Toshiba Corp.

Overview Key strengths Key risks Continued business base and scale in electric power and social infrastructure in Japan and abroad Core business' earnings expected to remain weaker than that of peers, reflecting its market position and competitiveness Relatively stable energy and infrastructure projects expected to support earnings recovery Semiconductor and hard disk drive (HDD) for data centers business, which is susceptible to economic fluctuations, could weigh on overall earnings Toshiba's financial condition will likely deteriorate materially as it is likely obliged to repay debt raised for its acquisition by a special purpose company (SPC) established by Japan Industrial Partners Inc. (JIP); financial position will likely recover only moderately in the next two years Under JIP, Toshiba is expected to continue

...We expect Toshiba Corp.'s energy and infrastructure business, a relatively stable segment in its portfolio, to underpin recovery of companywide earnings over the medium term. Its hard disk drives (HDDs) for data centers business has been affected by a deteriorating market environment, while the energy and infrastructure business is less susceptible to economic fluctuations because of its relatively longer business cycle. This business generates approximately 50% of consolidated EBITDA. We believe the companywide EBITDA margin will stay between 8% and 8.5% consistently in the next one to two years. It was 8.2% in fiscal 2022 (ended March 31, 2023). Toshiba's financial profile is likely to deteriorate materially this fiscal year, in our view. In September 2023, a tender offer for Toshiba by the SPC was completed. The company was delisted in December 2023, leaving the SPC as the only shareholder of Toshiba . We assume that Toshiba will be obliged to repay the debt that the SPC raised for the...

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