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Omega Investment Co., Ltd.

SUMIDA CORPORATION (Company note – 2Q update)

Coverage
Share price (8/25) ￥1,056 Dividend Yield (12/25 CE) 5.0 %
52weeks high/low ￥757/1,064 ROE(12/24) 1.0 %
Avg Vol (3 month)  227.9 thou shrs Operating margin (12/24) 3.1 %
Market Cap ￥34.96 bn Beta (5Y Monthly) 0.93
Enterprise Value ￥86.16 bn Shares Outstanding 33.108 mn shrs
PER (12/25 CE) 10.9 X Listed market TSE Prime section
PBR (12/24 act) 0.61 X    
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Profitability has improved, strengthening the downside rigidity of earnings

◇ Highlights of results for the second quarter (first half) of FY12/2025: profitability improved markedly

Sumida Corporation (the “Company”) announced on July 31, 2025, the results for the second quarter (first half) of the fiscal year ending December 2025. While revenue recorded a slight YoY decline, operating profit, interim profit before income taxes, and interim profit attributable to owners of the parent recovered. The effects of profitability improvements, including the cost structure reform implemented at the end of last year, have become evident.

For the first half, revenue was 71.17 billion yen (down 2.6% YoY), operating profit was 3.36 billion yen (up 44.2% YoY), interim profit before income taxes was 2.17 billion yen (up 196.6% YoY), and interim profit attributable to owners of the parent 1.66 billion yen (up 243.0% YoY). In the second quarter alone, revenue was 35.7 billion yen (down 2.6% YoY) and operating profit was 2.1 billion yen (up 86.9% YoY), indicating that profitability improvements have continued for two quarters.

The key points of these results are the following three.

First, revenue was weak. Automotive Electronics declined to 42.98 billion yen (down 5.4% YoY) due to sluggish sales to European manufacturers; Industrial Electronics softened to 18.07 billion yen (down 0.8% YoY) due to weakness in xEV rapid-charging infrastructure and solar power generation-related business in Europe. Consumer Electronics performed well at 10.11 billion yen (up 7.3% YoY); however, this was helped by compensation received from certain customers for reduced order volumes, and excluding this factor, the segment appears to be stagnant.

Source: Company material

Second, despite the above, profitability improved. Completion of restructuring in Europe, progress in optimizing manufacturing overhead in China, and the compensation mentioned above enabled higher profit despite lower revenue. As a result, the first half appears to have landed in line with the Company’s plan.

Source: Company material

Third, there are no issues with inventory trends. Amid lower revenue, inventory turnover days were 79 days, eight days fewer YoY.

◇ Forecast for FY12/2025: unchanged; assumes continued profitability improvement

The full-year earnings forecast has been left unchanged.

Revenue of 144.0 billion yen (flat YoY), operating profit of 7.0 billion yen (up 55.1% YoY), profit before income taxes of 4.08 billion yen (up 214.9% YoY), and profit attributable to owners of the parent of 3.20 billion yen (up 441.5% YoY). There are also no changes to basic earnings per share of 96.83 yen and an annual dividend per share of 53 yen.

◇ Stock price trends and points to watch going forward

The Company’s stock price edged higher following the announcement of results for the first quarter of FY12/2025, and at present, the 1,000-yen level has taken hold. Viewed over the long term, it is supported by a gentle upward trendline since 2012. Behind this are factors such as a PBR of around 0.6x and, as confirmed in these results, the successful securing of profitability even amid declining revenue, limiting downside risk. On the other hand, a resistance line has also formed from the 2017 high of 2,400 yen, and the stock price is within a large symmetrical triangle pattern.

Given this positioning of the stock price, points to watch going forward are whether downside risk on the earnings front will diminish further and whether new drivers of revenue will emerge, centered on the green energy-related  fields on which the Company is focusing, enabling a return to a trend of higher revenue and profit and a recovery in ROE. If a prospect takes shape for stably achieving ROE over the cost of capital, there is a possibility that PBR will exceed 1x and the stock will break out of the triangle pattern to the upside, which merits attention.

Points to check in the near term are as follows.

 • Success or failure in securing profitability at present: According to the full-year forecast, increases in both revenue and profit are needed in the second half. However, according to the financial results presentation materials, there are signs of slowing demand at present. In particular, while the Company’s direct impact from U.S. tariff policy is slight, its customer base will not be immune, and indirect effects on the Company are conceivable. Accordingly, it will be necessary each quarter to check whether further optimization of manufacturing overhead in China progresses, whether the Company can respond flexibly to customers by leveraging it made in market framework, and whether profit and loss are steadily secured as a result.

 • Continued accumulation of acquired projects: It is essential that newly acquired projects, as a leading indicator of the Company’s medium-term results, continue to accumulate steadily in line with the Mid-Term Business Plan. While xEV-related and solar power generation-related areas are showing increasingly different market trends by region, attention will focus on whether these can be reliably converted into projects and whether project formation will progress for rising demand, across regions, for AI-related storage batteries and the like. As a result, it is hoped that the likelihood of achieving the specific numerical targets set out in the new Mid-Term Business Plan, revenue of 190.0 billion yen and operating profit of 13.5 billion yen, will increase.

Note also that attention is required to fluctuations in exchange rate trends and prices of key raw materials such as copper.

Source: Company material

Company profile

Since its founding in 1950, it has been a global leader in the design and manufacturing of coil-related components and modules. Leveraging advanced technical design capabilities cultivated through many years of experience, proprietary manufacturing know-how, the ability to expand into a wide range of applications, and a solid global production structure, it operates mainly as a custom-made contract manufacturing business for major customers around the world under a “Made in Market” model. The Company’s business is characterized by a well-balanced, decentralized portfolio both geographically and by market segment.

In recent years, it has grown its results in so-called “green energy-related” fields. That said, the business environment is currently in a lull. Moreover, although there are many uncertainties, such as tariff issues, the Company has moved quickly to strengthen its cost structure and is delivering results.

Key points to watch going forward are whether “green energy-related” will, while broadening its base, drive the Company’s earnings; whether, as a result, the operating profit margin and ROE will increase toward the assumptions of the Mid-Term Business Plan; and whether, in turn, PBR will exceed 1x.

Key financial data

Unit: million yen 2020 2021 2022 2023 2024 2025
CE
Sales 84,417 104,920 138,600 147,672 143,978 144,000
EBIT (Operating Income) 2,300 5,669 7,983 8,829 5,633  
Pretax Income 1,470 3,898 6,534 5,856 1,295  
Net Profit Attributable to Owner of Parent 828 2,629 5,099 5,064 590 3,200
Cash & Short-Term Investments 5,237 4,237 2,944 3,107 4,286  
Total assets 98,063 117,725 134,846 142,786 147,766  
Total Debt 44,586 54,763 58,546 57,198 57,975  
Net Debt 39,349 50,526 55,602 54,091 53,689  
Total liabilities 63,503 77,622 85,966 85,471 86,849  
Total Shareholders’ Equity 32,990 38,338 46,829 55,056 58,648  
Net Operating Cash Flow 9,107 600 10,566 18,343 14,928  
Capital Expenditure 6,765 6,737 9,174 10,914 9,005  
Net Investing Cash Flow -6,669 -6,712 -8,174 -10,702 -8,834  
Net Financing Cash Flow -447 4,751 -4,130 -7,782 -5,268  
Free Cash Flow 3,118 -5,212 2,362 8,539 7,068  
ROA (%) 0.85 2.44 4.04 3.65 0.41  
ROE (%) 2.51 7.37 11.98 9.94 1.04  
EPS (Yen) 30.5 96.7 187.5 167.4 17.9 96.8
BPS (Yen) 1,213.7 1,409.8 1,722.1 1,687.4 1,774.6  
Dividend per Share (Yen) 9.00 28.00 47.00 51.00 53.00 53.00
Shares Outstanding (Million shares) 27.44 27.44 27.44 32.88 33.10  

Source: Omega Investment from company materials

Share price

Financial data (quarterly basis)

Unit: million yen 2024/12 2025/12 2026/12
　 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
(Income Statement)                  
Sales 37,662 37,718 36,739 36,313 36,752 36,470 34,442 35,390 35,780
Year-on-year 15.4% -2.7% -2.4% 2.1% -2.4% -3.3% -6.3% -2.5% -2.6%
Cost of Goods Sold (COGS) 31,927 31,752 32,584 32,014 32,263 31,656 30,037 31,007 30,524
Gross Income 5,735 5,966 4,155 4,299 4,489 4,814 4,405 4,383 5,256
Gross Income Margin 15.2% 15.8% 11.3% 11.8% 12.2% 13.2% 12.8% 12.4% 14.7%
SG&A Expense 3,142 3,090 3,006 3,218 3,353 3,091 2,713 3,151 3,059
EBIT (Operating Income) 2,593 2,876 1,149 1,081 1,136 1,723 1,692 1,232 2,197
Year-on-year 92.2% -8.5% -56.3% -51.1% -56.2% -40.1% 47.3% 14.0% 93.4%
Operating Income Margin 6.9% 7.6% 3.1% 3.0% 3.1% 4.7% 4.9% 3.5% 6.1%
EBITDA 4,828 5,283 3,718 3,707 3,956 4,552 4,439 3,809 5,618
Pretax Income 2,419 1,426 387 464 268 951 -389 802 1,372
Consolidated Net Income 2,050 1,060 757 313 114 710 -703 580 1,053
Minority Interest 7 -23 53 -35 -23 -46 -52 -5 -29
Net Income ATOP 2,043 1,083 702 348 137 756 -652 585 1,082
Year-on-year 230.6% -47.8% -66.0% -71.8% -93.3% -30.2% -192.9% 68.1% 689.8%
Net Income Margin 5.4% 2.9% 1.9% 1.0% 0.4% 2.1% -1.9% 1.7% 3.0%
                   
(Balance Sheet)                  
Cash & Short-Term Investments 9,903 6,439 3,107 6,002 5,156 4,750 4,286 6,087 5,429
Total assets 150,733 149,591 142,786 152,361 159,600 143,335 147,766 144,110 142,062
Total Debt 60,772 57,166 57,198 63,785 65,509 58,303 57,975 58,367 57,039
Net Debt 50,869 50,727 54,091 57,783 60,353 53,553 53,689 52,280 51,610
Total liabilities 88,503 85,870 85,471 92,128 95,474 85,403 86,849 85,709 83,098
Total Shareholders’ Equity 59,952 61,426 55,056 57,875 61,653 55,751 58,648 56,205 56,801
                   
(Profitability %)                  
ROA 5.11 4.41 3.65 2.89 1.46 1.33 0.41 0.56 1.17
ROE 14.17 11.79 9.94 7.90 3.74 3.32 1.04 1.45 2.99
(Per-share) Unit: JPY                  
EPS 71.8 33.2 21.5 10.7 4.2 22.9 -19.7 17.7 32.7
BPS 1,837.4 1,882.6 1,687.4 1,773.8 1,867.5 1,687.0 1,774.6 1,700.6 1,718.1
Dividend per Share 23.00 0.00 28.00 0.00 26.00 0.00 27.00 0.00 26.00
Shares Outstanding (million shares) 32.88 32.88 32.88 32.88 33.04 33.10 33.10 33.10 33.11

Source: Omega Investment from company materials

Financial data (full-year basis)

Unit: million yen 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
(Income Statement)                    
Sales 86,236 81,052 90,153 97,538 94,283 84,417 104,920 138,600 147,672 143,978
Year-on-year 11.2% -6.0% 11.2% 8.2% -3.3% -10.5% 24.3% 32.1% 6.5% -2.5%
Cost of Goods Sold 71,628 66,191 75,019 82,192 81,414 73,319 89,563 119,298 126,561 125,970
Gross Income 14,608 14,861 15,134 15,346 12,869 11,098 15,357 19,302 21,111 18,008
Gross Income Margin 16.9% 18.3% 16.8% 15.7% 13.6% 13.1% 14.6% 13.9% 14.3% 12.5%
SG&A Expense 10,371 8,507 8,837 9,694 9,330 8,798 9,688 11,319 12,282 12,375
EBIT (Operating Income) 4,237 6,354 6,297 5,652 3,539 2,300 5,669 7,983 8,829 5,633
Year-on-year 26.7% 50.0% -0.9% -10.2% -37.4% -35.0% 146.5% 40.8% 10.6% -36.2%
Operating Income Margin 4.9% 7.8% 7.0% 5.8% 3.8% 2.7% 5.4% 5.8% 6.0% 3.9%
EBITDA 8,443 9,251 9,574 9,660 8,848 8,247 12,337 16,103 18,190 16,655
Pretax Income 2,932 5,469 5,697 4,061 2,184 1,470 3,898 6,534 5,856 1,295
Consolidated Net Income 2,188 3,844 4,628 2,531 1,596 839 2,695 5,168 5,102 434
Minority Interest 156 178 123 110 13 11 66 68 37 -156
Net Income ATOP 2,032 3,666 4,504 2,420 1,582 828 2,629 5,099 5,064 590
Year-on-year 51.0% 80.4% 22.9% -46.3% -34.6% -47.7% 217.5% 94.0% -0.7% -88.3%
Net Income Margin 2.4% 4.5% 5.0% 2.5% 1.7% 1.0% 2.5% 3.7% 3.4% 0.4%
                     
(Balance Sheet)                    
Cash & Short-Term Investments 3,569 3,546 5,375 4,098 3,286 5,237 4,237 2,944 3,107 4,286
Total assets 67,876 69,007 84,366 94,277 96,561 98,063 117,725 134,846 142,786 147,766
Total Debt 33,879 30,611 35,836 40,206 43,646 44,586 54,763 58,546 57,198 57,975
Net Debt 30,310 27,065 30,461 36,108 40,360 39,349 50,526 55,602 54,091 53,689
Total liabilities 49,207 46,982 54,242 58,835 61,963 63,503 77,622 85,966 85,471 86,849
Total Shareholders’ Equity 17,411 20,629 28,570 33,829 33,013 32,990 38,338 46,829 55,056 58,648
                     
(Cash Flow)                    
Net Operating Cash Flow 5,515 8,291 3,658 4,672 8,732 9,107 600 10,566 18,343 14,928
Capital Expenditure 4,448 5,024 9,511 9,610 8,302 6,765 6,737 9,174 10,914 9,005
Net Investing Cash Flow -4,366 -4,961 -9,254 -15,153 -8,133 -6,669 -6,712 -8,174 -10,702 -8,834
Net Financing Cash Flow -1,054 -3,016 7,389 9,477 -1,261 -447 4,751 -4,130 -7,782 -5,268
Free Cash Flow 1,137 3,941 -5,173 -3,769 1,379 3,118 -5,212 2,362 8,539 7,068
                     
(Profitability )                    
ROA (%) 2.95 5.36 5.87 2.71 1.66 0.85 2.44 4.04 3.65 0.41
ROE (%) 11.98 19.27 18.31 7.76 4.74 2.51 7.37 11.98 9.94 1.04
Net Margin (%) 2.36 4.52 5.00 2.48 1.68 0.98 2.51 3.68 3.43 0.41
Asset Turn 1.25 1.18 1.18 1.09 0.99 0.87 0.97 1.10 1.06 0.99
Assets/Equity 4.07 3.60 3.12 2.86 2.86 2.95 3.03 2.97 2.72 2.56
(Per-share) Unit: JPY                    
EPS 87.5 157.9 176.4 90.2 58.3 30.5 96.7 187.5 167.4 17.9
BPS 750.1 888.8 1,069.6 1,250.0 1,216.1 1,213.7 1,409.8 1,722.1 1,687.4 1,774.6
Dividend per Share 26.00 34.00 45.00 27.00 24.00 9.00 28.00 47.00 51.00 53.00
Shares Outstanding (million shares) 23.94 23.94 27.44 27.44 27.44 27.44 27.44 27.44 32.88 33.10

Source: Omega Investment from company materials

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