2025-06-12-花旗集团-石川岛播磨重工（7013）_IHI（7013.T）模型更新_12页_637kb

IHI (7013.T) - Citigroup Research Summary

Recommendation & Target Price

• Maintain Buy rating, increase target price from ¥16,000 to ¥19,000.
• Decision based on CEO meeting: Restructuring low-margin businesses, accelerated property sales, and positive outlook for civil aero parts, defense, and nuclear businesses.

Key Financial Highlights

• Current price: ¥14,555.
• Recurring Sales and Profit forecasted to grow significantly, especially in the 2026-2028 period.
• Strong EBIT improvements seen over the last 18 months.
• Free cash flow yield is expected to increase from 0.8% in 2024 to 9.0% by 2028.
• ROE has improved from -16.9% in 2024 to an expected 20.3% for 2028.

Business Breakdown

• 40% of orders expected to come from aerospace and defense (FY3/26E).
• Key partnerships across various engine platforms, with a mixed outlook (rebound in PW1100G program).
• Significant real estate holdings valued at ¥342bn (as of 2024).

Valuation Approach

• Uses SoTP (Sum of the Parts) based on average EV/sales, EV/EBIT of domestic/international peers.
• Less discount than previously (10%) due to consistent earnings beats and cash flow generation records.

Next Catalyst

• Early August FY3/26 Q1 results expected to be next catalyst.
• Order forecast: ¥345bn (+5% YoY) & OP forecast: ¥29.6bn.

Risks

• PW1100G program losses, global aviation downturn, pitch competition on A320neo, liquefaction risk in Toyosu, ICE car demand decline, project delays, and equity financing.

Additional Key Points

• Portfolio pruning and asset sales expected to boost cash flow.
• Dividend yield expected to rise from 1.0% to 1.2%.