Zeon (4205.T): First take Q1: Battery materials drive strong beat; full-year guidance maintained but conservative

Research evidence excerpt

Zeon (4205.T): First take Q1: Battery materials drive strong beat; full-year guidance maintained but conservative

Goldman Sachs Zeon (4205.T)

n Specialty Binder Materials

Operating profit of JPY2.6bn (+160% YoY), represented the strongest area of

earnings growth. Higher shipments of cathode binders for high-end EVs, supported

by the resumption of EV subsidies in Europe, contributed meaningfully to margin

expansion. The results also highlighted Zeon’s strong competitive position in

cathode binder materials supplied to Chinese battery manufacturers. EV-related

volumes increased by approximately 10% YoY.

ESS-related binders also expanded rapidly, with volumes roughly doubling YoY,

supported by strong demand from ESS installations in China and, indirectly, ongoing

investment in AI-related data center infrastructure.

While investors had been concerned that a mix shift from EVs toward ESS might

dilute profitability due to lower ESS pricing, growth in higher-value cathode-related

applications, particularly Zetpol-based materials, supported margin improvement.

Demand remains broadly strong across applications. Although capacity tightening

could emerge if growth continues at the current pace, we believe the company is

likely progressing with production optimization, including shifting commodity

products to Chinese operations while utilizing domestic capacity for

higher-value-added products.

For the full year, management indicated that EV-related demand is tracking broadly

in line with plan, while ESS demand could exceed the company’s initial assumption of

+50–60% YoY growth.

Although neither Specialty Plastics nor Specialty Binder Materials experienced a

meaningful impact from Middle East-related disruptions, management highlighted weak