SoftBank Corp Earnings: Strong Second Quarter in Core and LY Corp; FVE Increased

SoftBank Corp’s second quarter fiscal 2023 result (quarter ending September 2023) was ahead of our estimates. We believe it is on track to beat its unchanged and conservative fiscal 2023 operating profit guidance of JPY 780 billion, and we forecast a full-year estimate of JPY 830 billion. We increase our fair value estimate to JPY 1,560 per share from JPY 1,450 per share previously based an increase in our forecasts for LY Corp and upgraded longer-term forecasts for the core business. We also retain our narrow moat rating based on cost advantage and efficient scale in SoftBank’s core telecom business. Our forecasts for underlying average operating profit growth over the next five years is 7.5%, driven mainly by forecast growth in Payment Services, LY Corp, and lower competitive intensity in mobiles.