgrade Daihen to Neutral

研报英文原文证据摘录

Revisiting ratings/TPs: Focus on Japan-US valuation gap in optical stocks and Panasonic’s competitive BBUs; downgrade Daihen to Neutral

integration from

battery cells to systems, future utilization of US-produced batteries (from a geopolitical

perspective), and the promotion of differentiation through a combination with capacitor

backup units (CBUs). We think the risk for 1Q results is to what extent it has been able to

absorb higher material costs in its white goods business. However, the company

implemented fixed cost reductions in FY3/26, creating a structure more conducive to

generating profits than the previous year. Mitsubishi Electric‘s stock price has been

somewhat weak recently, likely with the markets assuming that all the positive catalysts

have been priced in following its medium-term plan announcement, the plan’s OPM and

ROE targets being somewhat weak compared to market expectations, and relatively

tempered investor focus in the defense and space-related business. However, we think

its FA and air conditioning businesses could show strength in 1Q results. We also note

catalysts such as the business portfolio transformation through the restructuring of its

automotive business, and the possibility of a share buyback announcement, which has

not yet been made this year. Hitachi is uniquely positioned in terms of the potential for

physical AI deployment in its infrastructure businesses such as railways and power grids,

but we believe short-term catalysts are somewhat lacking. Also, while the company has

announced that it may consider M&A, we believe the share price could react negatively

depending on the acquisition price. We believe the next turning point could be if

product developments related to 800 V DC for data centers are confirmed toward the