2025-06-11-花旗集团-泽昂（4205）_瑞翁（4205.T）_中期计划_第三阶段揭晓_10页_253kb

Zeon (4205.T) Medium-Term Plan Summary

Core Content Overview

Zeon has unveiled Phase 3 of its rolling format medium-term plan, covering the fiscal years FY3/26 to FY3/29, aligning with the previous Phase 2 (FY3/24 to FY3/27). The company has outlined its growth drivers, next-generation growth drivers, and non-core, low-profit businesses. It aims to enhance selection and concentration in its business portfolio. The earnings targets for FY3/27 and FY3/29 have been announced, with OP (Operating Profit) projections of ¥38bn and ¥42bn, respectively. These targets are slightly higher than the analyst's projections, but the company has not introduced any significant changes in its financial strategy, including shareholder return policy.

Main Growth Drivers

Zeon identifies the following as its core growth areas:

• COP resins for semiconductor applications: Expected to grow at $19%$ annually, driven by $10%$ semiconductor market growth.
• COP resins for medical applications: Projected to grow at $23%$ annually, based on $15%$ growth in the resin prefilled syringe market.
• COP films: Anticipated to grow at $12%$ annually, with $7%$ growth in the shipment area of TVs of 55 inches or larger.

Additionally, battery materials are expected to see strong growth in 2025-2026, following an agreement with a major US battery manufacturer to supply high-performance anode binders. However, the profit growth contribution from battery materials is expected to be lower than that from COP resins and films.

Earnings Outlook

The analyst’s expected operating profit (OP) for FY3/26 is ¥29bn, while the consensus stands at ¥28.5bn and Zeon’s target is ¥28bn. For FY3/27, the analyst projects ¥35bn, with consensus at ¥32bn and Zeon's target at ¥38bn. This would result in an estimated 35% increase in OP from FY3/26 to FY3/27, driven primarily by COP resins, COP films, and cost savings. The analyst notes that while the growth targets appear ambitious, they do not necessitate a major revision of current estimates.

Valuation and Investment Rating

• Target Price: ¥1,400, based on a 10x FY3/26E PER (Price-to-Earnings Ratio).
• Expected Share Price Return: -3.6% over the next 12 months.
• Expected Dividend Yield: 5.0%.
• Expected Total Return: 1.3%.
• Market Cap: ¥286,564M (US$1,978M).

The investment rating is Neutral, indicating that the stock is neither strongly recommended for purchase nor sale. The Catalyst Watch/Short Term Views (STV) ratings are also Neutral, suggesting no strong near-term price movement is expected.

Key Risks

Downside Risks:

1. Intense competition in the battery materials sector.
2. Weak butadiene prices and lower profit levels in synthetic rubber due to declining auto production.
3. Lack of recovery in demand for high-margin optical films for small and mid-sized screens.

Upside Risks:

1. Stronger-than-expected growth in cathode battery materials.
2. Improvement in supply/demand for butadiene and higher profit levels in synthetic rubber.
3. Greater-than-expected demand for Zeonor film due to changes in display specs.

Analyst Information

• Analyst: Yuta Nishiyama (AC)
• Contact: +81-3-6776-4643 | yuta.nishiyama@citi.com
• Legal Entity: Citigroup Global Markets Japan Inc.

Research Methodology and Conflicts of Interest

Citi Research is a division of Citigroup Global Markets Inc., which has non-investment banking relationships with Zeon. This may result in a potential conflict of interest, which is acknowledged in the report. The analyst's compensation is not directly linked to specific recommendations and is based on overall Firm profitability.

Disclosure and Regulatory Information

• The report includes important disclosures regarding conflicts of interest, research methodologies, and regulatory compliance.
• Catalyst Watch and STV ratings are not equivalent to fundamental equity ratings and do not affect them.
• Investment ratings (Buy, Neutral, Sell) are based on expected total return (ETR) and risk assessment.
• The proportion of Buy, Hold, Sell recommendations has remained relatively consistent over the past 12 months.

Additional Notes

• The report is for informational purposes only and not an offer to sell or purchase any security.
• Investors are advised to consider their own investment objectives, risk tolerance, and consult legal counsel regarding compliance with economic sanctions and investment regulations.
• Non-US securities may involve additional risks, including limited information, less liquidity, and exchange rate fluctuations.

Summary

Zeon's Phase 3 medium-term plan continues the strategy of selection and concentration, focusing on COP resins, COP films, and battery materials. The company has not introduced major financial strategy changes, and its earnings targets are in line with the analyst’s expectations. The target price is set at ¥1,400, with a neutral investment rating. The report acknowledges potential risks and conflicts of interest, emphasizing the importance of independent analysis and regulatory compliance.