Mitsui Kinzoku: Mid-term Plan Targets Raised, Copper Foil ROIC at 64% by F3/29; Still Overweight

Core Conclusion

Mitsui Kinzoku sharply increased its mid-term recurring profit (RP) targets for F3/28 and F3/29, lifted copper foil ROIC targets, and raised the growth investment plan 1.5x to ¥122bn. Management signaled aggressive capacity expansion for MicroThin and VSP copper foil while strengthening U.S. marketing to improve demand forecasting. The F3/27 RP guidance of ¥93bn appears conservative, leaving room for upside. We maintain Overweight.

What the Market Is Underestimating

The market likely underestimates the earnings elasticity from copper foil capacity expansion and the confidence management has in AI server-driven demand.

• Copper foil ROIC target was raised from 39% to 52% for F3/28 and from 49% to 64% for F3/29.
• The growth investment plan was expanded 1.5x to ¥122bn.
• U.S. marketing efforts were enhanced to increase demand forecasting accuracy.
• These actions imply a strong conviction that visible demand will absorb the new capacity.

The F3/27 guidance of ¥93bn is viewed as conservative. Given the upgraded F3/28 target of ¥115bn and F3/29 target of ¥150bn, the near-term trajectory implies a compound annual growth rate of ~27% from F3/27 to F3/29. Market expectations anchored to the initial ¥70bn–¥100bn range have not yet fully adjusted.

Evidence Chain

Profit Targets Raised

• F3/28 RP target increased from ¥70bn to ¥115bn (+64%).
• F3/29 RP target increased from ¥100bn to ¥150bn (+50%).

Copper Foil ROIC Targets Lifted

• F3/28 target from 39% to 52%.
• F3/29 target from 49% to 64%.
  These levels indicate a projected return well above cost of capital, driven by MicroThin and VSP margins.

Growth Investment Expansion

• Total growth investment raised from ¥81.5bn to ¥122bn (+50%).
• Management stated proactive capacity expansion while monitoring demand trends to avoid missed opportunities.

Conservative Near-Term Guidance

• F3/27 RP guidance of ¥93bn is below the trajectory implied by the raised medium-term targets. This suggests either initial caution or a back-loaded ramp. If execution meets targets, the FY3/27 result will likely exceed ¥93bn.

U.S. Marketing Reinforcement

• The firm noted it has strengthened marketing in the U.S. to improve demand forecasting accuracy, a critical step given that end markets for AI server copper foil are increasingly U.S.-driven.

Key Risks

Downside

• Copper foil demand deterioration: a sharp economic slowdown could reduce orders for MicroThin and VSP.
• Zinc price decline: weaker zinc prices hurt the non-copper foil segment.
• Delays in new technologies: commercial production of HRDP and solid electrolytes for all-solid-state batteries may come later than expected.

Upside

• Zinc price upside could boost earnings from the base metals division.
• Stronger-than-expected copper foil sales driven by AI server deployment acceleration.
• Earlier commercialization of HRDP and solid electrolytes could create additional growth legs.

Valuation and Trading Implications

Current stock price (¥46,670, May 21, 2026) trades above the ¥37,000 target price. However, the Overweight rating is maintained based on medium-term growth potential from copper foil.

• Implied P/E using F3/27e EPS of ¥1,643 is 28.4x (¥46,670 / 1,643), above the target blended P/E of 22.5x.
• The blended P/E of 22.5x is derived from 30.3x for copper foil (peers reference) and 15.0x for other businesses (nonferrous smelting peer average). The implied P/B is ~4.4x.

If the raised profit targets are achieved, FY3/29 EPS could exceed ¥2,800 (assuming ~53.5bn shares), supporting a higher fair value even at a compressed multiple. The market is effectively pricing in the early stage of the copper foil ramp. Any upward revision to F3/27 guidance or further capacity expansion announcements would be catalysts.

Appendix: Key Target Revisions

Note: All figures from management briefing on May 21, 2026.