Shin-Etsu Chemical (4063.T): Q1 results – Slightly positive, PVC challenging but wafers more encouraging

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Shin-Etsu Chemical (4063.T): Q1 results – Slightly positive, PVC challenging but wafers more encouraging

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24 Jul 2026 07:45:30 ET │ 10 pages

Shin-Etsu Chemical (4063.T)

Q1 results – Slightly positive, PVC challenging but wafers more

encouraging

CITI'S TAKE Buy

Price (24 Jul 26 15:30) ¥6,702.0 Today’s release is likely to be slightly positive for the shares, as results

Target price ¥8,600.0 tallied with expectations while guidance came in below, but the wafer

outlook is very encouraging. Q1 OP roughly tallied with consensus. Full- Expected share price return 28.3%

year OP guidance of ¥700bn is below consensus but Shin-Etsu explained Expected dividend yield 1.9%

its forecasts are premised on conservative PVC market conditions. Shin- Expected total return 30.3%

Etsu provided the following update on wafers: 1) wafer lines are currently Market Cap ¥12,376,201M

running at full capacity (with current staffing), 2) demand has increased US$75,531M

rapidly especially from June, with July 300mm shipments hitting record

highs, 3) Shin-Etsu explained that in its ongoing LTA renewal

negotiations, it is seeking pricing that fully considers rising costs related to

capacity expansion investments (we understand the possibility of c50% Yuta NishiyamaAC

price hikes was not ruled out), and 4) current LTAs expire in 2027-2029, +81-3-6776-4643

but Shin-Etsu believes price hikes are possible for noncontracted add-on yuta.nishiyama@citi.com

orders ahead of the expiry of existing contracts.

Implications — Full-year FY3/27 guidance came in below consensus primarily due

to "conservative PVC market assumptions," but as we previously reported, we

expected consensus-level results with below-consensus guidance. We also

believe investors already widely recognize the weak PVC outlook. The very