Raising Hoshizaki’s Fair Value Estimate to JPY 5,000 From Stronger Outlook in Japan

Based on the stronger outlook for domestic sales, we raise Hoshizaki’s fair value estimate to JPY 5,000 from JPY 4,800. We think Hoshizaki has been able to resume production more swiftly than its domestic peers and can pass over higher component costs faster than previously expected. We believe these factors are testaments of Hoshizaki’s wide economic moat stemming from its intangible assets. As restaurants in Japan will likely increase investments in light of the reopening of borders and expected inbound demand, we expect solid sales and operating margins in the domestic market in the midterm. However, we view these factors as mostly priced in and Hoshizaki’s shares are currently fairly valued, after the share rally following the announcement.