Goldman Sachs: Daikin Industries - Data Center HVAC Briefing Focuses on Growth and Margins
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Goldman Sachs notes that Daikin Industries hosted a post-market briefing on its data center HVAC business to address investor concerns following NVIDIA's CES 2026 commentary on liquid cooling technologies. The firm views the briefing positively but finds no compelling reason to materially adjust earnings estimates, maintaining a Neutral rating on the stock. Daikin reiterated its North American data center cooling sales target of at least JPY 300 billion for the fiscal year ending March 2026. Management indicated that several billion yen in additional capital expenditure is required to meet escalating demand. However, Goldman Sachs expects the short-term profit and cash flow contributions from this segment to remain limited due to intense technological competition and market share battles. The firm forecasts Daikin's operating profit for fiscal years 2026 to 2028 will average approximately 3% below the I/B/E/S consensus. Primary profit drivers through the current fiscal year and the next mid-term plan remain centered on cost control and a recovery in high-margin regions such as China. Goldman Sachs maintains a 12-month target price of JPY 20,000, based on a 9.0x mid-cycle EV/EBITDA multiple applied to fiscal years 2027 and 2028 estimates, incorporating a 20% holding company discount. Key risks involve North American strategy execution and European recovery.