Tokyo Keiki (7721)

Equity Research 10 August 2026 | 9:06PM JST

Tokyo Keiki (7721.T) Earnings Review: 1Q beat/guidance raise; orders growth in defense & communications/marine systems likely to raise earnings expectations; maintain Buy

7721.T 12m Price Target: ¥9,000 Price: ¥7,310 Upside: 23.1% BUY Norihiro Miyazaki 1Q3/27 operating losses of ¥250 mn, announced after the August | Goldman Sachs Japan Co., Ltd. 10 close, beat our estimate (losses of ¥480 mn). 1Q earnings are Ryohei Kurita inherently subject to seasonality and typically start slow due to the | Goldman Sachs Japan Co., Ltd. timing of defense budget execution. As such, we are not surprised by this level of profit progress. Meanwhile, Tokyo Keiki raised company-wide operating profit guidance to ¥7 bn (+31% yoy) from ¥6.4 bn (+19% yoy) on stronger-than-expected progress in the marine systems and defense & communications equipment Key Data _____________________________________ Market cap: ¥120.1bn / $760.6mn segments. Already at 1Q, management has raised guidance to match Enterprise value: ¥143.3bn / $907.1mn 3m ADTV: ¥2.6bn / $16.2mn our prior estimate of ¥6.9 bn, indicating its outlook for favorable Japan profit growth momentum to continue. 1Q orders included a +63% Japan Growth M&A Rank: 3 yoy increase in the defense & communications equipment segment Leases incl. in net debt & EV?: Yes

backed by orders for onboard equipment for naval vessels, and a GS Forecast __________________________________ 3/26 3/27E 3/28E 3/29E +27% yoy increase in marine systems reflecting expanding inquiries Revenue (¥ bn) from Chinese shipbuilders. We view this progress as positive as we Op. profit (¥ bn) New 5.4 7.2 7.1 8.8 Op. profit (¥ bn) Old 5.4 6.9 7.0 8.7 believe it is likely to lift future earnings expectations. We raise our Op. profit CoE (¥ bn) -- 7.0 -- -- 12-month target price to ¥9,000, from ¥8,800, and maintain our EPS (¥) New EPS (¥) Old Buy rating. P/E (X) P/B (X) 1.9 2.4 2.2 2.0

n 1Q3/27 earnings: 1Q operating losses of ¥250 mn (vs. losses of CROCI (%) 4.3 8.8 7.8 8.9

¥330 mn in 1Q3/26) beat our estimate (losses of ¥480 mn). This 6/26 9/26E 12/26E 3/27E EPS (¥) was supported by higher marginal profits versus our estimate, GS Factor Profile ______________________________ driven by higher sales (+20% yoy) in the defense & Growth

communications equipment segment. The hike in full-year Financial Returns guidance centered on the marine systems segment and the defense & communications equipment segment, with operating Multiple

profit guidance revised up to ¥7.0 bn (+31% yoy) from ¥6.4 bn Integrated

(+19% yoy). 1Q progress tends to be modest relative to full-year Percentile 20th 40th 60th 80th 100th earnings due to the timing of defense budget execution, but we see the upward revision to guidance at 1Q earnings as a 7721.T relative to Japan Coverage 7721.T relative to Japan Growth

straightforward positive. Below, we summarize progress in the Source: Company data, Goldman Sachs Research estimates. defense & communications equipment and marine systems See disclosures for details.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Tokyo Keiki (7721.T)

Tokyo Keiki (7721.T) Income Statement (¥ bn) ___________________________________ BUY Rating since Jun 18, 2026 3/26 3/27E 3/28E 3/29E Total revenue Cost of goods sold ( ) SG&A ( ) Ratios & Valuation __________________________________________ R&D -- -- -- -- 3/26 3/27E 3/28E 3/29E Other operating inc./(exp.) -- -- -- -- P/E (X) EBITDA P/B (X) 1.9 2.4 2.2 2.0 Depreciation & amortization (1.7) (2.3) (2.6) (2.5) FCF yield (%) (5.6) (3.3) 4.6 (5.6) EBIT 5.4 7.2 7.1 8.8 EV/EBITDAR (X) Net interest inc./(exp.) (0.2) (0.3) (0.3) (0.3) EV/EBITDA (excl. leases) (X) Income/(loss) from…