1、 Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.Refer to Other Important Disclosures for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.BofA Securitie

2、s does and seeks to do business with issuers covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment d

3、ecision.Refer to important disclosures on page 22 to 24.Analyst Certification on page 20.Price Objective Basis/Risk on page 20.12891399 Nichias(5393)New Buy:Positive on offensive/defensive business portfolio and shareholder returns Initiating Coverage:BUY|PO:6,400 JPY|Price:5,575 JPY Initiate at Buy

4、 with PO 6,400,16%upside potential We initiate coverage of industrial materials major Nichias.Our Buy rating is based on three points:(1)potential for semiconductor production equipment(SPE)-related products to grow at a CAGR of+10%over FY3/26-30;(2)ample and highly visible cash inflow from plant-re

5、lated business and industrial products;and(3)shareholder returns with a prospective total return ratio above 50%.For earnings,we expect operating profit(OP)to surpass the consensus in FY3/26-28.Our price objective(PO)is based on a P/E of 13x our FY3/27 EPS estimate.We apply a P/E of 13x to our FY3/2

6、7 estimate to calculate our price objective,near the upper end of its past 10-year range,to factor in our outlook for OPM improvement supported by the recovery in SPE-related operations.Biz.portfolio combines growth businesses and cash cows Our valuation of Nichias is based on a combination of busin