Summary of Investor Presentation on Chemicals Industry Industry Overview - The chemicals industry is undergoing a significant restructuring wave across Asia, particularly affecting petrochemical majors and electronic chemicals [1][3][6] Key Insights on Petrochemical Majors - **Industry View**: Attractive - **Demand and Utilization**: Continued weak demand for petrochemicals and low ethylene utilization rates are expected. However, there are signs of improvement in the overall mood, influenced by China's anti-involution policies and naphtha cracker downsizing in South Korea [6] - **Price Trends**: Asia's petrochemical prices and spreads are unlikely to decline further but may lack recovery momentum [6] - **Investment Indicators**: Remain low, with shares generally viewed as undervalued [6] - **Recommended Stocks**: - **Sumitomo Chemical (4005)**: Focused on growth in agrochemicals and IT sectors, with a V-shaped recovery in pharmaceutical earnings. Current price: ¥482, target price: ¥760 [9][12] - **Asahi Kasei (3407)**: Current price: ¥1,196, target price: ¥1,450 [9][12] - **Mitsui Chemicals (4183)**: Current price: ¥3,719, target price: ¥4,500 [9][12] Insights on Electronic Chemicals - **Industry View**: In-line - **Demand Recovery**: Gradual recovery in demand for legacy semiconductors alongside the expansion of AI semiconductors. Silicon wafer recovery continues, particularly for 300mm wafers [6] - **Stock Recommendations**: - **ZEON (4205)**: Current price: ¥1,700, target price: ¥2,000 [9][12] - **Shin-Etsu Chemical (4063)**: Current price: ¥4,545, target price: ¥5,500 [9][12] Insights on Fine Chemicals - **Industry View**: In-line - **Revenue Improvement**: Significant revenue growth in carbon fiber composite materials due to recovery in aircraft applications. **Toray (3402)** is highlighted as a top pick [6] - **Stock Recommendations**: - **Toray (3402)**: Current price: ¥970, target price: ¥1,350 [9][12] - **DIC (4631)**: Current price: ¥3,589, target price: ¥3,500 [9][12] Additional Observations - **Investment Appeal**: The overall investment appeal in the chemicals sector is driven by specific company strategies and market conditions, with a focus on undervalued stocks and sectors poised for growth [6][12] - **Market Metrics**: The report includes various financial metrics such as P/E ratios, P/CF ratios, and EV/EBITDA ratios for the recommended stocks, indicating a comprehensive analysis of the market landscape [12] Conclusion - The chemicals industry in Asia is positioned for restructuring, with specific companies showing strong potential for growth and recovery. Investors are encouraged to consider the recommended stocks based on their strategic focus and market conditions [6][12]

Summary of the Investor Presentation on Chemicals Industry Industry Overview - The chemicals industry is undergoing a significant restructuring wave across Asia, particularly affecting petrochemical majors and electronic chemicals [1][3][6]. - The overall sentiment in the petrochemical sector is improving despite continued weak demand and low utilization rates for ethylene [6]. Key Insights on Specific Sectors Petrochemical Majors - **Industry View**: Attractive - **Current Trends**: Weak demand for petrochemicals is expected to persist, but there are signs of naphtha cracker downsizing in South Korea, which may lead to a more favorable market environment [6]. - **Price and Spread Outlook**: Asia's petrochemical prices and spreads are unlikely to decline further but may lack recovery momentum [6]. - **Investment Recommendations**: - **Overweight (OW)**: Sumitomo Chemical (4005), Asahi Kasei (3407), Mitsui Chemicals (4183) - **Equal Weight (EW)**: Tosoh (4042), Mitsubishi Chemical (4188) [6][9]. Electronic Chemicals - **Industry View**: In-Line - **Current Trends**: Demand for both AI semiconductors and legacy semiconductors is gradually recovering, with a steady growth trend observed [6]. - **Investment Recommendations**: - **Overweight (OW)**: Zeon (4205), Shin-Etsu Chemical (4063) - **Equal Weight (EW)**: Nissan Chemical (4021), SUMCO (3436), Kuraray (3405), Dexerials (4980) - **Underweight (UW)**: Nitto Denko (6988) [6][9]. Fine Chemicals - **Industry View**: In-Line - **Current Trends**: Significant revenue improvement in carbon fiber composite materials due to recovery in aircraft applications [6]. - **Investment Recommendations**: - **Overweight (OW)**: Toray (3402) - **Equal Weight (EW)**: DIC (4631) - **Underweight (UW)**: Teijin (3401) [6][9]. Financial Metrics and Valuations - **Petrochemical Majors**: Average P/E ratio of 9.1, P/CF of 7.5, and EV/EBITDA of 6.6, indicating undervaluation [11]. - **Electronic Chemicals**: Average P/E ratio of 17.8, P/CF of 10.2, and EV/EBITDA of 8.8, suggesting a stable valuation [11]. - **Fine Chemicals**: Average P/E ratio of 29.9, indicating a premium valuation compared to other sectors [11]. Additional Insights - Investment indicators in the petrochemical sector remain low, suggesting that shares are generally undervalued [6]. - The focus on accelerating growth in agrochemicals and IT-related sectors is highlighted as a strategic move for companies like Sumitomo Chemicals [6]. - The recovery in earnings from pharmaceutical subsidiaries is noted as a positive factor for Sumitomo Chemicals [6]. Conclusion - The chemicals industry in Asia is poised for restructuring, with specific sectors showing potential for recovery and growth. Investment opportunities exist in selected companies, particularly those focusing on innovation and strategic growth areas.