住友电工：AI/直流驱动业务盈利上升，光纤业务增长扩大

Sumitomo Electric JP Cables: SEI — AI/DC Drives EarningsUpside; Optical Content Expands Growth We revise our estimates for SEI following FY3/26 results (HERE), projectingFY3/27 OP of ¥473.2bn (vs. guidance of ¥425bn). For FY3/27–FY3/29, weforecast continued earnings expansion driven by sustained Infocom (DC),and we estimate FY3/27–29 company OP CAGR of 24%. We remain positiveon increasing demand for high-density optical connectivity, including MMC/ Earnings outlook: AI strength sustained, Infocomm and mix drive upside.For FY3/27,management guides OP at ¥425bn, but we see scope for a stronger outcome and forecast¥473.2bn, supported by broad-based upside across AI applications. At the segment level,we estimate Infocommunications OP at ¥141.1bn (vs ¥130bn guidance), Environment &Energy at ¥57.9bn (vs ¥44bn), Automotive at ¥201.9bn (vs ¥184bn), Electronics at ¥37.1bn(vs ¥33bn), and Industrial Materials & Others at ¥35.7bn (vs ¥34bn). The key support remainsInfocommunications, where continued demand for cables, connectors, and devices tied to AI-linked capacity expansion supports growth, while bottlenecks preserve earnings quality.We continue to view MMC/MPO connectors and CW/EML lasers as the key productsunderpinning medium-term earnings upside. In connectors, SEI remains well positioned tobenefit from the shift toward higher-density architectures as networks migrate from 800Gto 1.6T, with management planning to expand connector capacity by 2.0x in FY3/27 versus Valuation:We apply a SOTP-based PER of 27.7x to our FY3/29 EPS of ¥743, reflecting thestronger growth visibility and higher earnings quality now emerging in Infocommunications.We continue to anchor valuation on FY3/29 as this better captures the earnings power of the Our view:FY3/26 results strengthened confidence that SEI’s earnings mix is improvingstructurally, with Infocommunications becoming an increasingly important profit engine ashyperscaler investment drives demand for connectors, optical fiber, cables, and InP-baseddevices. With FY3/27 guidance still appearing conservative relative to the demand backdrop, Carlos Furuya * | Equity Analyst+81 3 6830 3618 | cfuruya@jefferies.com Thanh Ha Pham * | Equity Analyst81 3 5251 6160 | tpham@jefferies.com Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 5 - 10 of this report. The Long View: Sumitomo Electric Investment Thesis •We expect Sumitomo Electric to deliver steady earnings growth,supported by resilient fundamentals and improving visibility.•While Automotive remains a key earnings driver,the company’sdiversified portfolio helps mitigate tariff-related uncertainties.•The Information Communications segment is positioned for structural Downside Scenario,¥11200, -15% Base Case,¥20600, +57% Upside Scenario,¥23800, +82% •Telecombusinessfailstogrowasexpected,limitingcontributionfromInfocommunications. •SEI could outperform if Infocommunicationsgrowth accelerates faster than expected.•Stronger AI demand and rapid connectormigration from MPO to MMC would boost •We expect SEI to deliver steady earningsgrowth, supported by stronger fundamentals and improved guidance. •Automotive remains the near-term anchor,thoughtariff risks could weigh on wire harness demand. Catalysts Sustainability Matters Circular Economy Leadership: Sumitomo Electric promotes circularity through its “Go for Green 2025”initiative, focusing on life cycle assessment, waste reduction, and resource recovery. •Telecom business expansion and degreeof exposure within the company's businessportfolio•Auto segment declines as Japanese OEMs Low-Carbon Manufacturing: The company is actively reducing greenhouse gas emissions andadopting renewable energy sources, with goals set for 2030 in its Vision 2025 strategy. Green Supply Chain: Sumitomo Electric enhances sustainability across its supply chain by expandingsales of eco-products and services that reduce environmental impact, especially in energy, mobility, Disclosure and Transparency: ESG disclosures are aligned with global standards and publishedthrough its Integrated Report, detailing progress on sustainability KPIs and stakeholder engagement. Biodiversity and Stewardship: The company promotes biodiversity conservation through local Sustainable Technology Focus: Its product portfolio supports ESG-aligned applications such as EVs,smart grids, and high-speed communications, contributing to a greener, more connected society. Company Description Sumitomo Electric Sumitomo Electric is the biggest electric cable company in Japan. The company’s core business segments include production of wiring harnesses,electric power cables, optical fibers, magnet wires, industrial steel wires and hard metals, etc. While its optical fiber business has benefited inrecent years from increase in global data center demand, automotive segment remains as the company’s primary earnings driver, accounting Co