Focus on growth in specialty materials segment: Concerns over procuring synthetic rubber inputs starting to ease

Research evidence excerpt

Focus on growth in specialty materials segment: Concerns over procuring synthetic rubber inputs starting to ease

Global Markets Research

29 June 2026Zeon

4205.T 4205 JP / EQUITY: JAPAN CHEMICALS & TEXTILES

Focus on growth in specialty materials segment RatingRemains Neutral

Concerns over procuring synthetic rubber inputs starting to ease Target price Increased from 1,910 JPY 2,560

We retain our Neutral rating, expect specialty materials segment to support growth

Closing priceWe raise our target price for Zeon following a change in analyst but think the stock offers little 26 June 2026 JPY 2,396.0

valuation appeal and retain our Neutral rating. While we expect battery materials at the

specialty materials segment to support profit growth from 27/3 onward, these materials do not Implied upside +6.8%

currently account for a high proportion of companywide operating profits (12% in 26/3). We

therefore think they are unlikely to drive a major upturn in companywide profit. We obtain our

target price by multiplying our 27/3 adjusted EPS forecast by a P/E of 18.6x.

Relative performance chartWe reduce the discount we apply to the Russell/Nomura Large Cap (ex financials) average P/E

on FY26 forecasts from 20% to 10% to reflect lower concerns about production cutbacks for

synthetic rubber now that the situation in the Middle East is moving toward stabilization.

As potential upside catalysts, we think a confirmation of improved prospects for profit growth in

battery materials and progress with restructuring of the elastomer segment could prompt

investors to give the stock a fresh look. Competition in the US energy storage system (ESS)

market looks to be limited, and particularly if sales there were to increase we think the stock

could attract higher valuations.