Shin-Etsu Chemical (4063 JP) FY17 Q3 Results: Strength Across All Segments
Main Points
• Shin-Etsu reported a strong FY17 Q3 on Jan 26 and issued a long overdue upward earnings revision. Initial OP guidance of ¥268.0bil (+12.3% YoY) looked very conservative from the start, but as the Nikkei newspaper pointed out Shin-Etsu has not issued an upward revision since FY08. What the Nikkei failed to note is that the company issues guidance at the end of Q1, reducing the likelihood for large revisions.
• We discuss the company’s new OP guidance, the impact of lower US corporate tax rates and infrastructure spending.
• We have adjusted our FY18 forecasts and look to improving shareholder returns.
Shin-Etsu Chemical is mainly engaged in the manufacturing and sales of polyvinyl chloride and organic chemicals, silicon, functional chemicals, semiconductor silicon, electronic and functional materials, and others. Co.'s principal products include polyvinyl chloride, caustic soda products, methanol, chloromethane, silicon products, cellulose derivatives, silicon metal, poval (polyvinyl alcohol), synthetic pheromones, semiconductor silicon products, rare earth magnets, encapsulation materials, photoresists, photomask blanks, synthetic quartz products, epoxy molding compounds, pellicles, and resin processed products. Co. is also engaged in the export of plant equipment and others.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
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