Shin-Etsu Chemical (4063.T): Update: Wafers promising, but PVC struggles greater than anticipated

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Shin-Etsu Chemical (4063.T): Update: Wafers promising, but PVC struggles greater than anticipated

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30 Jul 2026 06:45:58 ET │ 19 pages

Shin-Etsu Chemical (4063.T)

Update: Wafers promising, but PVC struggles greater than anticipated

CITI'S TAKE

We revise our forecasts. Q1 results raised expectations for wafers, but PVC

was weak (our follow-up research suggests it is weaker than that first

impressions suggested). Any rerating hinges on strong wafer price hikes and Buy

signs of a PVC turnaround. Given that market expectations for wafer price Price (30 Jul 26 15:30) ¥5,756.0

hikes have already increased (investors are aware of the possibility of

substantial price hikes) and that expectations for a PVC recovery during Target price ¥7,200.0↓

FY3/27 are low, any real recovery will likely take some time. We maintain our from ¥8,600.0

Buy rating, as the shares look attractively valued following the correction, Expected share pricebut we lower our target price. 25.1%

return

Electronic materials (mainly wafers) — There were promising comments at the Expected dividend yield 2.1%

results briefing, including on 1) full capacity utilization in June, 2) prices for the next Expected total return 27.2%

round of LTAs, now being negotiated, needing to reflect investment in higher

production, and 3) the possibility of higher prices for additional demand under Market Cap ¥10,446,869M

current LTAs (ending in 2027-29) before their expiration (we assume this includes US$63,934M

measures like pricing demand above contracted levels at higher spot prices or

applying new LTAs on top of existing ones). However, we flag the possibility that the

Middle East situation and expectations of higher wafer prices have led to

anticipatory demand/inventory accumulation at customers. Our FY3/27-29