关键阶段看合并效益是否超过市场预期；维持中性评级

We revise our earnings forecasts for Tsuruha in light of the merger with Welcia Holdings. We expect profitability to improveover the next few years through cost reductions and revisions topurchasing arrangements. However, we think the effects arealready partly priced in, and await indications during this crucial Revise our forecasts in light of merger with Welcia HD. Raise our F2/26 OP forecast from ¥53.6bn to ¥63.6bn (guidance: ¥63.3bn) andour F2/27 forecast from ¥57.6bn to ¥96.9bn.Also raise our price target from ¥2,510 to ¥2,650 (P/E of 19.9x on F2/27e EPS of Target P/E (19.9x) is avg P/E for Japan's five major drugstore operators (17.4x),plus avg premium (+14.6%) at which Tsuruha has traded vs the five-company avg over the past year. We think merger effects are already priced in to an extent. Key is whetherbenefits exceed market expectations. Changes to our forecasts:We revise our forecasts for Tsuruha in light of the merger with Welcia Holdings. Factoring in the effects of the Welcia consolidation in F2/26 4Q, we raiseour full-year OP forecast from ¥53.6bn to ¥63.6bn (guidance: ¥63.3bn). For F2/27, whenwe anticipate the full effects of the consolidation, we raise our OP forecast from ¥57.6bnto ¥96.9bn. We think the market is starting to shift from vague expectations of mergereffects to concrete evaluations of how much in synergy benefits can be created in what benefits, such as improvements to purchasing terms secured by leveraging economies of ¥2,510 to ¥2,650, and maintain our EW rating on the shares. Our price target is based on aP/E of 19.9x and F2/27e EPS of ¥133.0. Our target P/E is set using the 17.4x average P/E ofJapan's five major drugstore operators (Tsuruha, MatsukiyoCocokara & Co., CosmosPharmaceutical, Sugi HD, and Sundrug), plus the average premium (+14.6%) at whichTsuruha has traded vs the five-company average over the past year. Previously, we appliedthe stock's average premium to the average P/E for six drugstore operators, including Risk Reward - Tsuruha Holdings (3391.T)Risk Reward – Tsuruha Holdings (3391.T) Eyes on post-integration scale and speed of specific synergies Risk Reward – Tsuruha Holdings (3391.T) Risk Reward Reference links 1. View explanation of Options Probabilities methodology - Options_Probabilities_Exhibit_Link.pdf2. View descriptions of Risk Rewards Themes - RR_Themes_Exhibit_Link.pdf3. View explanation of regional hierarchies - GEG_Exhibit_Link.pdf4. View explanation of Theme/Exposure methodology -