SoftBank Corp Earnings: Mobile Recovers Quicker Than Expected; Fair Value Estimate Raised

We increase our SoftBank Corp fair value estimate to JPY 1,660 per share from JPY 1,560 per share previously following its third-quarter fiscal 2023 result (quarter ended December 2023). Management raised fiscal 2023 revenue guidance by 1%, operating profit guidance by 7.6%, and net profit guidance by 10%. Given we were above the previous guidance, we only raised our fiscal 2023 operating profit guidance by around 3% but also raised fiscal 2024 and 2025 by around 4%-6%. We 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 5.4% per year driven mainly by forecast growth in payment services, LY Corp, and lower competitive intensity in mobiles. We see the shares as slightly overvalued at these levels.