Idemitsu Kosan (5019) 4Q results: Large profit decline forecast and new MTP announced

Research evidence excerpt

Idemitsu Kosan (5019) 4Q results: Large profit decline forecast and new MTP announced

J P M O R G A N Asia Pacific Equity Research

13 May 2026

Idemitsu Kosan (5019) Neutral

5019.T, 5019 JP

4Q results: Large profit decline forecast and new MTP Price (12 May 26):¥1,394

announced Price Target (Dec-26):¥1,450

Neutral: Guidance for a large profit decline in FY2026 was broadly in line with Japan Equity Research

expectations. This mainly reflects a time-lag impact, and management does not

Trading Companies, Energy

expect oil refining margins to deteriorate. We see progress on the pass-through of

additional crude oil costs as a key risk factor to watch. We think the details of the Jiro Iokibe AC

new MTP can be viewed positively. However, we are disappointed that the planned (81-3) 6736-8668

jiro.iokibe@jpmorgan.com

dividend for FY2026, the first year of the MTP, is flat YoY, despite management’s JPMorgan Securities Japan Co., Ltd.

adoption of steady dividend increases as part of its shareholder payout policy.

• Earnings summary: FY2025 operating profit plus equity-method income

(excluding inventory effects) totaled ¥244.1 billion (+14% YoY), above the

guidance of ¥175 billion and our estimate of ¥233 billion. Net profit (same

basis) rose 54% YoY to ¥192.3 billion, and the ROE was 10.6%. Management

forecasts FY2026 pretax profit excluding financial costs and inventory effects

(IFRS basis) of ¥140 billion and net profit (same basis) of ¥90 billion (-53%

YoY). Its Dubai crude oil price assumption is $81.3/bbl on an annual average

basis (1Q: $100/bbl, 2Q: $80/bbl, 3Q: $80/bbl, 4Q: $65/bbl), premised on the

Strait of Hormuz being passable in 2Q onward. A time-lag effect in the fuel oil

business is the main factor behind the guided profit decline in FY2026.