花旗：TDK（6762.T）维持买入评级 AI服务器相关业务增长亦为核心催化

TDK (6762.T) Staying Buy - AI server-related sales growth also a potential catalyst CITI'S TAKE We raise our target price from ¥2,800 to ¥4,500 to reflect our higher OPforecasts, a change in risk premium (from 4.5% to 3.0%), and a shift in ourbase year (FY3/28→FY3/29), and maintain our Buy rating. While the risk ofa smartphone market decline in FY3/27 is weighing on the share price inrelative terms, we raise our OP outlook based on 1) the potential for a lesssevere smartphone shipment decline in Q1 than previously expected and 2)an increased sales outlook for server-related passive components andHDDs.Despite the risk of relative underperformance due to highsmartphone exposure and concern about a demand correction, we expectvaluations to improve post-earnings. nBuy Price (26 Jun 26 15:30)¥3,575.0Target price¥4,500.0↑from ¥2,800.0Expected share price return25.9%Expected dividend yield1.1%Expected total return27.0%Market Cap¥6,785,901MUS$41,997M Also expecting AI-related growth— TDK has high exposure to smartphonebatteries in its total profits (we assume over 40%) and is not seen as an AI server-related stock. However, we expect a gradual expansion in the AI server-related profitweighting driven by 1) MLCC shipments starting for power applications, 2) the firm’shigh share in large aluminum capacitors, where growth is expected, 3) rising addedvalue in nearline HDD heads and suspensions, and 4) revenue growth in medium-sized batteries as the BBU-related market expands. We estimate the above factorswill account for just under 10% of companywide profit in FY3/27, reaching around12% in FY3/28. OP forecasts— We revise our OP forecasts for FY3/27 from ¥314.7bn to ¥338.0bn(+24.1% YoY) and for FY3/28 from ¥360.6bn to ¥395.0bn (+16.9%), and newlyforecast FY3/29 OP of ¥460.0bn (FX assumption changed from ¥150 to ¥160/$ fromQ2 onwards). The increase in our FY3/27 forecast includes +c¥15bn from FX, +¥5bnfrom increased AI server passive component sales, and +¥5bn from a slightly raisedQ1 smartphone battery outlook. The increase for FY3/28 includes around +¥20bnfrom FX, +¥10bn from increased AI server aluminum capacitor sales, and +¥5bnfrom increased smartphone battery value-add. Stock view— TDK assumes total smartphone demand will drop c10% in FY3/27,while China smartphone shipments have remained positive YoY recently, and weexpect limited negative impact in Q1. If Q1 results show YoY profit growth and goodprogress versus initial guidance, we believe the share price will correct upward. Takayuki NaitoAC+81-3-6776-4644takayuki.naito@citi.com Bull/Bear: TDK (6762.T) TDK Investment strategy We rate the shares of TDK Buy (1), with a target price of ¥4,500. Growth forproducts used in autos and smartphones like capacitors, magneticcomponents, and sensor components continues. We also expect growth indemand for capacitors and magnetic components in the AI server space. Withdemand growing, we also forecast solid sales of electronic components. Thissignals, in our opinion, the arrival of a new growth phase for TDK and wetherefore assign a Buy rating. We assume progress in technology for HDDheads and organic growth in the rechargeable battery business, helped by thespread of polymer batteries. Valuation In setting our target prices for the component industry, we employ RoIC-WACC, taking net cash into consideration. We set a base year of FY3/29,assume an expected growth rate of 0% and a risk-free rate of 2.0%, andcalculate an equity-risk premium of 3.0% from the recent TOPIX earningsyield. Our ¥4,500 target price is derived as follows. Theoretical shareholdervalue (=FY3/29E adjusted NOPAT x future business value multiplier + end-FY3/29E net cash [after deducting an amount equivalent to 5% of annualsales, including book value of investment securities] - end-FY3/29E minorityinterest )/(1 + WACC)^(number of months to end of valuation base FY/12). Risks Risks associated with our target price include 1) trends in HDD demand, 2)demand trends in tech products in general, 3) substantial changes in TDK’sprice competitiveness in passive components, 4) rapid changes insmartphone demand, 5) sharp yen fluctuations, 6) inventory adjustments inthe AI auto market, and 7) sensor adoption trends. 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 theUS +1-210-677-3788 Appendix A-1 ANALYST CERTIFICATION The research analysts primarily responsible for the preparation and content of this research report are either (i) designatedby “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 r