Iidemitsu Kosan (5019): 1Q results: Sharp profit growth; 1Q profit level beats full-year guidance with boost from major time-lag effects

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

08 August 2026

Idemitsu Kosan (5019)

1Q results: Sharp profit growth; 1Q profit level beats

full-year guidance with boost from major time-lag effects

Positive: As at Cosmo Energy Holdings (5021), 1Q FY2026 profit beat full-year

guidance as the fuel oil business benefited heavily from delays in the reflection of

crude oil prices. In contrast earnings in 2Q onward will be negatively affected by

time-lag effects. With earnings at the Nghi Son Refinery (Vietnam) improving on

high Asian refining margins, the potential for equity-method income is a positive.

Sharp profit growth in domestic petroleum business: 1Q pretax profit (ex.

financial expenses and inventory effects) was ¥156.1 billion (+152% YoY) and

net profit (same basis) ¥101.7 billion (+63%), well above our estimates (pretax

profit of ¥29.6 billion and net profit of ¥17.8 billion). Pretax profit (same basis)

in the fuel oil segment rose ¥95.5 billion YoY on to time-lag effects related to

crude oil procurement (+¥98.7 billion YoY), and profits in the resources

segment increased ¥6 billion YoY on higher production volumes from interests

in Vietnam. Management said that earnings excluding time-lag effects were

roughly flat YoY. It maintained full-year earnings guidance.

Management noted that the Nghi Son Refinery (Vietnam) generated a net profit

in 1Q on steadily high utilization, favorable Asian petroleum product prices,

and positive time-lag effects. If Nghi Son Refinery and Petrochemical (NSRP,

the management company) repays the principal of its senior loans on its own

in FY2026, Idemitsu could recognize and record equity-method income

associated with gains on the reversal of reserves.

Neutral

5019.T, 5019 JP

Price (07 Aug 26):¥1,321

Price Target (Dec-26):¥1,300

Japan Equity Research

Trading Companies, Energy

Jiro Iokibe AC

(81-3) 6736-8668

JPMorgan Securities Japan Co., Ltd.