TDK（6762）：因电池业务强劲及HDD零部件扩张，上调目标价至3,500日元；重申买入评级

Raise PO to ¥3,500 onbattery strengthand HDD parts expansion; Reiterate Buy Reiterate Rating:BUY| PO:3,500 JPY| Price:2,978JPY 18 May 2026 PO ¥3,500, reiterate Buy ReflectingFY3/26 earnings results, we revise TDK’s earnings forecasts as shown inExhibit 2. Accordingly, we raise our price objective (PO) from¥2,800 to¥3,500 (ADR POfrom $18.06 to $22.58). We reiterate Buy. The basis for our PO is a P/E of 25x ourFY3/28 EPS estimate. While we had applied 20x as the basis for our calculation, in lightof greater reassurance in fundamentals centered on the battery business and the Equity Steady batteries and expansion in magnetic products Our investment theses include (1) significant medium-term and long-term growthpotential in the mainstay battery business, (2) profitability improvement in the magneticapplication products business, (3) stable growth in passive components, and (4)expectations for enhanced shareholder returns. In the battery business, in addition tomaintaining high profitability in small batteries, we expect expansion of the mid-sizebattery business for AI data centers, including BBU batteries. Magnetic application Masashi Kubota>>Research AnalystBofAS Japanmasashi.kubota@bofa.com Expectations forimproved shareholder returns Alongside earnings expansion,improved shareholder returns are also expected. Duringthe current medium-term management plan through FY3/27, the focus has been onstructural reforms of low ROIC businesses. In the next medium-term plan from FY3/28,we expect stronger shareholder returns, including share buybacks. TDK’s total payout Hazel Xue>>Research AnalystBofAS Japanhazel.xue@bofa.com >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules. BBU: Battery Backup UnitHDD: Hard Disk Drive Refer to "Other Important Disclosures" for information on certain BofA Securities entities that takeresponsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. Refer to important disclosures on page 14 to 17. Analyst Certification on page 12. PriceObjective Basis/Risk on page 12. iQprofileSMTDK (6762) Company Sector Company Description Established in Dec 1935 as Tokyo Denki Kagaku Kogyo KK,TDK began with ferrite cores. By further utilizing ferritetechnology, it expanded to electronic components such asceramic capacitors and inductors. In the 1990s, itsucceeded in founding the HDD magnetic head business. In2005, it acquired Hong Kong battery maker ATL. The Investment Rationale Buy rating is premised on (1) considerable growth potentialof battery business, (2) stable growth of passivecomponents,mainly in automotive market, (3) superiortechnologies and large profit growth potential for sensors,(4) improved profitability outlook for HDD-related business.Besides auto-related business that had been strengthened, Source:Company data, BofA Global Research PO ¥3,500, reiterate Buy Raise PO: ¥2,800→¥3,500 Reflecting solid battery performance and profit expansion in magnetic applicationproducts, we revise TDK’s earnings forecasts as shown in Exhibit 2. In light of greaterreassurance in fundamentals centered on the battery business and the potential for a Our PO is based on a P/E of 25x our FY3/28 EPS estimate. In light of the risk of aslowdown in the earnings trend of the battery business, we had previously used 20x asthe basis, below the upper end of the past five-year range of 23x. However, followingthe FY3/26 results, in light of the stable earnings trend confirmed in the battery Our investment theses include (1) stable short-term earnings in the mainstay batterybusiness and significant medium-term and long-term growth potential, (2) profitability improvement in the magnetic application products business, (3) stable growth in passivecomponents, and (4) expectations for enhanced shareholder returns. We also expect We view TDK as an AI-related company based on the following factors: (1) notable profitexpansion in nearline (NL) HDD-related businesses for data centers, including magneticheads and suspensions, (2) significant growth potential in passive components such asMLCCs and inductors for the AI server market, and (3) significant growth potential in the Fading concerns over the battery business Share gains and ASP uplift effects Since 2H 2025, concerns over deterioration in TDK’s battery business earnings haveemerged, driven by (1) concerns about slowing production trends in IT devices such assmartphones and PCs and tablets due to rising memory prices and memory shortages,(2) margin deterioration risk from higher cobalt prices, and (3) concerns about a negative However, following the F