2Q beat/full-year guidance raise: AI data center sentiment headwinds persist, but LTAs, including price revisions, raising visibility; corrected valuations compelling; Buy

Furukawa Electric announced 2Q FY3/27 sales of ¥372.5 bn and operating profits of ¥32.2 bn (GS estimates: sales ¥357.1 bn / operating profits ¥27.3 bn). The company raised FY3/27 full-year guidance to sales of ¥1.57 tn and operating profits of ¥136 bn from ¥1.53 tn and ¥123 bn (GS prior estimates: ¥1,505.8 bn / ¥127.6 bn). Based on our investor conversations, we believe market expectations for full-year operating profits were around ¥135 bn at most, and revised guidance is slightly above that level. At the results briefing the company confirmed that negative headwinds such as a slowdown in demand have not materialized on the order intake front, that efforts are progressing on securing long-term contracts and pricing revisions with more agreements now incorporating volume shortfall compensation or take-or-pay purchase obligations, and that there is still room for margin improvement, such as via expansion of rollable ribbon into lower-fiber-count cable products. Reflecting the results, w