LIXIL (5938.T): Still Neutral: Costs rising ahead of price hike benefits, possible risks for guidance, which has a heavy H2 bias

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LIXIL (5938.T): Still Neutral: Costs rising ahead of price hike benefits, possible risks for guidance, which has a heavy H2 bias

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03 Aug 2026 10:35:42 ET │ 13 pages

LIXIL (5938.T)

Still Neutral: Costs rising ahead of price hike benefits, possible risks for

guidance, which has a heavy H2 bias

CITI'S TAKE Neutral

Price (03 Aug 26 15:30) ¥1,719.0 We revise our earnings forecasts following Q1 results. We lower our LHT

Target price ¥1,800.0 estimates mainly to reflect cost increases, but maintain our target price at

¥1,800 based on a 5% dividend yield, as our annual dividend forecast Expected share price return 4.7%

remains unchanged. We maintain our Neutral rating. Q1 revenue grew YoY, Expected dividend yield 5.2%

but profit declined. Lixil, however, stuck with initial guidance. Price Expected total return 9.9%

increase benefits are scheduled to surface from August onward, making Market Cap ¥494,371M

the path to achieving guidance excessively H2-weighted. Downside risks US$3,137M

will likely persist near-term, and we expect the shares to remain capped

until Q3 results confirm price increase penetration and underlying

demand.

Masashi Miki, CFAAC

FY3/27 — We forecast FY3/27 OP of ¥35.1bn (guidance ¥45.0bn). Aluminum price +81-3-6776-4665

spikes at LHT and deterioration in the domestic renovation mix drove the YoY OP masashi.miki@citi.com

decline in Q1. At ¥49.2bn, the increase in domestic procurement costs was twice the

initial estimate of +¥24.8bn. The countermeasure is price hikes, which we expect to

gradually take hold from August-October. Q2 results will likely be weak as cost

increases will come ahead of any price hike benefits. US revenue growth clearly

underperformed initial plans, and we find recovery expectations difficult to

maintain.