Morgan Stanley on GS Yuasa (6674.T): No Near-Term Catalysts, but Energy-Storage Potential Remains Attractive
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GS Yuasa raised F3/27 operating profit guidance by ¥30bn to ¥630bn at its first-quarter results: overseas lead-acid batteries +¥35bn on solid Southeast Asian demand and US IRA subsidies, domestic automotive lead-acid +¥5bn, lithium-ion -¥10bn on material-procurement adjustments. Morgan Stanley nudged its F3/27 operating profit estimate from ¥630bn to ¥640bn, kept F3/28 at ¥690bn, and sees room for a second guidance raise at Q2, though beats should be modest. The target price fell from ¥8,200 to ¥7,000 purely on valuation—the target P/E on F3/28e EPS drops from 19.0x to 16.3x reflecting peer de-rating—within a SOTP where industrial and specialty batteries carry 20.0x, automotive lead-acid 12.0x and automotive lithium-ion 20.0x. Overweight is maintained on medium-term logic: strong Japanese renewable-energy storage (ESS) battery demand and US AI data-center UPS orders. On August 31 the company announced a new stationary ESS plant in Ibaraki, aligned with METI's February 2026 battery supply-security plan, starting October 2028 and improving cost competitiveness versus the existing Ritto plant. US data-center UPS battery sales of about ¥5bn from F3/27 are guided to roughly ¥30bn by F3/29, the final year of the mid-term plan. Bull and bear targets are ¥10,000 (20x F3/28e EPS of ¥500.9) and ¥4,500 (12.5x ¥360.4).