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Tuesday, 23 June 2026 Top Call | Company | Equity Strategy | Fixed Income | Key Rating and Target Price Changes TopCall Mercari (4385.T) - Upgrading to Buy - high-value items drive GMV as user trustrises Mercari has introduced enhanced verification functions to its domestic platform tostrengthen user trust. We believe transactions involving high-value items havebegun driving GMV growth as user awareness of the Safe Appraisal Service rises.While we previously expected limited GMV growth due to MAU maturity, we nowsee increased potential for sustained GMV growth via the increase in high-valuetransactions. We raise our OP forecasts for FY6/26 to ¥45.7bn (from ¥38.9bn), Keiichi Yoneshima Company Fanuc (6954.T) - Looking ahead to Q1 numbers, although it is hard to quantifythe impact of physical AI Fanuc is scheduled to announce FY3/27 Q1 results July 31. We model orders of¥265.0bn (+29% YoY, +5% QoQ) with robots at ¥105.0bn (+16%, +4%), FA at¥77.5bn (+41%, +9%), and robo-machines at ¥45.0bn (+55%, +3%). On sales of¥240.0bn (+2%, +2%) we forecast OP of ¥57.5bn (OPM of 24%), ahead ofBloomberg consensus (¥53.4bn). We also expect Fanuc to raise FY3/27 OPguidance to c¥220.0bn from ¥212.0bn. One topical theme for Fanuc is physical AI,and the June 20Nikkeiran an article saying the Japanese government hopescombined public and private investment in physical AI will reach ¥10.5trn by 2040.Physical AI is one of 17 strategic growth sectors targeted by the government (with Graeme McDonald EquityStrategy Japanese equities have continued their upward trajectory since April, with TOPIXrecently breaking above 4,000 and the Nikkei 225 surpassing 72,000. While Tech sector EPS forecasts are also being revised upward at a rapid pace, and wejudge the rally remains within healthy bounds rather than reflecting speculativeexcess or bubble conditions. We maintain our TOPIX target at 4,500 points while Ryota Sakagami | Keishi Ueda FixedIncome Japan Rates - JSDA data (May 2026)—rebalancing at pension funds Rebalancing demand at pension funds has supported the market. Medium- andlong-term bonds attracted demand from wide variety of investors, while activity in Tomohisa Fujiki If you are visually impaired and would like to speak to a Citi representative regarding the detailsof the graphics in this document, please call USA 1-888-500-5008 (TTY: 711), from outside the Appendix A-1 ANALYST CERTIFICATIONThe research analysts primarily responsible for the preparation and content of this research report are either (i) designated by “AC” in the author block or (ii) listed in bold alongside content which is attributable to that analyst. If multiple ACanalysts are designated in the author block, each analyst is certifying with respect to the entire research report other than(a) content attributable to another AC certifying analyst listed in bold alongside the content and (b) views expressed solelywith respect to a specific issuer which are attributable to another AC certifying analyst identified in the price charts orrating history tables for that issuer shown below. Each of these analysts certify, with respect to the sections of the report IMPORTANT DISCLOSURES This product merely summarizes previously published research notes. To access the complete report along with the associatedAnalyst Certification, Issuer- or Analyst-specific Disclosures and non-US research analyst disclosures please click on thehyperlink alongside or in the headline of each excerpt above. Analysts’ compensation is determined by Citi Research management and Citigroup’s senior management and is based uponactivities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates (the “Firm”).Compensation is not linked to specific transactions or recommendations. Like all Firm employees, analysts receivecompensation that is impacted by overall Firm profitability which includes investment banking, sales and trading, and For financial instruments recommended in the Product in which the Firm is not a market maker, the Firm is a liquidity providerin such financial instruments (and any underlying instruments) and may act as principal in connection with transactions insuch instruments. The Firm is a regular issuer of traded financial instruments linked to securities that may have been Unless stated otherwise neither the Research Analyst nor any member of their team has viewed the material operations of theCompanies for which an investment view has been provided within the past 12 months. For important disclosures (including copies of historical disclosures) regarding the companies that are the subject of this CitiResearch product ("the Product"), please contact Citi Research, 388 Greenwich Street, 6th Floor, New York, NY, 10013,Attention: Legal/Compliance [E6WYB6412478]. In addition, the same important disclosures, with the exception of the https://www.citivelocity.com/cvr/eppublic/citi_research_disclosures.Valuation