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Fundamental Equity Research |
We set our target price for AGC at ¥4,800 (FY12/26E PER of 11x). We calculate our target price using a sum of the parts (SoTP) method referencing the one-year forward consensus-based PERs of global peers in each business. The multiples applied to each business are as follows: 7x for the glass business (construction glass and automotive), 13x for the display business, 20x for electronic materials, 7x for chemicals (essential chemicals and performance chemicals), and 20x for life science.
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Downside risks to our target price include 1) a lack of progress in price revisions for glass and displays, 2) a deterioration in glass and display profits caused by a rise in material and energy prices, 3) further delays in the ramp-up of life science plants, and 4) difficulties or delays in the EUV-based mass production of semiconductors by major EUV blank customers. Upside risks to our target price include 1) the generation of greater-than-expected benefits from measures to improve glass and display profitability, 2) an early recovery in life science-related demand, 3) progress in expanding EUV blank market share, and 4) the development of competitive new products in semiconductor-related materials.
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