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SUMCO Corporation (JP:3436)
:3436
Japanese Market

SUMCO Corporation (3436) AI Stock Analysis

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JP

SUMCO Corporation

(3436)

Rating:68Neutral
Price Target:
¥1,243.00
▲(11.13%Upside)
The overall score reflects strong financial performance tempered by cash flow challenges and increasing leverage. Technical analysis supports a positive short-term outlook, but valuation metrics point to a fair valuation. Mixed earnings call sentiment highlights profitability concerns and external market challenges.

SUMCO Corporation (3436) vs. iShares MSCI Japan ETF (EWJ)

SUMCO Corporation Business Overview & Revenue Model

Company DescriptionSumco Corporation, together with its subsidiaries, manufactures and sells silicon wafers for the semiconductor industry primarily in Japan, the United States, China, Taiwan, Korea, and internationally. It provides monocrystalline ingots, as well as polished, annealed, epitaxial, junction isolated, silicon-on-insulator, and reclaimed polished wafers. The company was formerly known as Sumitomo Mitsubishi Silicon Corp. and changed its name to Sumco Corporation in August 2005. Sumco Corporation was incorporated in 1999 and is headquartered in Tokyo, Japan.
How the Company Makes MoneySUMCO Corporation generates revenue primarily through the production and sale of silicon wafers. The company operates advanced manufacturing facilities capable of producing a variety of wafers, including polished, epitaxial, and silicon-on-insulator wafers, which are used in numerous electronic applications. SUMCO's key revenue streams come from its contracts and sales agreements with major semiconductor manufacturers who require a steady supply of high-quality wafers to produce microchips for consumer electronics, automotive, and industrial applications. The company also benefits from strategic partnerships and long-term agreements with leading technology firms, ensuring a stable demand for its products. Additionally, SUMCO invests in research and development to enhance its production processes and wafer quality, which helps maintain its competitive edge in the global market.

SUMCO Corporation Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 15.96%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment with both positive and negative aspects. While the company has exceeded operating profit forecasts and is seeing growth in AI-driven 300mm wafers, it faces challenges with profitability declines, weak 200mm wafer demand, and external risks from Forex and tariffs. Inventory levels also remain a concern.
Q1-2025 Updates
Positive Updates
Operating Profit Exceeds Forecast
Q1 sales were largely in line with forecasts, but the company exceeded expectations for operating and ordinary profit due to delays in incurring depreciation.
Interim Dividend Guidance
The company is guiding for an interim dividend of ¥10 based on a comprehensive view including forecast for EBITDA and cash available for dividend payments.
AI Driving Demand for 300mm Wafers
AI is a key driver for 300 mm wafers, supporting a gradual recovery despite no signs of a recovery in legacy applications.
Stable Debt Management
Interest-bearing debt increased by ¥9.9 billion to cover refinancing needs, with a net increase of ¥10 billion, maintaining a stable debt-to-equity ratio of 1.62x.
Negative Updates
Profitability Decline Despite Stable Sales
Despite unchanged sales projections for Q2, the company forecasts breakeven at the operating profit level, a loss of ¥1 billion for ordinary profit, and a loss of ¥2 billion in net profit due to increased depreciation and Forex impact.
Challenges in 200mm Wafer Market
200mm wafer demand remains weak, with expectations of recovery only to 70-80% of 2022 levels, partly due to transition to 300mm wafers and competition in China.
Forex and Tariff Concerns
Strengthening Yen and potential impacts from U.S. tariffs pose risks, with a projected negative Q-on-Q impact of ¥2.7 billion from Forex and uncertainty around tariffs affecting the market.
Increased Inventory Levels
Customer wafer inventory levels have risen slightly again, particularly in NAND memory and legacy logic applications, indicating ongoing market challenges.
Company Guidance
During the call, the company provided guidance for the second quarter of fiscal 2025, projecting sales to remain unchanged quarter-on-quarter (Q-on-Q) at ¥100 billion. However, they anticipate a breakeven at the operating profit level, a ¥1 billion ordinary profit loss, and a ¥2 billion net profit loss. The decline in profitability, despite stable sales, is attributed to an expected ¥4.3 billion Q-on-Q increase in depreciation expenses and a ¥2.7 billion negative impact from foreign exchange (Forex) movements due to the strengthening yen. These factors together represent a Q-on-Q negative impact of ¥7 billion. The company also guided for an interim dividend of ¥10, considering the forecast for EBITDA and cash available for dividend payments. Additionally, the call highlighted the ongoing challenges in the semiconductor market, with weak demand for 200 mm wafers and mixed trends for 300 mm wafers, largely influenced by AI demand. The company expressed concerns about potential impacts from U.S. tariffs, especially in the automotive sector, and noted the uncertain market conditions affecting their outlook.

SUMCO Corporation Financial Statement Overview

Summary
SUMCO Corporation shows strong revenue growth and effective asset management, but faces challenges with increasing leverage and cash flow constraints. Improving profitability and cash flow efficiency will be crucial for maintaining financial stability.
Income Statement
75
Positive
SUMCO Corporation demonstrates robust revenue growth with a notable increase from 2019 to 2023. The gross profit margin has been relatively strong, showcasing effective cost management. However, there is a recent decline in net income and EBIT margins from 2023 to 2024, indicating potential challenges in maintaining profitability.
Balance Sheet
70
Positive
The company maintains a strong equity base with a significant increase in stockholders' equity over the years. However, the debt-to-equity ratio has been increasing, signaling rising leverage, which could pose risks if cash flows do not improve. The equity ratio remains healthy, reflecting effective asset management.
Cash Flow
60
Neutral
SUMCO faces challenges in cash flow management, with a significant negative free cash flow in 2023 and 2024 due to high capital expenditures. Operating cash flow remains positive but shows a decline, suggesting potential issues in converting sales into cash. The free cash flow to net income ratio has deteriorated, indicating inefficiency in cash generation relative to earnings.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue396.62B425.94B441.08B335.67B291.33B
Gross Profit72.73B108.25B143.35B80.12B65.17B
EBITDA114.09B144.66B169.53B104.33B84.67B
Net Income19.88B63.88B70.20B41.12B25.50B
Balance Sheet
Total Assets1.17T1.07T892.55B764.82B593.44B
Cash, Cash Equivalents and Short-Term Investments95.67B156.35B259.31B224.67B82.97B
Total Debt353.95B224.45B141.38B141.07B149.90B
Total Liabilities515.45B437.56B301.07B241.98B238.44B
Stockholders Equity592.11B572.16B533.55B476.15B315.11B
Cash Flow
Free Cash Flow-177.62B-160.57B54.01B36.92B30.45B
Operating Cash Flow69.63B96.34B179.46B104.71B84.19B
Investing Cash Flow-247.88B-247.68B-126.35B-67.34B-55.19B
Financing Cash Flow112.29B43.46B-23.15B99.10B-16.24B

SUMCO Corporation Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1118.50
Price Trends
50DMA
1003.65
Positive
100DMA
1032.10
Positive
200DMA
1170.07
Negative
Market Momentum
MACD
40.05
Negative
RSI
60.77
Neutral
STOCH
64.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3436, the sentiment is Positive. The current price of 1118.5 is above the 20-day moving average (MA) of 1056.79, above the 50-day MA of 1003.65, and below the 200-day MA of 1170.07, indicating a neutral trend. The MACD of 40.05 indicates Negative momentum. The RSI at 60.77 is Neutral, neither overbought nor oversold. The STOCH value of 64.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3436.

SUMCO Corporation Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
68
Neutral
¥391.66B21.89
1.79%-0.96%-42.79%
63
Neutral
$34.04B6.14-11.52%1.82%5.53%-18.79%
$5.16B62.37-5.34%3.34%
DETYS
€2.29B14.2815.34%2.40%
77
Outperform
¥29.19B8.45
1.73%36.47%454.90%
69
Neutral
¥203.07B4.00
0.38%-48.30%
60
Neutral
$797.03B44.60
0.84%2.41%-3.95%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:3436
SUMCO Corporation
1,118.50
-1,277.37
-53.32%
ROHCF
Rohm Co
9.99
-3.95
-28.34%
DE:TYS
Tokyo Seimitsu Co., Ltd
55.30
-15.32
-21.69%
JP:6707
Sanken Electric Co., Ltd.
8,445.00
1,171.00
16.10%
JP:6855
Japan Electronic Materials Corporation
2,311.00
-1,360.91
-37.06%
JP:6967
Shinko Electric Industries Co., Ltd.
5,900.00
205.00
3.60%

SUMCO Corporation Corporate Events

SUMCO Corporation Revises 2025 Dividend Forecast
May 8, 2025

SUMCO Corporation has announced a revision to its dividend forecast for the fiscal year 2025, with an interim dividend now set at 10 yen per share. This decision reflects the company’s assessment of its financial performance and future outlook, balancing profit forecasts, capital investment needs, and cash flow considerations. The year-end dividend remains undetermined, highlighting a cautious approach amid market uncertainties.

SUMCO Corporation Exceeds Q1 2025 Financial Forecasts
May 8, 2025

SUMCO Corporation announced a positive variance between its forecasted and actual financial results for the first quarter of fiscal year 2025. The company exceeded its net sales and profit forecasts due to lower-than-expected costs and income taxes, resulting in a significant increase in quarterly profit attributable to owners of the parent.

SUMCO Corporation Reports Q1 2025 Financial Results with Profit Declines
May 8, 2025

SUMCO Corporation reported its consolidated financial results for the first quarter of 2025, showing a 9.6% increase in net sales compared to the previous year. However, the company experienced significant declines in operating profit, ordinary profit, and profit attributable to owners of the parent, with decreases of 31.1%, 46.3%, and 39.7%, respectively. The financial forecast for the first half of 2025 indicates a modest increase in net sales but anticipates substantial drops in profits. These results suggest challenges in maintaining profitability despite revenue growth, potentially impacting stakeholder confidence and market positioning.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 28, 2025