MIRA INFORM REPORT

 

 

Report Date :

08.10.2013

 

IDENTIFICATION DETAILS

 

Name :

SHIN-ETSU CHEMICAL CO LTD

 

 

Registered Office :

Asahi Tokai Bldg, 2-6-1 Ohtemachi Chiyodaku Tokyo 100-0004

 

 

Country :

Japan

 

 

Financials (as on) :

31.03.2013

 

 

Date of Incorporation :

September 1926

 

 

Com. Reg. No.:

0100-01-008680 (Tokyo-Chiyodaku)

 

 

Legal Form :

Limited Company

 

 

Line of Business :

·         Manufacturer of chemical fertilizer and limestone nitrogen

·         Manufacturer of vinyl chloride, silicon resin and semiconductor silicon

 

 

No. of Employees :

17,712

 

RATING & COMMENTS

 

MIRA’s Rating :

A

 

RATING

STATUS

PROPOSED CREDIT LINE

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

 

ECGC Country Risk Classification List – March 31st, 2013

 

Country Name

Previous Rating

(31.12.2012)

Current Rating

(31.03.2013)

Japan

A1

A1

 

Risk Category

ECGC Classification

 

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

japan ECONOMIC OVERVIEW

 

In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan develop a technologically advanced economy. Two notable characteristics of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. Japan's industrial sector is heavily dependent on imported raw materials and fuels. A small agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. While self-sufficient in rice production, Japan imports about 60% of its food on a caloric basis. For three decades, overall real economic growth had been spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession three times since 2008. A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake and the ensuing tsunami in March disrupted manufacturing. The economy has largely recovered in the two years since the disaster, but reconstruction in the Tohoku region has been uneven. Newly-elected Prime Minister Shinzo ABE has declared the economy his government's top priority; he has pledged to reconsider his predecessor's plan to permanently close nuclear power plants and is pursuing an economic revitalization agenda of fiscal stimulus and regulatory reform and has said he will press the Bank of Japan to loosen monetary policy. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2012 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. The new government will continue a longstanding debate on restructuring the economy and reining in Japan's huge government debt, which exceeds 200% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy.

 

Source : CIA

 

 

Company name

 

SHIN-ETSU CHEMICAL CO LTD

 

 

REGD NAME

 

Shin Etsu Kagaku Kogyo KK

 

 

MAIN OFFICE

 

Asahi Tokai Bldg, 2-6-1 Ohtemachi Chiyodaku Tokyo 100-0004 JAPAN

 

Tel: 03-3246-5011     Fax: 03-3246-5358

 

URL:                 http://www.shinetsu.co.jp/

E-Mail address:            info@shinetsu.co.jp

 

 

ACTIVITIES

 

Mfg of PVC, semiconductor wafers, silicon

 

 

BRANCHES   

 

Osaka, Nagoya, Fukuoka, Sapporo, Gunma

 

FACTORIES

           

Naoetsu, Takefu, Gunma (Isobe, Matsuida), Kashima

 

 

OVERSEAS   

 

USA (9), Mexico, Portugal, UK, Netherlands (4), Hungary, Germany, Malaysia (5), Korea (2), China (4), Taiwan (4), Singapore (2), Indonesia (2), Thailand (2), Philippines, Australia (2) (--subsidiaries)

 

CHIEF EXEC

 

SHINZO MORI, PRES & CEO

 

Yen Amount:     In million Yen, unless otherwise stated

 

 

SUMMARY

 

FINANCES        FAIR                 A/SALES          Yen 1,025,409 M

PAYMENTSREGULAR   CAPITAL           Yen 119,419 M

TREND SLOW               WORTH            Yen 1,623,176 M

STARTED         1926                 EMPLOYES      17,712

 

 

COMMENT

 

MFR SPECIALIZING IN PVC & ELECTRONIC MATERIALS. 

 

FINANCIAL SITUATION CONSIDERED FAIR AND GOOD FOR ORDINARY BUSINESS ENGAGEMENTS.

                       

                        Notes: Unit: In Million Yen

Forecast (or estimated) figures for 31/03/2014 fiscal term

 

 

HIGHLIGHTS

 

The subject company was established originally as mfr of chemical fertilizer and limestone nitrogen, and has since developed business operations into silicone production and PVC in 1950s.  Now is known one of the world’s largest mfrs of vinyl chloride, silicon resin and semiconductor silicon.  Expanding into electronics materials, including rare earths & synthetic quartz.  Has many excellent subsidiaries both in Japan & abroad.  Noted for high earnings power.　Production of rare-earth kept rising for 31st consecutive month in value terms in spring 2008, climbing 19% from a year earlier to Yen 8.51 billion, according to a study by the Japan Electronics & Information Technology Industries Association.  Considering start of in-house production of poly-silicon; technical development already completed, but location of plant & construction schedule unfixed yet.  Planned capacity buildup of 300mm wafers & release of solar cell-use products possible put off for some time, the firm says.  The firm is building a rare-earth magnet alloy plan in Fujian, China, aiming for stable material procurement, the new plant is scheduled to start up in Jan 2013.  Water-soluble materials will be produced in the US as well as in Japan & Europe, when a new US plant goes into operation in early 2014.  The PVC subsidiary in the US has large growth potential in up-and-coming countries, fueled by increased infrastructure demand.  Semiconductor wafer business is still in a state of oversupply, the company is cautious about investment in capacity expansion and next-generation products.  It is eager for M&A, with a view to expanding new businesses.

                       

 

FINANCIAL INFORMATION

 

The sales volume for Mar/2013 fiscal term amounted to Yen 1,025,409 million, a 2.1% down from Yen 1,047,731 million in the previous term.  During the term, although a gradual recovery continued in the US, there was sluggishness in the European economy due to Europe’s financial problems as well as a slowdown in economic growth in emerging markets such as China.  As a whole, a deceleration trend continued in the world economy.  By divisions, Vinyl Chloride & Chemicals up 6.1% to Yen 343,697 million; Silicones down 4.7% to Yen 129,029 million; Functional Chemicals down 4.1% to Yen 83,526 million; semiconductor Silicones down 11.8% to Yen 202,466 million.  The recurring profit was posted at Yen 170,207 million and the net profit at Yen 105,714 million, respectively, compared with Yen 165,237 million recurring profit and Yen 100,643 million net profit, respectively, a year ago..

 

(Apr/Jun/2012 results): Sales Yen 270,908 million (up 1.6%), operating profit Yen 45,530 million (up 12.9%), recurring profit Yen 49,022 million (up 19.5%), net profit Yen 32,035 million (up 20.3%).  (% compared with the corresponding period a year ago). 

 

For the current term ending Mar 2014 the recurring profit is projected at Yen 180,000 million and the net profit at Yen 110,000 million, respectively, on a 3.4% rise in turnover, to Yen 1,060,000 million.  In silicone business, exports to China will continue a downward trend.  But sales of silicon wafers will bounce back from a slump in the preceding term.  A subsidiary in US will be in top shape, helping PvC sales continue to increase.  Sales of electronic materials for semiconductors, LEDs and optical fibers will be steady.  Operating profits will top the goal, thanks in part to the weakening Yen. 

 

The financial situation is considered FAIR and good for ORDINARY business engagements. 

 

 

REGISTRATION

 

Date Registered:      Sept 1926

Regd No.:                0100-01-008680 (Tokyo-Chiyodaku)

Legal Status:    Limited Company (Kabushiki Kaisha)

Authorized:      1,720 million shares

Issued:             432,106,693 shares

Sum:                 Yen 119,419 million

 

Major shareholders (%): Master Trust Bank of Japan, T (8.7), Japan Trustee Services Bank T (6.8), Nippon Life Ins (5.6), Hachijuni Bank (2.7), Japan Trustee Services t4 (2.6), Meiji Yasuda Life Ins (2.4), SSBT OD05 Omnibus Acct Treaty Cl (2.0), Company’s Treasury Stock (1.6), State Street Bank & Trust 505225 (1.5), Mellon Bank Mellon Omnibus US P (1.3); foreign owners (41.3)

 

No. of shareholders: 52,589

 

Listed on the S/Exchange (s) of: Tokyo, Nagoya

 

Managements: Chihiro Kanagawa, ch; Shunzo Mori, pres & CEO; Fumio Akiya, v pres; Yasuhiko Saitoh, v pres; Toshinobu Ishihara, s/mgn dir; Norikazu Fukud, mgn dir; Akiji Takasugi, mgn dir; Masahiko Todorogi, mgn dir; Toshiya Akimoto, mgn dir; Fumiaki Arai, mgn dir; Yukihiro Matsui, mgn dir

 

Nothing detrimental is knows as to the commercial morality of executives.

 

Related companies: Shintech Inc (USA), Shin-Etsu Polymer, Shin-Etsu Handotai,  other

 

 

OPERATION

 

Activities: Manufactures industrial chemicals:

 

(Sales Breakdown by Divisions):

 

Vinyl Chloride & Chemicals Div (33%): PVC, silicones, methanol, chloromethane, cellulose derivatives, caustic soda, silicon metal;

 

Silicones Div (13%): semiconductor silicone, organic materials for electronics industry, rare earth magnets for electronics industry, photo-resists;

 

Functional Materials Div (8%): synthetic quartz products, oxide single crystals, rare earths, rare earth magnets, construction of plants engineering, information processing, export of technology & plants, import of goods, others.

 

Semiconductor Silicones Div (20%);

 

Others (26%);

 

Overseas sales ratios (67%)

 

Clients: [Mfrs, wholesalers] Shin-Etsu Handotai (meaning semiconductor), Mitsubishi Corp, Shin-Etsu Electronics Materials Singapore, Mitsui & Co, Shin-Etsu Astech, Toshiba Corp, other.

            No. of accounts: 3,000

            Domestic areas of activities: Nationwide

 

Suppliers: [Mfrs, wholesalers] Shin-Etsu Handotai, Naoetsu Electronics, Mitsui & Co, Kashima PVC Monomer, Mitsubishi Chemical, Shintech Inc, other.

 

Payment record: Regular

 

Location: Business area in Tokyo.  Office premises at the caption address are leased and maintained satisfactorily.

 

Bank References:

 

MUFG (H/O)

Mizuho Bank (H/O)

Relations: Satisfactory

 

 

FINANCES

(In Million Yen)

 

FINANCES: (Consolidated in million yen)

 

　

　

Terms Ending:

31/03/2013

31/03/2012

INCOME STATEMENT

 

 

 

  Annual Sales

　

1,025,409

1,047,731

 

  Cost of Sales

769,427

798,592

 

      GROSS PROFIT

255,981

249,138

 

  Selling & Adm Costs

98,938

99,505

 

      OPERATING PROFIT

149,632

149,633

 

  Non-Operating P/L

20,575

15,604

 

      RECURRING PROFIT

170,207

165,237

　

      NET PROFIT

105,714

100,643

BALANCE SHEET

 

 

 

 

  Cash

　

252,881

241,390

 

  Receivables

 

243,785

264,283

 

  Inventory

 

269,377

260,308

 

  Securities, Marketable

214,380

89,301

 

  Other Current Assets

52,090

86,962

 

      TOTAL CURRENT ASSETS

1,032,513

942,244

 

  Property & Equipment

649,650

598,558

 

  Intangibles

 

14,637

13,587

 

  Investments, Other Fixed Assets

224,103

255,452

 

      TOTAL ASSETS

1,920,903

1,809,841

 

  Payables

 

100,197

109,378

 

  Short-Term Bank Loans

5,507

13,862

 

　

 

　

　

 

  Other Current Liabs

93,931

124,201

 

      TOTAL CURRENT LIABS

199,635

247,441

 

  Debentures

 

　

　

 

  Long-Term Bank Loans

7,709

1,454

 

  Reserve for Retirement Allw

20,185

16,687

 

  Other Debts

　

70,198

49,686

 

      TOTAL LIABILITIES

297,727

315,268

 

      MINORITY INTERESTS

 

 

 

Common stock

119,419

119,419

 

Additional paid-in capital

128,234

128,177

 

Retained earnings

1,470,015

1,435,693

 

Evaluation p/l on investments/securities

11,591

1,212

 

Others

 

(66,916)

(149,003)

 

Treasury stock, at cost

(39,167)

(40,925)

 

      TOTAL S/HOLDERS` EQUITY

1,623,176

1,494,573

　

      TOTAL EQUITIES

1,920,903

1,809,841

CONSOLIDATED CASH FLOWS

 

 

 

 

Terms ending:

31/03/2013

31/03/2012

 

Cash Flows from Operating Activities

　

235,622

96,567

 

Cash Flows from Investment Activities

-119,254

-89,190

 

Cash Flows from Financing Activities

-44,011

-42,174

　

Cash, Bank Deposits at the Term End

　

363,028

271,321

ANALYTICAL RATIOS            Terms ending:

31/03/2013

31/03/2012

 

 

Net Worth (S/Holders' Equity)

1,623,176

1,494,573

 

 

Current Ratio (%)

517.20

380.80

 

 

Net Worth Ratio (%)

84.50

82.58

 

 

Recurring Profit Ratio (%)

16.60

15.77

 

 

Net Profit Ratio (%)

10.31

9.61

 

 

Return On Equity (%)

6.51

6.73

 

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.61.78

UK Pound

1

Rs.99.06

Euro

1

Rs.83.84

 

INFORMATION DETAILS

 

Report Prepared by :

MNL

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

--

NB

New Business

 

--

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                  Payment record (10%)

Credit history (10%)                   Market trend (10%)                                Operational size (10%)

 

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