Investing.com -- UBS raised its price target on House Foods (TYO:2810) to ¥5,000 from ¥3,900, citing the potential sale of its Japanese curry restaurant chain Ichibanya and broader reforms aimed at improving capital efficiency.
House Foods shares rose 0.72% on Monday to ¥4,056, after closing 0.92% higher on Friday. The stock remains sharply below UBS's new ¥5,000 price target, while the brokerage reiterated its "buy" rating and raised its earnings per share forecasts by 5% for fiscal 2027, 118% for fiscal 2028 and 25% for fiscal 2029.
UBS said it now factors in a sale of House Foods' 51% stake in Ichibanya in fiscal 2028, with proceeds expected to be returned to shareholders through additional buybacks.
UBS expects House Foods to conduct ¥26 billion of buybacks in fiscal 2027, ¥100 billion in fiscal 2028 and ¥30 billion annually from fiscal 2029.
The brokerage sees the potential transaction as evidence that House Foods is shifting toward capital efficiency after management highlighted concerns that return on equity had remained below its cost of equity.
UBS forecasts return on equity improving from 4.1% in fiscal 2027 to 8.3% by fiscal 2030 as business reviews and buybacks progress. It expects House Foods to retain a net cash position even with the larger shareholder returns.
The bank said the current share price does not appear to reflect an Ichibanya sale or additional buybacks. The brokerage sees scope for further restructuring beyond the restaurant business as House Foods narrows its focus on the spice value chain.
Potential areas for review include the loss-making U.S. tofu business, the Tokyo head office and the Itami plant. UBS estimates these assets could generate additional cash proceeds, although it has not included those disposals in its base case.
Original Article
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