Resonac Holdings (4004.T): Positive implications for HD media business from reported major HDD production increase at Toshiba

According to an October 2 Nikkei report, Toshiba plans to invest c.¥60 bn to expand its Philippine plant and double its production capacity of HDDs for AI data centers during FY3/28. This is reportedly the first large-scale investment in the HDD unit in about five years. In addition to expanding production lines, it will support new products with up to 40% more storage capacity per unit. This reported move could have positive implications for Resonac's HD media business, for which we assume Toshiba is the largest customer. We reiterate our Buy rating, as in addition to Resonac's broad coverage, competitiveness, and growth potential in back-end materials for AI data centers, the business potential of HD media and SiC wafers also appears high. We look for valuation multiple expansion as a purer semiconductor and electronic materials company following the spin-off of Crasus Chemical. Toshiba relies on external procurement for HD media, and we assume it is the largest customer of Resonac's