Japan Machinery Semiconductor utility sector Updating GSe, maintain bullish stance on the subsector

Equity Research 27 July 2026 | 5:38PM JST

Semiconductor utility sector: Updating GSe, maintain bullish stance on the subsector

We update our earnings estimates for each company based on the recently updated Takeru Adachi | capex plans of major semiconductor companies. However, we make no substantial Goldman Sachs Japan Co., Ltd. revisions to our earnings estimates, with the exceptions of our FY3/27 estimate for Yuichiro Isayama Nomura Micro Science and our FY3/28 estimate for Japan Material. With valuations | remaining at healthy levels, we believe the subsector remains highly attractive as it is Goldman Sachs Japan Co., Ltd. positioned to benefit from robust semiconductor investment over the medium to Takato Enoki | long term. We also introduce 2029E for Nomura Micro and Japan Material. Goldman Sachs Japan Co., Ltd.

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Rating Target price (JPY) FY26 OP estimate (JPYmn) FY27 OP estimate (JPYmn) Current Old New % Chg Old New % Chg Old New % Chg

Semi utilities Japan Material Neutral 2,200 2,300 5% 15,600 15,900 2% 19,400 22,700 17% Nomura MS Buy 5,300 5,500 4% 12,300 16,400 33% 21,500 22,700 6% Organo Buy 19,500 19,200 -2% 42,900 42,700 0% 49,100 48,500 -1% Kurita Water Buy 10,000 10,000 0% 62,500 61,700 -1% 69,600 71,600 3%

Japan Material (Neutral, target price ¥2,300)

Of the four semiconductor utilities companies in our coverage, Japan Material has undergone the most significant re-rating YTD. We think the primary reason for this is heightened market expectations for future growth upside amid the current strength in the memory market, as the company has historically benefited substantially during periods of expanded capex by Kioxia (Kioxia has been contributing 35-52% of Japan Materials sales over the past 5 years). In line with this, we believe that a significant increase in profits of over 40% yoy is likely in FY3/28, when we see a significant increase in initial sales. However, since margins fluctuate depending on the volume of new projects, we think it is still premature to shift our focus to FY3/28 estimates in the current environment, where project schedules are shifting daily. Based on this premise, we raise our FY3/28 operating profit estimate by 17% to reflect improving profitability and new domestic projects, and we raise our 12-month target price to ¥2,300, from ¥2,200. However, we maintain our Neutral rating.

Exhibit 1: Japan Material: Earnings summary Japan Material (6055.T) FY3/24 FY3/25 FY3/26 FY3/27 FY3/28 FY3/29 FY3/27 3/26 Q1 3/26 Q2 3/26 Q3 3/26 Q4 3/27 Q1 3/27 Q2 3/27 Q3 3/27 Q4 (JPYmn) Actual Actual Actual GSE GSE GSE CoE Actual Actual Actual Actual GSE GSE GSE GSE Financials 05/13/26 Net sales 48,592 52,678 57,976 64,300 82,900 81,200 61,000 13,256 12,418 16,058 16,244 15,425 16,125 16,025 16,725 - YoY (%) 4% 8% 10% 11% 29% -2% 5% 19% 4% 31% -6% 16% 30% 0% 3% Gross profit 12,019 16,160 19,755 20,600 27,700 26,800 4,526 4,107 5,228 5,894 - GP margin (%) 24.7% 30.7% 34.1% 32.0% 33.4% 33.0% 34.1% 33.1% 32.6% 36.3% EBITDA 8,657 12,338 15,897 17,200 24,000 22,800 - EBITDA margin (%) 18% 23% 27% 27% 29% 28% Operating profit 7,759 11,188 14,640 15,900 22,700 21,600 15,500 3,190 2,889 3,924 4,637 3,875 4,075 3,875 4,075 - OP margin (%) 16% 21% 25% 25% 27% 27% 25% 24% 23% 24% 29% 25% 25% 24% 24% Net profit 5,681 7,872 10,592 11,254 16,014 15,244 10,800 2,135 2,159 2,802 3,496 - NP margin (%) 12% 15% 18% 18% 19% 19% 18% 16% 17% 17% 22% - ROE (%) 12% 15% 18% 17% 21% 18% EPS (¥) - YoY (%) -28% 39% 35% 6% 42% -5% 2% 39% 56% 43% 17%

Electronics segment Segment sales 46,923 50,555 56,047 62,200 80,800 79,100 12,871 11,940 15,590 15,646 Initial 17,955 15,005 20,587 18,500 35,000 29,500 4,827 3,198 6,527…