29 June 2015 Asia Pacific/Japan Equity Research Major Chemicals (Chemicals/Textiles (Japan)) / MARKET WEIGHT Chemicals Research Analysts COMPANY UPDATE Masami Sawato 81 3 4550 9729
[email protected] Corporate Day: Kuraray, Asahi Kasei, Tosoh, Shin-Etsu Chemical, JSR, Zeon, Ube Industries, Hitachi Chemical, Nippon Kayaku ■ Kuraray (3405, NEUTRAL TP ¥1,650): We forecast 1H FY3/16 OP of ¥29.5bn, beating guidance (¥29.0bn) by ¥0.5bn (the Quick consensus is ¥30.4bn). The company indicated that areas such as Poval products, including optical-use Poval film, isoprene, and methyl methacrylate have been outperforming, while glass laminating solutions (vinyl acetate-related) have been falling short of guidance. Based on firm 1Q shipments, the company expects shipment volume of optical-use Poval film to increase by around 7% YoY for the full year. We think Kuraray will likely leave full-year guidance unchanged. The company indicated that the impact of coated polarizing film among optical-use Poval film will be modest in the near term. ■ Asahi Kasei (3407, NEUTRAL, TP ¥1,200): We forecast 1Q OP of ¥32.0bn, equivalent to 45.4% of 1H guidance (¥70.5bn; Nikkei 1Q forecast ¥32.0bn; Quick consensus ¥32.1bn). The company indicated that profits have been tracking above guidance considering factors including that housing profits are concentrated in 2Q. At the chemicals segment, the company expects higher styrene monomer (SM) margins and functional resin outperformance to offset acrylonitrile (AN) margins, which have been tracking below its assumptions. We understand fibers, electronics, and pharmaceuticals & healthcare have also been firm. Housing orders are firm, but it expects a YoY decline in earnings due mainly to increases in materials and construction costs.