BofA-INPEX Downgrade to Underperform； weak crude oil prices to be drag on earnings-20251128

Downgrade to Underperform, lower PO to ¥2,750

We downgrade INPEX to Underperform from Neutral because we now expect earnings tocome in below consensus, after lowering our earnings estimates to reflect a reduction inour global commodities team's Brent crude oil price forecasts (from $70/bbl to $60/bblfor 2026 and from $70/bbl to $62/bbl for 2027) on expectations of oversupply. We lowerour price objective (PO) from ¥2,950 to ¥2,750. We continue to apply a P/E of 9x to ourFY12/26 estimate. Despite proactive shareholder returns, our Underperform is premisedon expectations for earnings to fall short of consensus due to weak crude oil prices.

Revise estimates to reflect reduction in our crude oil priceoutlook, despite strong results

We raise our FY12/25E net profit (NP) from ¥384.5bn to ¥400.0bn (consensus:¥381.0bn) on strong 3Q results. However, we lower our FY12/26E NP from ¥377.0bn to¥350.0bn (¥372.4bn) on a reduction in our crude oil price outlook. We assume a forexrate of ¥150/$. As it usually does, we expect the company to announce conservativeinitial guidance for NP of around ¥300-320bn in FY12/26.