Shin-Etsu Chemical Co (4063) AI Stock Analysis

• Market Cap: ¥12.48T
• Dividend Yield: 2.17%
• Average Volume (3M): 5.66M
• Price to Earnings (P/E): 24.1
• Beta (1Y): 1.15
• 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: ¥6,939.00 ▲(54.20% Upside)
• Action: Upgraded Date: 01/29/26
• Date: Action: Upgraded 01/29/26

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

High profitability

Sustained high net and EBIT margins indicate strong pricing power, efficient operations, and a higher-quality product mix. Over months this supports internal funding for R&D/capex, cushions cyclical revenue swings, and preserves cash available for shareholder returns and strategic investment.

Very conservative balance sheet

Extremely low leverage and a high equity ratio provide durable financial flexibility: the company can fund capex, expand capacity, or weather downturns without refinancing risk. This structural strength reduces insolvency risk and preserves strategic optionality over 2–6 months and beyond.

Strong cash generation

Robust free cash flow growth and strong operating cash conversion imply sustainable internal funding for investments, dividend payments, and capacity additions. Reliable cash generation underpins long-term reinvestment in specialty/semiconductor segments and reduces financing dependence.

Negative Factors

Cyclicality of end markets

Revenue is structurally tied to cyclical industries (construction, autos, semiconductors). Demand slowdowns or semiconductor capex pauses can materially reduce volumes and utilization. This creates durable revenue and margin volatility risks that persist across industry cycles.

Exposure to energy/raw-material costs

PVC and chlor-alkali are energy-intensive; persistent commodity or energy price rises squeeze margins unless fully passed through. This structural input-cost exposure can compress profitability and make earnings more sensitive to macro commodity trends over the medium term.

Recent EPS weakness

Negative EPS growth suggests earnings have lagged, possibly from mix shifts or cost pressures. If this trend persists, it may limit retained earnings available for reinvestment or shareholder returns and reflect challenges in translating revenue into bottom‑line growth.

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	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	2.57T	2.56T	2.41T	2.81T	2.07T	1.50T
Gross Profit	904.21B	984.12B	911.21B	1.21T	868.00B	543.70B
EBITDA	982.90B	1.06T	1.02T	1.21T	865.91B	547.34B
Net Income	485.80B	534.02B	520.14B	708.24B	500.12B	293.73B
Balance Sheet
Total Assets	5.45T	5.64T	5.15T	4.73T	4.05T	3.38T
Cash, Cash Equivalents and Short-Term Investments	1.50T	1.81T	1.72T	1.60T	1.44T	1.15T
Total Debt	243.43B	33.90B	41.19B	47.09B	38.95B	34.45B
Total Liabilities	961.58B	799.01B	723.90B	704.18B	624.20B	493.99B
Stockholders Equity	4.32T	4.66T	4.26T	3.87T	3.33T	2.82T
Cash Flow
Free Cash Flow	159.20B	442.46B	380.77B	492.50B	357.75B	164.98B
Operating Cash Flow	451.50B	881.93B	755.18B	788.01B	553.53B	401.18B
Investing Cash Flow	-402.60B	-142.55B	-1.10T	-186.49B	-253.72B	-250.72B
Financing Cash Flow	-409.00B	-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: Negative
• RSI: Negative
• STOCH: Negative

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 5551.10, below the 50-day MA of 5333.60, and below the 200-day MA of 4795.04, indicating a bullish trend. The MACD of 201.81 indicates Negative momentum. The RSI at 70.28 is Negative, neither overbought nor oversold. The STOCH value of 91.83 is Negative, 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	¥12.48T	24.10	10.87%	2.17%	3.77%	0.35%
3407	68 Neutral	¥2.56T	15.94	7.48%	2.89%	3.55%	95.65%
4188	66 Neutral	¥1.53T	17.55	1.09%	3.50%	-11.50%	25.86%
4005	65 Neutral	¥910.58B	9.58	8.79%	2.68%	-1.64%	―
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4061	60 Neutral	¥303.43B	-32.48	-4.00%	3.71%	0.24%	-234.36%
4004	58 Neutral	¥2.26T	74.33	1.67%	1.00%	-1.90%	-71.97%