Daicel Corp (4202) Raise PO; earnings remain weak despite higher shareholder returns

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Daicel Corp (4202) Raise PO; earnings remain weak despite higher shareholder returns

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Daicel Corp (4202)

Raise PO; earnings remain weak despite

higher shareholder returns

Reiterate Rating: UNDERPERFORM | PO: 1,260 JPY | Price: 1,433 JPY

Raise PO to ¥1,260 from ¥1,070; reiterate Underperform 06 July 2026

Although we lower our earnings forecasts to reflect weaker acetate tow volumes and Equity

profitability, we raise our valuation multiple based on the company’s new shareholder

return policy, which targets a total payout ratio of 60%+ and a DoE of 5%+. Our revised

Key ChangesPO is based on FY3/28 P/E of 11.5x (previously FY3/27 P/E of 8.0x; FY3/28 P/E was 8.1x

under the previous framework). Our bearish stance reflects our expectation that earnings (¥) Previous Current

will remain below consensus due to the weak operating environment for key products Price Obj. 1,070 1,260

including acetate tow and polyacetal. 2027E Rev (m) 573,800 601,600

2028E Rev (m) 601,000 593,300

2029E Rev (m) NA 604,700Lower forecasts: deteriorating acetate tow outlook

We lower our operating profit forecasts to ¥37bn from ¥42bn for FY3/27 (consensus: 2027E EPS 119.47 109.63

¥45.5bn) and to ¥39bn from ¥46bn for FY3/28 (consensus: ¥50.5bn). 1Q operating profit 2028E EPS 131.42 109.63

came in at ¥8.5bn, broadly in line with the ¥8.5bn consensus. The company left its 2029E EPS NA 111.59

guidance unchanged, and we do not anticipate any earnings surprise. 2027E EBITDA (m) 89,018 81,017

2028E EBITDA (m) 97,518 87,017

Weak earnings remain a concern 2029E EBITDA (m) NA 92,017

For acetate tow, profitability is being pressured not only by lower product prices 2027E DPS 60 70

resulting from weak supply-demand conditions but also by rising costs for acetate pulp,

a key raw material.