Archion Corp: Offering price within a reasonable range

研报英文原文证据摘录

Archion Corp: Offering price within a reasonable range

, a

UBS Cons.

core customer, faces volume and price regulations. We forecast Indonesia CV sales to 03/27E 26.1 34.2

rise 31% yoy in H1 FY3/27 due partly to temporary factors, and then decline 24% in H2 03/28E 36.6 34.4

as demand normalizes, for an increase of 1% yoy for the full year, effectively flat. 03/29E 42.6 40.4

Earlier realisation of synergies an upside scenario Kohei Takahashi

Analyst

The company plans for cumulative synergy benefits of ¥110bn over the seven years kohei.takahashi@ubs.com

through FY3/33. For FY3/27, however, management anticipates limited synergy benefits +81-3-5208 6172

and nearly equivalent one-off integration-related costs, for almost zero net synergies.

Mao EguchiOur forecast is also zero (Figure 2). If synergies materialise earlier than expected and

Associate Analyst

trigger an upward revision to FY3/27 guidance, this could become an upside catalyst as mao.eguchi@ubs.com

the shares start to price in synergy benefits from FY3/28 onward. The FY3/28 synergy +81-3-5208 6242

effects of ¥20bn (Figure 3) are unchanged from before (Figure 5). We forecast FY3/27

OP will fall short of guidance by around 2-3%, as Southeast Asia CV sales volumes are

tracking below the company's assumptions.

Valuation: Price target of ¥270

Our price target is based on a FY3/28E PER of 8X, a discount to Isuzu's PER of 9X in

reflection of lower profitability. We incorporate June sales data into our forecasts but our

full-year estimates are unchanged. We forecast Q1 FY3/27 OP of ¥20bn, assuming

integration-related costs are concentrated in Q1, although the reliability of quarterly

forecasts is low because historical seasonality is unclear.

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