味之素（2802）CEO会议：ABF涨价30%可能性不大；战略保持不变（附会议纪要）

strategy intact (notes attached)ReiterateRating:NEUTRAL/PO:5,400JPYIPrice:5,193JPY CEOMeeting:Nosurprises,includingABFpricehikes President Nakamura stated that "if costs rise sharply, we will discuss passing them on,but considering customer relationships,a uniform 30% price increase would be difficult." KeyChanges There were no major differences from the earnings briefing, but we believe the sharpshare price increase on May 11 was driven by heightened expectations for a 30% ABFprice hike following certain media reports, and there is a possibility that theseexpectations may ease. However, there is no change to the medium-term growthscenario for ABF.At the same meeting, management also showed a willingness toachieve its FY2030 financial targets, including R0E of 20%,ahead of schedule.Price objectiveraised,butNeutral reiterated forecast up by1%to￥207.2bn (up14%).Wealso raise ourFY3/27forecast P/Efrom 35xto 37xand increase ourprice objective from￥5,000 to￥5,400.While the roughly￥3Obn increase in costs due to Middle East conditions appears larger than expected,Ajinomotohas already implemented cost reduction measuresglobally,and webelieveprice hikes in high-share overseas seasonings can absorb this impact. On the other hand,our FY3/27forecasts, including for frozen foods,remain below consensus, and webelieve market expectations are high; therefore, we reiterate our Neutral rating.Keyshareprice catalysts include (1)accelerated ABF salesgrowth and implementation ofprice hikes, (2) increased visibility of profit growth in biopharma services, (3) structuralreform of low-profit businesses, and (4) significant profit improvement in overseasseasonings driven by price hikes.Estimates ()3/24A3/25A3/26E3/27E3/28E +81 3 6225 8855manabu.sumoge@bofa.comYuxi Dai>>Research AnalystBofAS Japan yuxi.dai@bofa.com ABF: Ajinomoto Build-Up FilmCDMO:ContractDevelopmentandManufacturing Organization >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rulesRefer to'Other Important Disclosures'for information on certain BofASecurities 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 page14 to 16.Analyst Certification on page 10.PriceObjective Basis/Risk on page 10.12975611 iQprofileAjinomoto(2802)Key Income Statement Data3/24A3/25A Food Processors Ajinomoto isa diversifiedconglomerate leveraging amino acid technology across seasonings, processed foods,pharmaceutical CDMO, and semiconductor insulationmaterials. Its umami seasonings hold strong share inSoutheast Asia and South America, driving a high overseassales ratio. Robust semiconductor demand has boostedprofit via ABF insulation materials. In 2023, Ajinomotoacquired Forge Biologics, a CDMO specializing in genetherapy, reinforcing long-term growth via CDMOinvestment. We expect Functional Materials, including ABF, to remain the key driver of profit growth beyond. However, we believethis outlook is already reflected in the current share priceand consensus. On the other hand, the timing of profitacceleration in Biopharma Services (CDMO) remainsuncertain. There are also multiple downside risks toconsensus, including rising costs in Frozen Foods and recalrisks in the US. As such, we see limited upside for the shareprice. Key Metrics CE0 Meeting (Held on May 18 at 10:00)Q&A [Functional Materials (ABF)] Q:HowdoesAjinomotoviewpriceincreasesforABF? A: I have been involved in ABF for a long time. The essence of the high-speed development system is that as chips improve every two years, materials are alsoupgraded every two years. For next-generation development, customers present variousrequirements such as chip size and strength. In this process, multiple materialcandidates are proposed, and development progresses through iterative alignment. Oncespecifications are finalized, both customers and package suppliers agree on the premisethat cost increases can be passed on to end customers. In other words, the high-speeddevelopmentsystemencompassesnotonlyperformanceimprovementsbutalsopricealignment. New-generation products deliver higher performance and use higher-qualityraw materials, resulting in higher prices. After that, as mass production begins andvolumes increase, costs decline through scale effects. discuss price pass-through. However, a uniform 30% price hike is not feasible, as itwould undermine long-term customer relationships. Ajinomoto's approach is todetermine appropriate pricing based on performance improvements, generational shifts,and cost structure. Q:Onshareholderproposalsregardingdisclosureof theelectronicmateri