Sumitomo Chemical Co (4005) AI Stock Analysis

• Market Cap: ¥756.34B
• Dividend Yield: 2.56%
• Average Volume (3M): 11.31M
• Price to Earnings (P/E): 8.9
• Beta (1Y): 0.57
• Revenue Growth: -1.64%
• EPS Growth: N/A
• Country: JP
• Employees: 32,161
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): 27.02
• Shares Outstanding: 1,657,914,400
• 10 Day Avg. Volume: 7,385,430
• 30 Day Avg. Volume: 11,309,560
• PEG Ratio: -0.14
• Price to Book (P/B): 0.66
• Price to Sales (P/S): 0.23
• P/FCF Ratio: 5.76
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ¥519.68
• Price Target Upside: 8.83% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: ¥524.00 ▲(9.74% Upside)

Sumitomo Chemical Co's stock score reflects its strong technical momentum and reasonable valuation, balanced by financial performance challenges and mixed earnings call outcomes. The company's ability to maintain healthy profit margins and generate cash flow is a positive, but high leverage and declining revenue growth remain concerns.

Positive Factors

Core Operating Income Growth

The significant increase in core operating income indicates strong operational performance, driven by strategic initiatives and favorable market conditions, enhancing long-term profitability.

Financial Position Strengthening

Reduction in interest-bearing liabilities strengthens the balance sheet, improving financial stability and flexibility for future investments and growth.

Essential & Green Materials Segment Improvement

Profit margin improvements in the Essential & Green Materials segment reflect successful cost management and product demand, supporting sustainable growth.

Negative Factors

Decline in Overall Sales Revenue

A decline in sales revenue across most segments suggests challenges in market demand or competitive pressures, potentially impacting future revenue streams.

High Leverage

High leverage poses financial risks, limiting flexibility and increasing vulnerability to economic downturns, which could affect long-term financial health.

Free Cash Flow Deterioration

Deterioration in free cash flow indicates challenges in cash generation, potentially affecting the company's ability to fund operations and investments.

Sumitomo Chemical Co Business Overview & Revenue Model

Company Description

Sumitomo Chemical Co., Ltd. is a leading chemical manufacturer based in Japan, operating in various sectors including petrochemicals, agricultural chemicals, and specialty chemicals. The company focuses on producing a wide range of products such as plastics, fertilizers, pharmaceuticals, and electronic materials. With a commitment to innovation and sustainability, Sumitomo Chemical serves diverse industries including automotive, electronics, agriculture, and healthcare.

How the Company Makes Money

Sumitomo Chemical generates revenue through multiple key streams, primarily from the sale of its chemical products across different sectors. The company’s petrochemical division produces basic chemicals and plastics that are utilized in a wide range of applications, while its agricultural chemicals segment offers pesticides and fertilizers that support global food production. Additionally, the specialty chemicals division contributes to revenue through high-value products used in electronics and pharmaceuticals. Strategic partnerships with other companies, including joint ventures and collaborations for research and development, enhance its product offerings and market reach. Factors such as global demand for chemicals, innovations in sustainable practices, and expansion into emerging markets also play significant roles in bolstering its earnings.

Sumitomo Chemical Co Financial Statement Overview

Summary

Sumitomo Chemical Co shows resilience with healthy profit margins and strong cash flow generation. However, challenges include declining revenue growth, high leverage, and low return on equity.

Income Statement

Sumitomo Chemical Co's income statement shows a mixed performance. The TTM data indicates a slight decline in revenue growth at -3.3%, but the company maintains a healthy gross profit margin of 27.8%. The net profit margin is relatively low at 1.5%, indicating challenges in converting revenue into profit. The EBIT and EBITDA margins are moderate at 7.5% and 12.5%, respectively, suggesting operational efficiency but room for improvement in profitability.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 1.43, indicating significant leverage, which could pose financial risks. However, the equity ratio stands at 26.6%, showing a reasonable level of equity financing. The return on equity is low at 1.1%, reflecting challenges in generating returns for shareholders.

Cash Flow

Cash flow analysis shows positive trends, with a strong free cash flow growth rate of 33.6% in the TTM period. The operating cash flow to net income ratio is 0.22, indicating adequate cash generation relative to net income. The free cash flow to net income ratio is 0.44, suggesting a solid conversion of earnings into free cash flow.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.46T	2.61T	2.45T	2.90T	2.77T	2.29T
Gross Profit	721.38B	725.48B	499.69B	820.93B	873.86B	771.20B
EBITDA	346.60B	321.64B	-258.31B	199.08B	388.68B	306.28B
Net Income	84.82B	38.59B	-311.84B	6.99B	162.13B	46.04B
Balance Sheet
Total Assets	3.36T	3.44T	3.93T	4.17T	4.31T	3.99T
Cash, Cash Equivalents and Short-Term Investments	216.36B	209.84B	217.45B	305.84B	389.42B	360.92B
Total Debt	1.19T	1.29T	1.56T	1.46T	1.35T	1.35T
Total Liabilities	2.18T	2.37T	2.77T	2.68T	2.61T	2.51T
Stockholders Equity	958.74B	900.79B	965.75B	1.17T	1.22T	1.02T
Cash Flow
Free Cash Flow	110.52B	102.56B	-204.19B	-31.96B	64.25B	253.65B
Operating Cash Flow	227.15B	233.03B	-51.32B	111.62B	171.72B	374.46B
Investing Cash Flow	-11.21B	79.90B	-112.24B	-19.41B	-115.42B	-177.39B
Financing Cash Flow	-334.84B	-295.45B	49.25B	-178.50B	-81.39B	-39.97B

Sumitomo Chemical Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 477.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4005, the sentiment is Positive. The current price of 477.5 is above the 20-day moving average (MA) of 466.72, above the 50-day MA of 462.78, and above the 200-day MA of 389.52, indicating a bullish trend. The MACD of 2.04 indicates Positive momentum. The RSI at 53.65 is Neutral, neither overbought nor oversold. The STOCH value of 21.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4005.

Sumitomo Chemical Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3407	76 Outperform	¥1.89T	13.47	7.48%	2.87%	3.55%	95.65%
4021	72 Outperform	¥700.00B	15.55	19.69%	3.28%	10.06%	18.03%
4063	69 Neutral	¥9.49T	18.62	10.87%	2.21%	3.77%	0.35%
4005	69 Neutral	¥756.34B	8.92	8.79%	2.56%	-1.64%	―
3405	62 Neutral	¥478.41B	61.72	1.08%	3.44%	-1.94%	-84.08%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4188	54 Neutral	$1.12T	10.25	1.09%	3.67%	-11.50%	25.86%

Sumitomo Chemical Co Corporate Events

Sumitomo Chemical Reports Q2 Financial Impacts

Sumitomo Chemical Co., Ltd. reported a share of loss of ¥17,513 million due to the poor financial performance of Rabigh Refining and Petrochemical Company, an equity-method affiliate. Additionally, the company recorded a foreign exchange gain of ¥15,232 million, attributed to fluctuations in foreign exchange rates impacting assets and liabilities in foreign currencies.

Sumitomo Chemical Revises Financial Forecasts Amid Strong North American Sales

Sumitomo Chemical announced variances between its forecasted and actual financial results for the second quarter ending March 31, 2026, with stronger than expected sales of ORGOVYX in North America and reduced expenses leading to higher core operating and net income. Additionally, the company revised its full-year forecast, anticipating continued strong performance in North America and incorporating impacts from the partial sale of shares in Petro Rabigh, which is expected to positively affect its financial outcomes.

Sumitomo Chemical Reports Q2 FY2025 Financial Results

Sumitomo Chemical Co. reported its consolidated financial results for the second quarter of fiscal year 2025, showing a decline in sales revenue by 11.8% compared to the previous year. Despite this, the company experienced a significant increase in core operating income by 268.8%, indicating improved recurring earnings capacity. The financial results reflect a challenging market environment but also highlight the company’s ability to enhance operational efficiency. The exclusion of XUYOU Electronic Materials (Wuxi) Co., Ltd. from consolidation and a revision of financial forecasts for the fiscal year were noted, impacting stakeholders’ expectations.

Sumitomo Chemical to Acquire Tanaka Chemical as Wholly-Owned Subsidiary

Sumitomo Chemical Co., Ltd. is set to make Tanaka Chemical Corporation a wholly-owned subsidiary through a simplified share exchange, effective January 30, 2026. This strategic move aims to strengthen Sumitomo’s position in the rechargeable battery market by leveraging Tanaka’s expertise in cathode materials, aligning with Sumitomo’s growth strategy and enhancing its technological capabilities in response to increasing demand for energy-efficient solutions.

Sumitomo Chemical Reduces Stake in Petro Rabigh, Strengthening Financial Strategy

Sumitomo Chemical Co., Ltd. has completed the sale of a portion of its Class A ordinary shares in Rabigh Refining and Petrochemical Company (Petro Rabigh) to Saudi Aramco, reducing its stake from 37.5% to 15%. This transaction makes Saudi Aramco the largest shareholder of Petro Rabigh, holding nearly 60% of the Class A shares. The move is part of a strategic effort to improve Petro Rabigh’s financial structure and support its turnaround plan. Sumitomo Chemical and Saudi Aramco have also subscribed to new Class B ordinary shares issued by Petro Rabigh, which will aid in prepaying debts and reducing accumulated losses. The financial impact on Sumitomo Chemical includes a projected profit of approximately 35 billion yen before tax for the third quarter of the fiscal year ending March 31, 2026, despite recording a loss on valuation of the newly acquired Class B shares.