Obic (4684.T): Margin gains to continue long-term on Al implementation, rise in large company sales weighting

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Obic (4684.T): Margin gains to continue long-term on Al implementation, rise in large company sales weighting

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29 Jul 2026 02:35:31 ET │ 14 pages

Obic (4684.T)

Margin gains to continue long-term on AI implementation, rise in large

company sales weighting

CITI'S TAKE Buy

Price (28 Jul 26 15:30) ¥4,567.0 April-June results showed marked profitability gains driven by AI and a

Target price ¥5,600.0↑ rising large enterprise sales weighting and suggested that these gains will

be sustained. Signs have also emerged that modernization demand will from ¥5,000.0

extend longer than previously expected due to AI implementation. Expected share price return 22.6%

Specifically, companies that opted for a rebuild/rehost approach (limited Expected dividend yield 2.2%

to programming language or operating environment changes) during ERP Expected total return 24.8%

updates now require rewrite-type modernization to implement AI. Based Market Cap ¥1,968,195M

on the company's comments regarding the order pipeline, we now

US$12,013M forecast modernization demand, previously expected to peak in FY28, will

continue beyond FY30. As a result, we forecast that Obic’s strong earnings

will continue over the longer term, and we maintain our Buy rating.

Moriya KoketsuAC

Jul-Sep forecasts — We forecast July-September OP of ¥25.5bn (+15% +81-3-6776-8304

YoY),expecting similarly strong OP growth to that seen in April-June. We forecast moriya.koketsu@citi.com

system integration sales of ¥15.3bn (+11% YoY) and OP of ¥9.4bn (+13%), with profit

growth continuing against a backdrop of gross margin gains driven by AI utilization

and a rise in the large enterprise sales weighting. We forecast system services sales

of ¥20.2bn (+15% YoY) and OP of ¥15.2bn (+16%), expecting substantial profit