Kamigumi (9364.T): F3/27 2Q Results: In Focus for Earnings Stability (Defensiveness) & 7% Total Return Yield (Yield Play)

Kamigumi 2Q consolidated OP of ¥9.6bn beat our ¥9.0bn forecast (IFIS: ¥9.4bn) but we conclude it was broadly within the range we envisaged. 2Q logistics sales rose 8% YoY with OP up 1%, which we view positively given the drop-out of one-time demand seen a year ago. The company raised F3/27 guidance from ¥34.3bn to ¥34.7bn, mainly reflecting the 1H overshoot, but its new lower target for 2H still looks conservative; we see room for further upside and our new estimate is ¥35.7bn. With macro uncertainty still unresolved, we look for a near-term share price rebound on the sense of relative earnings stability (Kamigumi mainly handles cargo imported into Japan, but its highly diversified product range spreads risk) and on appeal as a yield stock (total return yield including share buybacks is about 8%, dividend yield about 5%). We stay Equal-weight with a price target of ¥5,190, based on a fair P/B of 1.3x against an estimated F3/27 ROE of 7.4% versus capital costs of 5.8%.