Shin-Etsu Chemical

Research evidence excerpt

Shin-Etsu Chemical

Global Markets Research

9 July 2026Shin-Etsu Chemical

4063.T 4063 JP / EQUITY: JAPAN CHEMICALS & TEXTILES

RatingOngoing strong performance in electronics

From Suspended Neutralmaterials

Target price JPY 7,100 From N/AOutlook for PVC warrants attention

Closing price JPY 6,920We assign a Neutral rating; electronics materials faring well but PVC warrants 8 July 2026

attention

We resume coverage of Shin-Etsu Chemical with a Neutral rating. We expect the Implied upside +2.6%

electronics materials segment to continue to see profit growth thanks to rising AI-related

demand for wafers and resists. By contrast, PVC prices in Asia have fallen recently,

having risen because of the conflict in the Middle East, and US prices also appear to be

coming under increasing downward pressure. We take a positive view of the medium-term Relative performance chart

growth potential of the electronics materials segment but find it difficult to gauge the

direction of PVC prices. We think earnings might exceed our forecasts if demand for

electronics materials exceeds our assumptions or if the company takes an aggressive

stance towards pricing when renegotiating long-term wafer contracts. We obtain our target

price of ¥7,100 using an EV/EBITDA of around 12x on our 27/3 forecasts, broadly on par

with the Russell/Nomura Large Cap (ex financials) average on FY26 forecasts, and assign

a Neutral rating. While we forecast EPS growth in excess of the benchmark average,

particularly for electronics materials, we also factor in the risk of PVC prices causing

volatility in earnings.

27/3: We see strong performance for wafers and resists at electronics materials

segment, but think PVC prices will peak out