InP Substrates as Core Product Longer Term, But Too Soon to Price In

研报英文原文证据摘录

InP Substrates as Core Product Longer Term, But Too Soon to Price In

UpdateM

Investment Summary

Share price performance to date since F3/26

The share price had mostly moved in line with TOPIX until F3/26 1Q results, despite some

ups and downs. Between F3/26 1Q and 2Q results, it greatly outperformed TOPIX. During

1Q results, we think the market reacted positively to the earnings beat and announcement

of F3/27 guidance above consensus. Furthermore, the upward revision included expanded

sales of titanium-copper and tantalum powder for AI servers. Similar to Mitsui Kinzoku

during the same time, we think the market re-rated the company as an 'AI-related' stock.

On the other hand, the share price greatly underperformed TOPIX after 2Q results. While

the company indicated a growth outlook for sputtering target materials in line with

market expectations, we attribute the significant correction to the growth outlook for

tantalum powder and InP substrates falling short of market expectations.

Meanwhile, the company’s share price once again significantly outperformed TOPIX from

around the time of the 3Q earnings release. We believe the key drivers were: 1) rising

copper prices; 2) an improving outlook for the semiconductor market; and 3) strong

earnings. In 3Q the company delivered earnings above consensus and provided

conservative guidance; however, on a mark-to-market basis, full-year guidance could be

expected to exceed consensus. In addition, the announcement of a third capacity

expansion investment this fiscal year for InP substrates was well-received by the market.

Following 4Q results, the share price greatly underperformed TOPIX, but then bottomed

on Jun 11 and turned up again. 4Q results themselves contained no particular surprises,