Emkay Global Financial' research report on PI Industries
Kumiai Chemical Industry (Kumiai) has revised up its H1FY25 revenue guidance by ~9% to JPY96bn from JPY88bn, citing that net sales are expected to exceed the forecast due to advanced shipment to overseas markets in its Agchem business. Its FY25 guidance is unchanged at JPY159bn. We believe the revision is owing to liquidation of excess AXEEV inventory build-up in FY24 (Kumiai inventory up 50% YoY to JPY75bn). Kumiai maintains ~6 months of inventory, with higher growth expected in its H1 largely factored into PI’s H1FY25 numbers. Also, revising up H1 guidance and keeping full-year guidance unchanged implies lowering of H2 guidance. PI, in its Q4FY25 call, has already given guidance for a mid-single digit growth in FY26; there is no major upgrade in Kumiai’s numbers for FY26.
Outlook
We maintain REDUCE on PI with unchanged TP of Rs3,650, and await visibility on scale-up of new patented molecules.
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