J.P.. Morgan Seven & i Holdings (3382) Seven-Eleven Japan's Aggressive Moves, Steady Progress on Omni-Channel Strategy Raising price target to Y4,600, reiterating Overweight rating Adjusting our earnings estimates and price target, still bullish: We adjust our forecasts and raise our price target from ¥4,400 to ¥4,600 (see page 2 for valuation details). We raise our assumptions for the convenience store, financial services, and restaurant segments and lower our assumptions for the superstore segment. We slightly lower our FY2014 profit growth estimate because demand is likely to decline after the consumption tax hike. We adjust our consolidated estimates and expect operating profit to rise 7% on an adjusted basis (15% on a nominal basis) in FY2013 and 6% in FY2014. We consider the stock attractive relative to other large retail stocks, in light of profitability, growth, and valuation, and see 22% upside potential. We maintain our bullish stance. • Earnings outlook reassuring, mainly in convenience store business: We expect operating profit in 3Q to grow 7.6% on an adjusted basis and 17.7% on a nominal basis. As in 2Q, likely sales shortfalls for Ito-Yokado (IY) and the department store business will probably be offset by the convenience store and financial services segments, resulting in solid consolidated earnings. Improved profit growth in the convenience store segment should have a particularly strong impact in 3Q onward, with a slight slowdown in the rise in Seven-Eleven Japan's adjusted SG&A costs, following a peak in IQ, and solid results in dollar terms for 7-Eleven, Inc. The post-consumption tax hike outlook is uncertain, but we expect solid profit growth in FY2014, with structurally stable growth for Seven-Eleven Japan, driven by the meeting of normal-use demand from middle- aged and older consumers and women, offsetting likely profit declines for Ito- Yokado and the department store business. • Series of forward-looking strategic