Mitsubishi Electric：三菱电机：FA业务令人担忧-20250529

Investment Rating - The report assigns a 12-month rating of "Sell" for Mitsubishi Electric with a price target of ¥1,700, indicating a potential decline from the current price of ¥2,901 [5]. Core Insights - The report highlights concerns regarding the FA (Factory Automation) business, which has seen a significant decline in operating profit margins, dropping from nearly 20% in the past to 6.1% in FY3/25 [2][3]. - The company is undergoing restructuring, particularly in the FA business, with plans to make decisions regarding operations worth approximately ¥0.8 trillion by FY3/26 [1][3]. - Despite some positive opinions on the restructuring, the overall sentiment remains bearish due to the company's slow response to market share losses in China and the gradual implementation of cost-cutting measures [3][4]. Financial Performance - Revenue projections show a slight decline from ¥5,521.7 billion in FY3/25 to an estimated ¥5,470.0 billion in FY3/26, with a forecasted operating profit of ¥350.0 billion [7][8]. - The report estimates that the operating profit guidance for FY3/26 includes a one-off profit of over ¥30 billion, suggesting that the underlying performance may be weaker than it appears [4]. - The forecast for EPS (Earnings Per Share) is projected to decrease from ¥156.2 in FY3/25 to ¥129.1 in FY3/26, reflecting a significant drop of 17.3% [6][9]. Valuation Metrics - The report uses an EV/EBITDA multiple of 5x for valuation, leading to a price target of ¥1,700 [4][12]. - Key valuation metrics include a P/E ratio of 22.5 for FY3/26 and a projected dividend yield of 1.7% [9][10]. - The company's market capitalization is reported at ¥6,021 billion, with a free float of 67% [5][8]. Market Position and Outlook - Mitsubishi Electric operates in various sectors, including cyclical and non-cyclical fields, maintaining a strong and stable position within the industry [11]. - The report indicates a bearish outlook for the company's stock, with a forecasted total stock return of -39.7% over the next year [10].