We derive our ¥1,700 target price using a DCF model, based on our forecasts for FY5/26-FY5/30. We set the market assumptions at a risk-free rate of 1.5% and an equity risk premium of 5.2%. We use a beta for Askul of 1.3, a tax rate of 30.7%, and a terminal growth rate of 0.5%, for WACC of 6.1%.  

Converted to PERs based on our forecasts for EPS, our target price equates to an FY5/26 PER of 23.5x and an FY5/27 PER of 18.9x.

Risks that the share price will exceed our target price include the following: 1) a strong showing in the e-commerce business resulting in greater-than-expected growth, 2) improved profitability due to cost cuts at logistics centers and for IT systems, and 3) business expansion thanks to further strengthening of the capital and business alliance with the parent company. In contrast, risks that the share price will fall below our target price include 1) a slowdown in e-commerce business growth due to intensifying competition, 2) higher costs associated with extra logistics centers and system development, and 3) a narrowing of the business domain due to the shrinkage/dissolution of the capital and business alliance.