Nippon Investment Bespoke Research UK Ltd

Nippon Investment Bespoke Research UK

Equity Bottom-Up

<ul><li>MEC (4971 JP) reported FY25 (Dec year-end) Q1~Q3 OP of ¥4,247mil (+16.4% YoY) on sales of ¥14,987mil (+9.5% YoY.</li><li>Chemicals sales rose +11.6% YoY to ¥14,559mil while chemical sales volume also gained +10.9% YoY to 34,844ton.</li><li>The gross profit margin [GPM] improved to 62.4% (+1.0ppt YoY), thanks to sales growth of MEC’s core product, CZ-8101.</li></ul>

MEC (4971 JP) reported FY25 (Dec year-end) Q1~Q3 OP of ¥4,247mil (+16.4% YoY) on sales of ¥14,987mil (+9.5% YoY.Chemicals sales rose +11.6% YoY to ¥14,559mil while chemical sales volume also gained +10.9% YoY to 34,844ton.The gross profit margin [GPM] improved to 62.4% (+1.0ppt YoY), thanks to sales growth of MEC’s core product, CZ-8101.

<ul><li>While MEC’s (4971 JP) FY25 (Dec year-end) 1H sales fell short of guidance by 2.2% to ¥9,387mil (+5.7% YoY), OP improved +3.3% YoY to ¥2,440mil, coming in 8.5% above the firm’s guidance of ¥2,250mil.</li><li>This was primarily due to less than expected SG&A spending – something the firm had flagged in an earlier release.</li><li>Net profit [NP] was revised from ¥1,450mil (-23.2% YoY) to ¥1,893mil (+0.2% YoY), thanks to the receipt of a subsidy from the Ministry of Economy, Trade and Industry [METI] specifically for smaller sized companies to support growth investment.</li></ul>

While MEC’s (4971 JP) FY25 (Dec year-end) 1H sales fell short of guidance by 2.2% to ¥9,387mil (+5.7% YoY), OP improved +3.3% YoY to ¥2,440mil, coming in 8.5% above the firm’s guidance of ¥2,250mil.This was primarily due to less than expected SG&A spending – something the firm had flagged in an earlier release.Net profit [NP] was revised from ¥1,450mil (-23.2% YoY) to ¥1,893mil (+0.2% YoY), thanks to the receipt of a subsidy from the Ministry of Economy, Trade and Industry [METI] specifically for smaller sized companies to support growth investment.

<ul><li>MEC’s (4971 JP) FY25 (Dec year-end) Q1 results were largely in line with guidance for OP to rise +3.8% YoY / +19.8% QoQ to ¥1,093mil on sales of ¥4,423mil (+1.6% YoY / -2.8% QoQ).</li><li>Chemical segment sales rose +8.0% YoY / -4.5% QoQ to ¥4,237mil, thanks to 1) a steady increase in demand for chemicals used in high-end packages related to generative AI, and 2) a gradual recovery in demand associated with PCs, smartphones and general servers.</li><li>MEC is guiding for FY25 1H OP of ¥2,250mil (-4.8% YoY) on sales of ¥9,600mil (+8.1% YoY), and full-year OP of ¥5,000mil (+9.6% YoY) on sales of ¥20,000mil (+9.7% YoY).</li></ul>

MEC’s (4971 JP) FY25 (Dec year-end) Q1 results were largely in line with guidance for OP to rise +3.8% YoY / +19.8% QoQ to ¥1,093mil on sales of ¥4,423mil (+1.6% YoY / -2.8% QoQ).Chemical segment sales rose +8.0% YoY / -4.5% QoQ to ¥4,237mil, thanks to 1) a steady increase in demand for chemicals used in high-end packages related to generative AI, and 2) a gradual recovery in demand associated with PCs, smartphones and general servers.MEC is guiding for FY25 1H OP of ¥2,250mil (-4.8% YoY) on sales of ¥9,600mil (+8.1% YoY), and full-year OP of ¥5,000mil (+9.6% YoY) on sales of ¥20,000mil (+9.7% YoY).

<ul><li>MEC’s (4971 JP) reported FY24 (Dec year-end) results, producing OP of ¥4,562mil (+83.0% YoY) on sales of ¥18,234mil (+30.1% YoY).</li><li>FY24 Chemical segment sales rose +27.0% YoY to ¥17,478mil, thanks to 1) a steady increase in demand for chemicals used in high-end packages, and 2) a gradual recovery in demand associated with PCs, smartphones, and general servers.</li><li>MEC is guiding for FY25 1H OP of ¥2,250mil (-4.8% YoY) on sales of ¥9,600mil (+8.1% YoY), and full-year OP of ¥5,000mil (+9.6% YoY) on sales of ¥20,000mil (+9.7% YoY).</li></ul>

MEC’s (4971 JP) reported FY24 (Dec year-end) results, producing OP of ¥4,562mil (+83.0% YoY) on sales of ¥18,234mil (+30.1% YoY).FY24 Chemical segment sales rose +27.0% YoY to ¥17,478mil, thanks to 1) a steady increase in demand for chemicals used in high-end packages, and 2) a gradual recovery in demand associated with PCs, smartphones, and general servers.MEC is guiding for FY25 1H OP of ¥2,250mil (-4.8% YoY) on sales of ¥9,600mil (+8.1% YoY), and full-year OP of ¥5,000mil (+9.6% YoY) on sales of ¥20,000mil (+9.7% YoY).

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/taiyo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15154:1" rel="noopener">Taiyo Holdings (4626 JP)</a> shares were up 19.1% based on a <a href="https://news.bloombergtax.com/private-equity/taiyo-holdings-gets-buyout-proposals-from-firms-including-kkr" target="_blank" rel="noopener">Bloomberg report</a> that it received privatisation proposals from KKR and Nippon Sangyo Suishin Kiko. </li>
<li>Taiyo confirmed that it has received privatisation offers. The Board would view privatisation as a solution to rid itself of Oasis, which has recently waged an <a href="https://www.corpgovfortaiyo.com/taiyo-corp-gov" target="_blank" rel="noopener">activist campaign</a>. </li>
<li>At the last close price of JPY6,230, Oasis would be up 45.9% on its highest price of JPY4,720. My analysis suggests that an offer around JPY7,000 can be justified.</li>
</ul>



Taiyo Holdings (4626 JP) shares were up 19.1% based on a Bloomberg report that it received privatisation proposals from KKR and Nippon Sangyo Suishin Kiko. 
Taiyo confirmed that it has received privatisation offers. The Board would view privatisation as a solution to rid itself of Oasis, which has recently waged an activist campaign. 
At the last close price of JPY6,230, Oasis would be up 45.9% on its highest price of JPY4,720. My analysis suggests that an offer around JPY7,000 can be justified.


Taiyo Holdings (4626 JP): Privatisation Interest as Oasis Agitates

Japan

MEC COMPANY LTD. manufactures and markets chemicals and equipment for printed circuit boards.  The Company has sales/manufacturing subsidiaries in Taiwan, Hong Kong, Belgium, and US.

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Mec Co Ltd (4971 JP)

MEC Co., LTD (4971 JP): RESEARCH UPDATE

MEC (4971 JP) reported FY25 (Dec year-end) Q1~Q3 OP of ¥4,247mil (+16.4% YoY) on sales of ¥14,987mil (+9.5% YoY. Chemicals sales rose +11.6% YoY...

Nippon Investment Bespoke Research UK

MEC Co., Ltd (4971 JP): Research Update

While MEC’s (4971 JP) FY25 (Dec year-end) 1H sales fell short of guidance by 2.2% to ¥9,387mil (+5.7% YoY), OP improved +3.3% YoY to ¥2,440mil,...

Nippon Investment Bespoke Research UK

MEC Co., Ltd (4971 JP): Research Update

MEC’s (4971 JP) FY25 (Dec year-end) Q1 results were largely in line with guidance for OP to rise +3.8% YoY / +19.8% QoQ to ¥1,093mil on sales of...

Nippon Investment Bespoke Research UK

MEC Co., Ltd (4971 JP): Research Update

MEC’s (4971 JP) reported FY24 (Dec year-end) results, producing OP of ¥4,562mil (+83.0% YoY) on sales of ¥18,234mil (+30.1% YoY). FY24 Chemical...

Nippon Investment Bespoke Research UK

Taiyo Holdings (4626 JP): Privatisation Interest as Oasis Agitates

The Board would view privatisation as a solution to rid itself of Oasis, which has recently waged an activist campaign. My analysis suggests that...

Arun George

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