日立制作所一季度利润超预期并上调全年经营利润指引

Hitachi (6501.T): Q1 results – Positive, full-year guidance hiked from Q1
Q1 adjusted OP increased 39.5% YoY to ¥294.3bn, beating the VA consensus by 16%. Energy OP was up ¥49.3bn YoY, outperforming significantly, with CI and Mobility also exceeding expectations. Versus internal plans, adjusted EBITA beat by c¥50bn, comprising forex +¥14bn, unrealized Middle East risk +¥13bn, and business scale effects etc. +¥23bn. Full-year adjusted OP guidance was raised ¥93bn to ¥1,408bn, exceeding the VA consensus of ¥1,380bn. Main factors behind the uplift include forex +¥55.5bn, business scale etc. +¥50bn, and growth investment -¥17bn.
Implications
We view today’s release positively, as we believe it demonstrates Hitachi’s earnings renewed growth capabilities. We expect the shares to react favorably to Q1 results and the unexpected full-year guidance hike. In the growth-driving energy segment, capacity expansion through capex and headcount increases, combined with production efficiency improvements including AI utilization, appear to be fueling stronger-than-expected sales and profit growth. We believe this will help lift consensus estimates. For DSS, domestic IT earnings reassuringly show solid orders and revenue, while GlobalLogic recorded a YoY revenue decline in Q1, which raises concerns about the full-year guidance for high single-digit YoY growth in dollar-based revenue for overseas IT (HDS + GL).
Investment Rating
Buy
Valuation
We derive our Hitachi target price using a PER-based SoTP approach. We sample 54 companies in similar industries in our coverage, derive a fair value PER for each of the business domains, calculate business value, and sum them.
Hitachi's fair value PERs are distributed from 14x to 31x, while fair value derived from a weighted average comes to 25.1x. We apply this to our FY3/27 EPS forecast of ¥259.3, producing fair value of ¥6,500, which we set as our target price. For reference purposes, we calculate fair value of ¥7,400 based on EV/EBITDA multiples and ¥5,500 based on PBR.
Risks
The main risks we see that might prevent the share price reaching our target price are 1) a slowdown in the domestic IT investment market or European/US power grid and railway markets, 2) missteps in project management in the heavy electrical field, 3) rapid yen strengthening against the US dollar and the euro, 4) slower-than-expected progress with streamlining, and 5) the emergence of concerns about AI's impact on the SaaS and IT services markets. On the other hand, if factors 1) to 4) turned out to be more favorable than we anticipate, earnings could overshoot and the share price could exceed our target price.