Raise PO: AI-related materials, acetylene black to drive growth

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Raise PO: AI-related materials, acetylene black to drive growth

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Denka (4061)

Raise PO: AI-related materials, acetylene

black to drive growth

Reiterate Rating: BUY | PO: 5,200 JPY | Price: 4,533 JPY

22 June 2026

Raise PO from ¥4,400 to ¥5,200; reiterate Buy Equity

We revise down our earnings forecasts to reflect lower sales outlook for acetylene black

due to acetylene gas feedstock shortages stemming from Middle East disruptions, and a

weaker outlook for diagnostic agents. On the other hand, we raise our valuation and Key Changes

price objective on the back of strong growth in AI-related materials (Snecton, spherical (¥) Previous Current

alumina, spherical silica) and acetylene black (high-voltage cables, ESS applications), Price Obj. 4,400.00 5,200.00

with significant earnings expansion expected through FY3/29. With the start of the new 2027E Rev (m) 418,600.0 439,800.0

fiscal year, we roll forward the valuation base year. We apply a FY3/28 P/E of 20x 2028E Rev (m) 441,600.0 451,900.0

(previously FY3/27 P/E of 20x; equivalent to 15x on a FY3/28 basis) to obtain our ¥5,200 2029E Rev (m) NA 482,000.0

price objective (PO). Our Buy rating is largely based on expectations for outperformance 2027E EPS 220.48 222.74

versus consensus, supported by high growth in AI-related materials and acetylene black. 2028E EPS 295.91 261.90

2029E EPS NA 322.99

OP: factoring in feedstock shortages and weak diagnostics 2027E EBITDA (m) 69,000.0 67,000.0

We lower our OP forecasts to ¥35bn (from ¥38bn; consensus ¥34bn) for FY3/27 and to 2028E EBITDA (m) 80,000.0 76,000.0

¥42bn (from ¥46bn; consensus ¥39.9bn) for FY3/28. We expect 1Q OP of ¥7bn, broadly 2029E EBITDA (m) NA 83,000.0

in line with consensus of ¥6.5bn. While we do not anticipate a major surprise, we think