Ishihara Sangyo (ISK, cap Y119 bn) is a chemical company: Core products are agrochemicals and Electric Component (mainly, MLCC/Multilayer Ceramic Capacitor.  MLCC is one of the most common electronic components in the world — every phone, car, PC, and piece of industrial equipment uses them.

The stock fell sharply by 18% on 5/23 following weaker‑than‑expected guidance. It has been essentially flat since my note on 11/29/25.

For context — and so you don’t feel the need to stop reading my notes — not all my calls look like this one. I’ve had some strong performers too, including Tomen Device (2737), which is up 113% since my 10/14/25 note, and JSB (3480), up 82.7% since my 11/21/25 note.

FY3/26 results: Excellent

Net sales came in at ¥154.897 billion, up 6.7% year on year,

Operating profit was ¥19.077 billion, an 82.0% increase, both beating twice-raised guidance (OP guidance beat was 19%).

Sales of herbicides and insecticides grew in Europe, and electronic materials such as MLCC also performed well.

But,

FY3/27 guidance

-Revenue: ¥150 Bn (down 3.1%)

-Operating profit: ¥14.2 Bn (down 25.6%): I detailed the rationale behind OP decline in my client notes.

-Ordinary profit: ¥13.3 Bn (down 34%)

·-FX assumption: Y155/$, Y180/Euro vs. mid term assumption of Y140/$ and Y180/Euro.

-Net income: ¥9.1 Bn (down 45.3%)

-Expected Dividend payout: Y130 vs. Y120 in FY3/26. Div Yield: 4.38%

My take:

I would characterize the outlook as incorporating a wide range of negative possibilities. Margin improvement is emerging in TiO₂, though the current step‑up reflects the absence of discounted inventory‑reduction sales rather than a structural shift. Even so, this stage often sets the foundation for more fundamental margin improvement.

Inorganics (≈80% TiO₂) OP margin:

• FY3/25: Slight operating loss

• FY3/26: +4%

Company‑wide, the FY3/26 operating margin improved to 12.3%, up from 7.22% in FY3/25. While 12.3% remains well below Nissan Chemical’s 22.7% (reflecting Nissan’s greater focus on high‑value chemicals), the direction is clearly positive.

FY3/27 OP margin is guided down to 9.5%, but given management’s historical tendency to revise upward as the year progresses, it is too early to conclude that margins peaked in FY3/26.

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