CKD：半导体相关需求强劲复苏，预计F3/27起盈利显著改善 Zhongwen (zh-Hans): CKD：半导体相关需求强劲复苏，预计F3/27起盈利显著改善

Lisa JiangEquity AnalystLisa.Jiang1@morganstanley.com Strong Semiconductor-related Recovery; Expect Sharp Morgan Stanley MUFG Securities Co., Ltd.+Takeshi KitauraEquity AnalystTakeshi.Kitaura@morganstanleymufg.com+81 3 6836-5427 Daisuke HoriuchiResearch Associate CKD (6407.T, 6407 JT) Factory Automation|Japan We lift our F3/27 forecasts and price target. 1Q earnings likely toexceed conservative guidance. Semiconductor-related salesexpansion impacts will likely create earnings upside, but market Stock RatingIndustry ViewPrice targetUp/downside to price target (%)Shr price, close (Jun 8, 2026)Mkt cap, curr, basic (bn)Div yld (03/27e) (%) We revise our forecasts:We lift our OP forecasts for CKD, from ¥25.5bn to¥28.0bn for F3/27 and from ¥27.5bn to ¥30.0bn for F3/28. We expect F3/27 earnings to rise sharply on semiconductors:We lift our F3/27forecast by ¥2.5bn, reflecting stronger-than-expected F3/26 4Q results, with growthdriven primarily by the equipment segment, particularly semiconductor-relateddemand. By segment, we expect 1) equipment OP in F3/27 to increase 44% YoY to¥28.5bn on a sharp recovery in semiconductor-related demand alongside a gradual 1Q earnings outlook:We forecast 1Q OP at ¥7.0bn, up 86% YoY but down 2% QoQ,with the slight QoQ decline mainly due to seasonal factors in the automationmachinery segment. In contrast, we expect the core equipment business to deliverQoQ profit growth driven by volume effects and utilization gains. Key takeawaysfrom the post-earnings interviews include: 1) F3/26 4Q results saw profit growth Morgan Stanley does and seeks to do business withcompanies covered in Morgan Stanley Research. As a result,investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of Morgan StanleyResearch. Investors should consider Morgan StanleyResearch as only a single factor in making their investment We hike our PT to ¥5,700:We hike our PT from ¥5,300 to ¥5,700 to reflect ourrevised earnings forecasts. Our new PT is derived from a P/B of 2.1x our F3/28estimate BPS of ¥2,734. Our target multiple is unchanged. For analyst certification and other important disclosures,refer to the Disclosure Section, located at the end of thisreport. += Analysts employed by non-U.S. affiliates are not registeredwith FINRA, may not be associated persons of the memberand may not be subject to FINRA restrictions oncommunications with a subject company, public appearancesand trading securities held by a research analyst account. Valuation Source: FactSet, Morgan Stanley Research. e = Morgan Stanley Research estimates Source: FactSet, Morgan Stanley Research. e = Morgan Stanley Research estimates We expect earnings recovery from F3/27 driven by semi-related capex increase EQUAL-WEIGHT THESIS ¥5,700 ・We expect earnings to recover from lowlevels, benefiting from the strong recoveryfor semiconductor demand. F3/28e BPS ¥2,734 x 2.1. F3/28 OP ¥30.0bn, ROE 12.7%. ROE-P/B correlation indicates P/B is1.0x when ROE is 12.4%. We apply a 40% premium to this fair value P/B, given (1) strongearnings improvement, and (2) that the market has applied a 30-40% premium in pastupcycles. We then apply an additional 50% premium, considering (3) prospective OP 30%higher than the past peak and (4) TOPIX valuation having moved higher. ・We envision margin achieving the pastpeak level, with sales increasing and in lightof the current strong recovery trend. ・The share price has surged already,reflecting expectations of substantialearnings improvement in the coming 2 years; Risk Reward Themes Secular Growth:PositiveView descriptions of Risk Rewards Themeshere ¥7,000 ¥1,200 F3/28e BPS ¥2,364 x 0.5BEAR CASE BASE CASE BULL CASE F3/28e BPS ¥2,734 x 2.1 F3/28e EPS ¥368 x 19 Semiconductor capex expands more thanexpected,and general manufacturing capexalso recoversfirmly: F3/28 OP recovers to¥33bn. We apply a ~30% premium vs. the11x historical average from FY2016-17, theprevious upcycle, considering (1) a strongerthan expected semiconductor-relatedrecovery, with smooth acquisition of new Capex(mainly semiconductor-related)doesnot recover: F3/28 OP declines to ¥16.5bn.Bear case P/B is 0.5x, close to past bottom Earnings recover strongly from the bottom:F3/28 OP ¥30.0bn, ROE 12.7%. ROE-P/Bcorrelation indicates P/B is ~1.0x when ROEis 12.7%. We apply a 40% premium to thisfair value P/B, given given (1) strong earningsimprovement, and (2) that the market hasapplied a 30-40% premium in past upcycles.We then apply an additional 50% premium, Risk Reward – CKD (6407.T) RISKS TO PT/RATING RISKS TO UPSIDE 1) Sales growth (Japan/overseas) for pneumaticequipment,fluid control equipment forsemiconductors2) Profitability improvement via automation, RISKS TO DOWNSIDE Earnings related data Risk Reward Reference links 1. View explanation of Options Probabilities methodology -Options_Probabilities_Exhibit_Link.pdf 2. View descriptions of Risk Rewards Themes - RR_Themes_Exhi