Kobe Steel: Materials segment earnings should improve in FY3/27

研报英文原文证据摘录

Kobe Steel: Materials segment earnings should improve in FY3/27

2 FY3/27 in accordance with rising raw material and fuel costs. For

03/28E 291.8 304.0 4 247.6

advanced materials, we expect an earnings expansion phase to start, centred on the

03/29E 309.7 332.2 7 252.9

energy field. We are raising our EPS forecasts from ¥279 to ¥286 for FY3/27, ¥292 to

¥304 for FY3/28, and ¥310 to ¥332 for FY3/29. Harunobu Goroh

Analyst

Needs to execute strategy and move faster with eye on next medium-term plan harunobu.goroh@ubs.com

from FY3/28 +81-3-5208 6215

In the machinery segment (hardware, engineering and construction machinery), orders

for hardware, which generates two-thirds of profits, remain elevated, led by industrial

and energy equipment. We expect profit growth to continue across core products with

high global market shares, including customised compressors, resin mixing equipment,

LNG vaporisers and isostatic presses. In the engineering business, we forecast annual

earnings in the ¥10-20bn range centred on DRI plants (Midrex). Under the new medium-

term plan starting next fiscal year, we believe the company should concentrate the

allocation of management resources to enhance engineering capacity in the machinery

segment, while accelerating structural reform in the materials segment. We believe the

gap between consensus estimates for ROE of 7-8% for FY3/28-29 and the implied ROE

of 4.7% derived from PBR will narrow from FY3/28 onward as a growth scenario

emerges centred on the machinery segment.

Valuation:

Highlights (¥b) 03/24 03/25 03/26 03/27E 03/28E 03/29E 03/30E 03/31E

Revenues 2,543.1 2,555.0 2,436.6 2,514.0 2,600.0 2,674.0 2,762.0 2,865.0

EBIT (UBS) 186.6 158.7 129.9 158.0 166.0 181.0 185.0 189.0

Net earnings (UBS) 109.6 120.2 97.9 113.3 120.2 131.4 134.6 137.8