Shin-Etsu Chemical Co (4063) AI Stock Analysis

• Market Cap: ¥10.12T
• Dividend Yield: 2.17%
• Average Volume (3M): 5.66M
• Price to Earnings (P/E): 20.0
• Beta (1Y): 1.16
• Revenue Growth: 3.77%
• EPS Growth: 0.35%
• Country: JP
• Employees: 27,274
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): N/A
• Shares Outstanding: 1,984,995,800
• 10 Day Avg. Volume: 5,966,100
• 30 Day Avg. Volume: 5,664,786
• PEG Ratio: 4.03
• Price to Book (P/B): 1.80
• Price to Sales (P/S): 3.28
• P/FCF Ratio: 18.97
• 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: ¥6,000.00
• Price Target Upside: 33.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: ¥5,473.00 ▲(21.62% Upside)

The score is driven primarily by very strong financial performance (high margins, strong cash generation, and an extremely low-leverage balance sheet). This is partially offset by a weaker near-term technical picture (trading below the 20- and 50-day averages with low momentum indicators), while valuation is reasonable but not cheap given a P/E around 21 and a ~2.18% dividend yield.

Positive Factors

Balance sheet strength

Extremely low leverage and a high equity ratio provide durable financial flexibility, lowering refinancing and solvency risk. This balance-sheet strength supports steady dividends, capacity investments and resilience through industry cycles, preserving long-term operational optionality.

Cash generation and FCF growth

Strong operating cash conversion and double-digit free cash flow growth underpin the company's ability to fund capex, R&D and shareholder returns without adding leverage. Reliable cash generation supports strategic investments and cushions against cyclical revenue swings.

High profitability from specialty mix

Elevated margins reflect a durable mix toward higher-value silicones and electronic materials plus scale manufacturing. Persistent margin advantages support reinvestment and pricing power, helping the company sustain returns across cycles in industrial and semiconductor end markets.

Negative Factors

Exposure to commodity PVC and energy costs

A material commodity segment tied to PVC and chlor-alkali makes earnings sensitive to energy and feedstock price swings. Over months this input-cost exposure can compress margins and cause uneven segment profitability when construction demand or energy costs move unfavorable.

Dependence on semiconductor cycles

Significant exposure to silicon wafers and electronic materials ties performance to semiconductor industry utilization and capital cycles. Demand swings and capacity adjustments can create multi-quarter volatility in volumes and margins despite long-term structural demand growth.

Limited recent strategic/corporate catalysts

The absence of disclosed M&A, major product launches or strategic partnerships reduces visible near-term catalysts to materially shift growth or mix. Without clear structural initiatives, growth acceleration or margin expansion may rely mainly on organic end-market recovery.

Shin-Etsu Chemical Co Business Overview & Revenue Model

Company Description

Shin-Etsu Chemical Co., Ltd. is a leading global chemical manufacturer based in Japan, primarily engaged in the production of silicones, silicon wafers, and other advanced materials. Operating across various sectors, including electronics, automotive, and healthcare, the company specializes in high-performance materials that cater to diverse applications, such as semiconductor manufacturing, construction, and personal care products. With a strong commitment to innovation and sustainability, Shin-Etsu has established itself as a key player in the chemical industry, providing essential materials that drive technological advancements.

How the Company Makes Money

Shin-Etsu Chemical generates revenue through several key streams, primarily from the sale of silicones, silicon wafers, and specialty chemicals. The company’s silicone products serve a wide range of industries, including automotive, construction, and consumer goods, contributing significantly to its revenues. Additionally, its silicon wafer segment, which supports the semiconductor industry, is a critical revenue driver, as demand for electronics continues to rise. Shin-Etsu also benefits from strategic partnerships and collaborations with leading technology companies, enhancing its market position and driving innovation. Furthermore, the company focuses on research and development to create high-value products, allowing it to maintain competitive pricing and adapt to changing market needs. Overall, Shin-Etsu's diversified product offerings and strong industry relationships play a crucial role in its financial success.

Shin-Etsu Chemical Co Financial Statement Overview

Summary

Strong overall fundamentals: solid revenue growth (+6.07% YoY) and high profitability (net margin 20.85%, EBIT margin 28.97%). Balance sheet is exceptionally conservative (debt-to-equity 0.004; equity ratio 82.72%), and cash generation is strong with rising free cash flow (+17.15%) and healthy cash conversion (operating cash flow to net income 1.65).

Income Statement

Shin-Etsu Chemical Co demonstrates strong income statement performance with consistent revenue growth and high profitability margins. From 2024 to 2025, the company achieved a revenue growth rate of 6.07%, and its net profit margin increased to 20.85%, indicating robust profitability. The EBIT margin and EBITDA margin are also strong at 28.97% and 41.56% respectively, showcasing operational efficiency and effective cost management.

Balance Sheet

The balance sheet of Shin-Etsu Chemical Co reflects a solid financial position with a low debt-to-equity ratio of 0.004 and a high equity ratio of 82.72%. The company's return on equity stands at 11.45%, highlighting effective utilization of equity to generate profits. Overall, the company's low leverage and high equity provide financial stability and reduce risk exposure.

Cash Flow

Shin-Etsu Chemical Co's cash flow performance is commendable with a free cash flow growth rate of 17.15% from 2024 to 2025. The operating cash flow to net income ratio of 1.65 indicates strong cash generation relative to earnings, and the free cash flow to net income ratio of 0.83 reinforces the company's efficient cash management. Overall, the cash flow situation supports sustainability and future investment capabilities.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.56T	2.41T	2.81T	2.07T	1.50T
Gross Profit	984.12B	911.21B	1.21T	868.00B	543.70B
EBITDA	1.06T	1.02T	1.21T	865.91B	547.34B
Net Income	534.02B	520.14B	708.24B	500.12B	293.73B
Balance Sheet
Total Assets	5.64T	5.15T	4.73T	4.05T	3.38T
Cash, Cash Equivalents and Short-Term Investments	1.81T	1.72T	1.60T	1.44T	1.15T
Total Debt	33.90B	41.19B	47.09B	38.95B	34.45B
Total Liabilities	799.01B	723.90B	704.18B	624.20B	493.99B
Stockholders Equity	4.66T	4.26T	3.87T	3.33T	2.82T
Cash Flow
Free Cash Flow	442.46B	380.77B	492.50B	357.75B	164.98B
Operating Cash Flow	881.93B	755.18B	788.01B	553.53B	401.18B
Investing Cash Flow	-142.55B	-1.10T	-186.49B	-253.72B	-250.72B
Financing Cash Flow	-454.90B	-369.47B	-423.56B	-122.50B	-91.12B

Shin-Etsu Chemical Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4500.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4063, the sentiment is Positive. The current price of 4500 is below the 20-day moving average (MA) of 5343.05, below the 50-day MA of 4998.78, and below the 200-day MA of 4647.74, indicating a neutral trend. The MACD of 53.26 indicates Positive momentum. The RSI at 47.26 is Neutral, neither overbought nor oversold. The STOCH value of 15.92 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4063.

Shin-Etsu Chemical Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4063	75 Outperform	¥10.12T	20.04	10.87%	2.17%	3.77%	0.35%
4042	71 Outperform	¥802.21B	19.85	4.79%	4.21%	-1.21%	-27.21%
4091	70 Outperform	¥2.03T	18.96	―	1.11%	2.35%	0.43%
3407	69 Neutral	¥2.04T	14.51	7.48%	2.89%	3.55%	95.65%
4188	68 Neutral	¥1.35T	12.36	1.09%	3.50%	-11.50%	25.86%
4005	66 Neutral	¥769.60B	9.07	8.79%	2.68%	-1.64%	―
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%