2024-06-14 14:46:33 ET
Summary
- Shin-Etsu Chemical had a challenging FY'24, as the company saw weaker housing activity hit PVC demand as well as a sharp correction in semiconductor materials and other construction/industrial chemicals.
- PVC prices have started showing some improvement and with modest inventory levels, Shin-Etsu should see demand rebound in 2025, while semiconductor wafer demand likewise recovers.
- Management has multiple R&D-driven projects underway that should deliver in the coming years, including technologies for GaN chip production and magnets that don't need rare earth elements.
- Shin-Etsu shares still offer some upside at today's price.
I could go on at length about my respect for Shin-Etsu Chemical ( SHECY ) (4063.T), and I have , but this remains an exceptionally well-run company that, although operating in multiple cyclical end-markets and facing fierce competition, has continued to generate exceptional returns with a nearly clockwork regularity. Moreover, this isn’t just a cyclical play, as the company remains leveraged to self-directed efforts to grow its next-gen semiconductor materials business, as well as key businesses serving long-term growth markets like EVs....
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Shin-Etsu Chemical Remains A Superior Operator And Well-Leveraged To End-Market Recoveries