Mitsui Kinzoku (5706.T): Growth Scenario for AI-related Copper Foil Intact

We maintain our Overweight rating on Mitsui Kinzoku (5706.T) and lower our price target to ¥36,000 (19.4x F3/28e EPS of ¥1,869), implying 70% upside to the Sep 17, 2026 close of ¥21,235. The cut reflects weaker valuations for CCL and PCB makers in the copper foil supply chain, with the P/E applied to copper foil reduced from 36.5x to 24.9x. We think the 58% decline from the May 26 peak over-discounts concerns over HVLP/MicroThin share loss and a potential capital raise: we expect MicroThin's near-monopoly to be maintained and FaradFlex for AI servers to scale (profit contribution rising from ¥5.0bn in F3/27 to over ¥20.0bn in F3/31). We forecast a +41% RP CAGR for AI-related copper foil over F3/27-29, and see around ¥20bn in annual FCF from F3/28, limiting capital raise risk. We lower our F3/27 RP forecast to ¥118bn (-13.7% YoY), F3/28 to ¥138bn (+16.9%) and F3/29 to ¥165bn (+19.6%).