METI's new strategy aligns with GS Yuasa's medium-term plan, and the report expects a positive impact on the share price

Overview

This report focuses on the "Battery and Power Industry Strategy" released by Japan's Ministry of Economy, Trade and Industry (METI) on June 2, 2026, and analyzes its potential impact on GS Yuasa Corporation (6674.T). The report believes that the policy has expanded from the construction of a single battery manufacturing base to strengthening the competitiveness of the entire power system with batteries at the core, which directly corresponds to GS Yuasa's medium-term growth directions in social infrastructure, AIDC high-reliability power supplies, and ESS energy storage systems.

Core views

The core view is that policy catalysis is aligned with the company's strategy: on one hand, delayed BEV demand expansion makes a pure automotive battery thesis less sufficient; on the other hand, demand is rising for power control and energy storage solutions in AI data centers, medical care, disaster prevention, renewable energy grid connection, and grid stability. GS Yuasa retains its core mobility businesses such as lead-acid batteries and lithium-ion batteries, while also positioning AIDC and ESS as new markets, so the report expects the new policy to have a positive impact on its share price.

Analysis framework

The report adopts an event-driven and corporate-strategy-matching analytical path: it first compares the change in scope between METI's 2022 battery industry strategy and the 2026 battery and power industry strategy, then maps the policy direction to the business priorities in GS Yuasa's medium-term plan released on May 13, and finally discusses valuation foundations and risks using a P/E and segment SOTP valuation framework.

Methodology notes

• Policy event analysisMatching METI strategic changes with the company's medium-term plan

  Judge the impact on the share price based on expanded policy scope, changes in demand structure, and the degree of fit with the company's growth businesses.

  The report believes that METI's shift from a liquid lithium-ion battery manufacturing base target to a power system strategy centered on batteries reflects rising demand for power control and energy storage in AI data centers, medical care, disaster prevention, and renewable energy scenarios; GS Yuasa's AIDC and ESS positioning is aligned with this direction.

• Valuation frameworkSOTP segment valuation and P/E multiple method

  Apply a target P/E of 18.0x to F3/28e EPS of ¥458.6, while using different P/E multiples by business line.

  The target P/E of 18.0x represents a premium to the 12.0x industry benchmark; within the SOTP, automotive lead-acid batteries use 12x P/E, industrial batteries and power supplies use 22.5x, automotive lithium-ion batteries use 20x, and specialty batteries use 25x.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• GS Yuasa Corporation (6674.T)

  A policy beneficiary; the company's medium-term plan is aligned with the direction of METI's battery and power industry strategy.

  Strengths

  Core mobility businesses include lead-acid batteries and lithium-ion batteries; social infrastructure is listed as a growth area; AIDC high-reliability power supplies and ESS energy storage systems are linked to demand from AI data centers, renewable energy grid connection, and grid stability; HEV orders are strong and production lines can be flexibly used for ESS.

  Weaknesses

  Delayed BEV demand expansion still creates uncertainty; the data center UPS business is limited in scale; foreign exchange sensitivity is low, so benefits from yen depreciation are limited.

  Comparison

  The target P/E of 18.0x is above the 12.0x industry benchmark, with the premium coming from higher segment valuation multiples in industrial batteries and power supplies, automotive lithium-ion batteries, and specialty batteries within the SOTP.

  Risks

  Inflows of low-cost overseas battery products may intensify price competition, and if ESS and AIDC businesses scale up more slowly than expected, the transmission of policy benefits into earnings and valuation will weaken.

Key data

• Report date2026-06-03The report text is marked June 3, 2026 01:49 AM GMT.
• Policy event date2026-06-02METI announced the "Battery and Power Industry Strategy".
• Original battery industry strategy target150GWh/year by 2030The August 2022 strategy proposed establishing a liquid lithium-ion battery manufacturing base by 2030.
• Company medium-term plan disclosure date2026-05-13GS Yuasa's medium-term plan continued to focus on core mobility businesses and identified social infrastructure as a growth area.
• Valuation anchorF3/28e EPS ¥458.6 × 18.0xThe report disclosed a target P/E of 18.0x, above the 12.0x industry benchmark.
• Segment valuation multiples12x / 22.5x / 20x / 25xCorresponding respectively to automotive lead-acid batteries, industrial batteries and power supplies, automotive lithium-ion batteries, and specialty batteries.
• Morgan Stanley rating definition horizon12-18 monthsThe disclosure page states that, unless otherwise noted, the target price time frame in Morgan Stanley research is typically 12 to 18 months.

Impact & implications

If the METI strategy continues to promote the construction of industry chains for batteries, power control, energy storage, and data center power supplies, GS Yuasa's ESS and AIDC narrative may receive stronger policy support, and the market may be more willing to accept a valuation premium. However, the actual impact will still depend on order conversion, ESS scaling capability, UPS business expansion, and competitive pressure from low-cost overseas products.

Risks

• Delayed BEV demand expansion leads to uncertainty in growth related to automotive lithium batteries.
• Inflows of low-cost overseas battery products may intensify price competition.
• The limited scale of the data center UPS battery business may constrain the profit contribution of the AIDC theme.
• The company's foreign exchange sensitivity is low, so benefits from yen depreciation are limited.
• Morgan Stanley discloses that it may have business relationships or potential conflicts of interest with the covered company, and investors should use this research as only one factor in decision-making.

What to watch

• Follow-up policy details, subsidy direction, and industry chain implementation pace of METI's battery and power industry strategy.
• Whether ESS demand continues to rise along with renewable energy expansion, grid connection, and grid stability needs.
• The strength of HEV battery orders and whether production lines can be flexibly shifted to ESS uses.
• Customer expansion, order scale, and profit contribution of AIDC and data center UPS battery businesses.
• Pressure from low-cost overseas battery products on the pricing and gross margins of Japanese domestic battery companies.