In-Depth Analysis: Stella Chemifa Q1 FY2027 Earnings – Semiconductor Recovery, Offsetting Rising Raw Material Costs, and Comprehensive Shareholder Returns

Based on the Q1 FY2027 earnings report of Stella Chemifa Corporation (Securities Code: 4109), this report provides a comprehensive analysis of key performance highlights, segment-specific details, the impact of raw material prices, full-year outlook, shareholder return policies, and development topics for medium-to-long-term growth.

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1. Overall Performance and Key Topics (10 Highlights)

The following 10 points summarize the critical topics attracting investor attention in this earnings report:

1. Revenue and Operating Profit Growth : Q1 revenue increased by 10.9% year-on-year to 9,754 million yen , with operating profit rising 1.6% to 1,242 million yen .
2. Significant Increase in Quarterly Net Profit : Due to the recording of gains from changes in equity following a capital increase at a domestic affiliate, quarterly net profit attributable to owners of the parent surged 32.1% year-on-year to 1,094 million yen .
3. High-Purity Chemicals Segment: Revenue Up, Profit Down : While revenue grew to 8,383 million yen (+10.2%) due to increased semiconductor shipments and successful price pass-throughs, operating profit declined to 902 million yen (-9.6%) due to the impact of rising raw material costs.
4. Surge in Key Raw Material Prices (Anhydrous Hydrofluoric Acid) : The Chinese import trade statistics price spiked to 384 yen/kg , putting pressure on the profit margins of the High-Purity Chemicals segment.
5. Transportation Business Complements Corporate Performance : Driven by increased cargo volume and improved profitability, the segment recorded a notable operating profit of 337 million yen (+48.8% year-on-year) .
6. Strong Bottoming Out of Semiconductor Shipments : Q1 shipment volume for high-purity hydrofluoric acid (for semiconductors) reached 18,700 tons , confirming a recovery in demand.
7. Full-Year Forecast Maintained : Despite factoring in cost increases such as rising raw material prices, the full-year plan remains unchanged at 39,100 million yen in revenue and 4,800 million yen in operating profit, supported by robust demand for semiconductors and electronic materials.
8. Recovery Scenario via Volume Effects : The full-year operating profit outlook anticipates that increased sales volume will serve as a growth driver, contributing +1,000 million yen to profit.
9. Highly Generous Shareholder Returns : Aiming for a total return ratio of 100% or more over a three-year period, the company has decided on a share buyback of up to 1.9 billion yen (300,000 shares) in addition to dividends (forecasted at 180 yen annually).
10. Advancing Next-Generation Growth Drivers : Sample work is in full swing for high-value-added fields, including high-selectivity etching agents for semiconductors and cathode coating materials for lithium-ion secondary batteries ( SL-51 ).

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2. Q1 FY2027 Earnings Highlights and Factor Analysis

Consolidated results for the first quarter were as follows: revenue of 9,754 million yen (+10.9% YoY), operating profit of 1,242 million yen (+1.6% YoY), ordinary profit of 1,176 million yen (+2.4% YoY), and quarterly net profit attributable to owners of the parent of 1,094 million yen (+32.1% YoY).

In terms of revenue, progress in price pass-throughs in the core semiconductor division and increased shipment volumes in the electronic materials division strongly drove overall growth. Regarding profit, although cost of sales rose due to the sharp increase in the price of anhydrous hydrofluoric acid, the company secured an increase in operating profit by absorbing these costs through higher sales volumes and structural improvements in the transportation business.

The following slide provides a multi-faceted analysis of the factors contributing to the change in operating profit.

[Slide Commentary: Importance of Operating Profit Variance Analysis (YoY)]

This slide clearly illustrates the interaction of positive and negative factors that resulted in the current period's operating profit (1,242 million yen).

• Sales Volume Effect (+300 million yen) : Increased shipments in the semiconductor and electronic materials divisions outweighed the sluggish performance in the energy and general products divisions, making a significant positive contribution.
• Price/Cost Factors (-350 million yen) : While price pass-throughs in the semiconductor division progressed (positive), the burden of rising raw material prices (negative) exceeded this, acting as a negative factor for the High-Purity Chemicals segment as a whole.
• Other Businesses/Eliminations (+115 million yen) : The Transportation Business , which achieved increased logistics volume and improved profitability, made a significant contribution, playing a crucial role in offsetting the profit pressure in the manufacturing divisions.

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3. Raw Material Price Trends and Segment Performance

Revenue in the core High-Purity Chemicals segment grew steadily to 8,383 million yen (+10.2% YoY). A breakdown shows that the semiconductor sector , which accounts for 70% of the segment, reached 5,884 million yen (+10.2%), while the electronic materials sector grew significantly to 375 million yen (+61.0%). Regarding the geographical distribution of semiconductor shipments, the company maintains a stable share in Japan while continuing to expand into key Asian regions such as Taiwan and South Korea.

However, operating profit for this segment fell to 902 million yen (-9.6% YoY). This was primarily due to the sharp rise in the market price of anhydrous hydrofluoric acid.

[Slide Commentary: Significance of Hydrofluoric Acid "Import Trade Statistics Price" Trends]

This line graph shows the trend in the import trade statistics price (average unit price) of hydrofluoric acid from China, the company's main supplier. Prices hovered in the high 200 yen/kg to 300 yen/kg range from FY2023 to FY2026, but spiked to 384 yen/kg in Q1 FY2027 . This rise in raw material costs is the primary factor lowering the profit margin of the High-Purity Chemicals segment. While the company is passing these costs on to sales prices, the graph visually demonstrates the time lag between rapid market price changes and cost recovery.

Meanwhile, the Transportation Business , another pillar of the company, performed exceptionally well with revenue of 1,350 million yen (+16.5% YoY) and operating profit of 337 million yen (+48.8% YoY). By capturing demand for the transport of hazardous materials and special chemicals, and promoting transport efficiency and profitability, it became a powerful driver for the group's overall earnings.

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4. Full-Year Earnings Forecast and Growth Scenario

The company has maintained its full-year consolidated earnings forecast for FY2027:

• Revenue : 39,100 million yen (+6.3% YoY)
• Operating Profit : 4,800 million yen (+3.3% YoY)
• Ordinary Profit : 4,900 million yen (+10.7% YoY)
• Net Profit Attributable to Owners of the Parent : 3,400 million yen (+11.2% YoY)

In the full-year operating profit variance outlook, the company expects a +1,000 million yen increase due to higher sales volumes . The plan assumes that the cost increases from raw materials and expenses (totaling approx. -823 million yen) will be sufficiently offset by increased shipments of semiconductor and electronic materials and continued price pass-throughs. A full-scale recovery of the semiconductor market in the second half is the key to profit expansion.

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5. Improving Capital Efficiency and Proactive Shareholder Returns

The company identifies the improvement of capital efficiency and proactive profit returns to shareholders as a top priority, setting the following ambitious goals for the three-year period from FY2026 to FY2028:

• Total Return Ratio : Aiming for 100% or more cumulatively over three years.
• Dividends : Setting a floor of 170 yen per share annually.

The dividend forecast for FY2027 is 180 yen per share (90 yen interim, 90 yen year-end). Furthermore, concurrent with this earnings announcement, the company announced a share buyback as part of its flexible capital policy.

[Slide Commentary: Significance of Dividend Track Record/Forecast and Share Buybacks]

This slide symbolizes the company's highly proactive stance on shareholder returns.

• Decision on Share Buyback : The company decided on a large-scale buyback with a maximum of 300,000 shares and a total acquisition cost of 1.9 billion yen (acquisition period: August 7, 2026 – October 30, 2026).
• Total Return Ratio Trends : Historical data shows high levels of 101.5% in FY2024, 107.0% in FY2025, and 71.7% in FY2026. By combining dividends and share buybacks in FY2027, the company reinforces its commitment to achieving a total return ratio of 100% or more.

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6. Advanced Technology Topics for Next-Generation Growth

To enhance corporate value over the medium-to-long term, the company is steadily advancing R&D and new application development in high-value-added areas based on its fluorine chemistry expertise.

1. Development of High-Selectivity Etching Agents for Semiconductors : As semiconductor devices become more miniaturized and 3D-structured, technology that selectively removes specific materials is required. The company has developed a reagent with selectivity exceeding conventional products and is currently conducting sample work with users .
2. Development of Cell Culture Vessels : Utilizing proprietary surface treatment technology, the company has developed cell culture vessels suitable for regenerative medicine and drug development. It is promoting these through exhibitions and PR activities, aiming for full-scale sales in FY2027.
3. Development of High-Value-Added Organic Fluorine Compounds : By integrating fluorine gas, fluorinating agents, and flow synthesis with batch methods, the company is expanding its contract synthesis and manufacturing/sales business for pharmaceutical intermediates and reagents.
4. Development of Materials for Lithium-Ion Secondary Batteries (LiB) : The company is promoting the development of " SL-51 ," a cathode active material coating, as a next-generation battery material. It improves charge-discharge characteristics and durability. In addition to sample work for high-voltage liquid LiBs, efforts are underway with an eye toward commercialization for all-solid-state LiBs around 2030 .

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Summary

Stella Chemifa's Q1 FY2027 earnings were solid, maintaining revenue and profit growth despite the short-term headwind of rising raw material prices, thanks to a recovery in semiconductor shipments , progress in price pass-throughs , and the strong performance of the transportation business .

Furthermore, in parallel with the volume-increase scenario for achieving full-year forecasts, the company has demonstrated a clear stance on enhancing shareholder value by executing large-scale share buybacks and maintaining high dividend levels with a total return ratio of 100% or more in mind . With its approach to growth areas such as advanced semiconductor materials and battery materials, the company remains one to watch closely.