GS Yuasa Corp: Grid-scale ESS Demand Growing

Goldman Sachs upgrades GS Yuasa to Buy, raising its target price to ¥7,200 as the company pivots toward high-margin industrial Energy Storage Systems (ESS). Growth in Japanese grid-scale ESS and US data centers is expected to drive earnings significantly above consensus.

Key Takeaways

• 1.Upgrade to Buy from Neutral based on expected above-consensus earnings driven by the expansion of the energy storage system (ESS) market.
• 2.Significant target price increase from ¥4,800 to ¥7,200, shifting to a sum-of-the-parts (SOTP) valuation methodology.
• 3.Industrial batteries are becoming the key earnings driver, with profit contribution expected to rise from 35% to 41% over three years.

Table of Contents

• New guidance below market expectations
• Implementing aggressive upfront investment during new medium-term plan period
• Raising our earnings estimates
• Raising our target price; shifting to SOTP to incorporate the future potential of industrial batteries
• Per-share theoretical value including the balance sheet is ¥6,700-¥7,800
• Key risks
• Investment Thesis - GS Yuasa
• Price Target Risks and Methodology - GS Yuasa

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