Meiji Earnings: Midterm Profit Targets Overly Optimistic; Food Volume Contraction a Key Challenge

Narrow-moat Meiji’s profit guidance for fiscal 2026 (ending March 2027), indicating a 38% increase in operating profits over the three-year period, looks challenging without a sizable correction in input costs or a clear revival plan for the domestic consumer product business. We deem recovery of the probiotic yogurt and plain yogurt sales volume crucial to restoring margins and profitability. We have marginally lifted our fair value estimate to JPY 4,400 per share from JPY 4,350 to reflect the increased time value of money. Despite a handsome 31% upside to our intrinsic value, investors’ appetite for Meiji may not rebound until it delivers meaningful top-line growth, which requires new hit products to bolster domestic sales or rapid distribution expansion overseas.