Confirmation of Recovery in Medical Business for China Likely to be Key

研报英文原文证据摘录

Confirmation of Recovery in Medical Business for China Likely to be Key

our F3/28 forecasts, Recurring profit (¥bn)* 4.9 7.9 10.0 12.0

it is trading at P/E ~19x, EV/EBITDA ~7x, and P/B ~1.1x (ROE ~6%), so it does not Net income (¥bn)* 0.5 4.9 6.4 7.7

EPS, basic (¥)* 16.0 156.6 205.3 247.9

look undervalued, and we stay EW. Total shareholder return yield of ~9% (assuming Prior EPS, basic (¥)* 47.1 122.0 183.7 -

EPS (¥)** 16.0 156.6 205.3 247.9

¥5bn in buybacks) should support the share price.

Prior EPS (¥)** 47.1 122.0 183.7 -

P/E, basic* 231.0 25.7 19.6 16.2

Raise F3/27–28 profit ests.: F3/26 OP was ¥1.5bn below our forecast: functional P/BV, basic 1.1 1.1 1.1 1.1

solutions and medical were broadly in line, but apparel undershot sharply (Gunze ROE (%)* 0.4 4.4 5.8 6.9

EV/EBITDA, basic 10.3 8.6 7.6 6.9

booked ~¥1.9bn in inventory valuation losses related to business restructuring),

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

resulting in a large overall shortfall. We lift our F3/27 OP est. from ¥6.5bn to framework

** = Based on consensus methodology

¥8.3bn, reflecting additional profit in apparel as valuation losses associated with * = GAAP or approximated based on GAAP

e = Morgan Stanley Research estimates

structural reforms in that business were brought forward to F3/26, and an upward

revision to medical as the decline in F3/26 4Q was milder than expected ex.

valuation losses. YoY, we expect earnings in medical to deteriorate due to lower

sales to China (tissue reinforcement materials etc.) but expect overall OP to rise

70%, as this is covered by an improvement in apparel earnings from lower valuation

losses and structural reform effects, and higher profit in functional solutions Morgan Stanley does and seeks to do business with