NOF: F3/27 1Q Results: Earnings to Recover from a 1Q Bottom

Research evidence excerpt

M

Update

August 5, 2026 06:43 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.+

NOF (4403) | Japan

Ryoichi Watanabe

Equity Analyst

F3/27 1Q Results: Earnings to

Recover from a 1Q Bottom

Takato Watabe

Equity Analyst

Kayoko Shoji

Research Associate

Kano Fujita

AlphaSignals Earnings Reaction

Research Associate

Unchanged

In-line

Largely unchanged

Impact to our thesis

Financial results versus consensus

Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

Key Takeaways

Functional Chemicals: Cosmetics ODM sales appear to have increased by nearly

NOF (4403.T, 4403 JT)

15% YoY. We view performance as solid.

Fine Chemicals | Japan

Stock Rating

Industry View

Price target

Shr price, close (Aug 4, 2026)

Mkt cap, curr, basic (bn)

Avg daily trading value (bn)

Pharmaceutical, Medical and Health: DDS sales appear to have declined by more

than 30% YoY. This exceeded our expectation, which had assumed a decline of

more than 50%. Higher food costs weighed on profits.

Explosives & Propulsion: Top-line performance was in line with our expectations,

Overweight

In-Line

¥3,800

¥2,757

¥624.3

¥2.2

while margins exceeded our assumptions.

The additional buyback leaves a favorable impression. Our view remains that

earnings will recover from 2Q and see pullbacks as a buying opportunity.

1Q OP fell 10% YoY to ¥10.7bn, but topped our ¥9.0bn forecast. In the Functional

Chemicals segment, strong cosmetics ODM drove OP above our expectations. In the

Pharma, Medical and Health segment, DDS was weak, but this appears to also

reflect a timing shift from 1Q to 2Q, suggesting a strong likelihood of recovery from

2Q. Higher food costs in the segment also weighed on 1Q OP, although we expect

price pass-throughs to progress from 2Q. In defense-related Explosives &

Propulsion, sales appear to have grown more than 4x YoY. We forecast a further

step-up in 2Q. The ¥5.0bn buyback announcement also leaves a favorable

impression. We expect the share price to turn upward as the market begins to price

in earnings recovery from 2Q onward.

Exhibit 1:

Results Highlights

F3/26

F3/27 1Q

F3/27 Full

(JPY bn)

1Q

4Q

Full

Act

Con

e

Ce

Con

e

Sales

56.1

84.5

258.0

69.0

66.1

319.0

314.5

321.0

…