Baudroie (4413.T): Tailwinds from AI-driven infrastructure, security demand

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Baudroie (4413.T): Tailwinds from AI-driven infrastructure, security demand

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24 Jul 2026 02:35:49 ET │ 12 pages

Baudroie (4413.T)

Tailwinds from AI-driven infrastructure, security demand

CITI'S TAKE

Our post-March-May results follow-up newly confirmed that security-

related revenue is rising. Baudroie operates network security as one of its

core businesses, and government-led demand for security enhancement Buy

has recently emerged, centering on financial institutions. In addition to Price (23 Jul 26 15:30) ¥2,824.0

demand for network infrastructure enhancements driven by AI

implementation needs, this new demand should benefit the firm strongly, Target price ¥3,200.0↑

and we thus expect the favorable earnings environment to continue. We from ¥2,800.0

raise our target price from ¥2,800 to ¥3,200 and maintain our Buy rating. Expected share price return 13.3%

Expected dividend yield 3.5%Security demand — On May 22, the FSA issued a request to financial institutions

regarding "short-term responses to the changing threats posed by frontier AI." In Expected total return 16.9%

light of frontier AI models' strong hacking capabilities, the government is asking Market Cap ¥88,095M

financial institutions, as key elements in Japan’s social infrastructure, to strengthen

US$538Mtheir security systems. Specifically, it is requesting an increase in operational

personnel and an acceleration in patch updates. Benefiting from growth in security

demand, the firm posted strong March-May results, centered on the security

business. In addition to regular security projects, financial institutions have urgently

requested the company to form security operations teams. We expect these teams Price Performance

to continue growing in size.