Q4 FY3/26 results update
More improvements to come – FY3/26 results were ahead of guidance, driven by efficiency gains at the Flour Milling segment. The Food segment saw growth, but profitability was impacted by cost pressures. We continue to think the segment could deliver meaningful earnings growth if costs stabilize. Importantly, further production efficiency gains are ahead, as NIPPN’s new Chita Mill commenced operations in February 2026. As NIPPN’s record pipeline of strategic capex projects comes online over the next few years, we think the trend of incremental efficiency gains is likely to continue, although tempered by higher depreciation charges. Furthermore, NIPPN’s commitment to optimizing its capital structure, as evidenced by FY3/26, and to reducing cross-shareholdings should drive incremental earnings growth.
Improving capital structure & efficiency
Capital allocation highlights – NIPPN accelerated capex in FY3/26 (¥33.5bn, +60% YoY), redeemed the ¥25bn convertible bond, and raised ¥50.3bn in new debt. Cross-shareholding disposals totaled ¥5.9bn in FY3/26, with NIPPN targeting additional disposals in FY3/27. The Company completed its ¥4.0bn share buyback in H2 FY3/26.
FY3/27 guidance impacted by depreciation — FY3/27 guidance expects steady growth with sales of ¥430.0bn (+2.8% YoY), but operating profit to decline to ¥19.5bn (-11.7% YoY), driven by an increase in depreciation from the newly operational Chita Mill.
Valuations – On our earnings estimates, the shares are trading on an estimated FY3/27E EV/EBITDA of 7.0x (on +1.4% EBITDA growth YoY) and PER of 10.3x and at 0.52x our SOTP valuation.
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