JX Advanced Metals: We raise profit forecasts for InP substrates, raise rating to Buy

研报英文原文证据摘录

JX Advanced Metals: We raise profit forecasts for InP substrates, raise rating to Buy

Global Markets Research

8 July 2026JX Advanced Metals

5016.T 5016 JP / EQUITY: JAPAN STEEL, NONFERROUS METALS, WIRE & CABLE

RatingWe raise profit forecasts for InP substrates, raise

Up from Neutral Buyrating to Buy

Target price

We expect 20-fold increase in InP substrate sales and 42-fold increase in Increased from 4,500 JPY 4,800

operating profits

Closing price JPY 3,855We raise profit forecasts for semiconductor materials segment, raise rating from 7 July 2026

Neutral to Buy

We raise our sales forecasts for indium phosphide (InP) substrates at JX Advanced Metals Implied upside +24.5%

and raise our rating from Neutral to Buy. We had thought that the company would lack the

production capacity for InP substrates to meet strong demand, given the small size of the

business. However, it has now decided to increase its InP substrate production capacity

by up to 10 times (versus 26/3), and we accordingly raise our operating profit forecasts for Relative performance chart

the semiconductor materials segment substantially. Increasing InP substrate production

should go a long way to easing bottlenecks for optical devices, as JX Advanced Metals

sells its entire output to third parties. We also see potential to factor rising InP substrate

selling prices into the share price, given strong demand and mounting geopolitical risks.

We use a sum-of-the-parts valuation methodology and apply a P/E of around 27x our 27/3

EPS forecast to obtain our target price.

27/3: We raise outlook for semiconductor targets for logic applications, forecast

sharp profit growth

We raise our 27/3 operating profit forecast from ¥245.0bn to ¥255.0bn (up 46% y-y), with