Raising GSe, but cutting TP on lower sector multiple and premium; looking toward a peak-out in order momentum; Neutral

We have revised our estimates based on the various monthly and statistical data published as of September 15, including the latest machine tool orders. Reflecting strong order trends (record high or near record high) and the results of our channel checks on selling price trends, we raise our FY12/26E-FY12/28E estimates by just over 50% on average to reflect the far greater-than-expected order trends. For valuation, however, in light of (1) the historical correlation between the stock market and the machinery sector (decline in multiples), and (2) the peak-out in order momentum (yoy), we now use normalized earnings and normalized multiple premium as our valuation basis (vs. an average EV/EBITDA premium post its restructuring announcement previously). With this, we lower our normalized FY12/28E EV/EBITDA multiple from 10X to 9X, and revise the sector-relative premium from +40% to +/-0% (the historical median plus 1 standard deviation). As a result, our 12-month target price moves to Y6,5