Here's Why You Should Invest In Shin-Etsu Chemical (SHECY)

Shin-Etsu Chemical Co., Ltd.’s (OTC:SHECY) efforts to improve its product quality, production capacity and shareholder-friendly policies make it a solid bet for investors now.

It currently sports a Zacks Rank #1 (Strong Buy).

Market sentiments have been positive for Shin-Etsu Chemical for quite some time now. Notably, in the last year, the company’s American Depository Receipts have yielded 28.5% return, outperforming 27.1% gain recorded by the industry it belongs to.



Why the Upgrade?

Shin-Etsu Chemical's financial performance in first-quarter fiscal 2017 (ended Jun 30, 2017) was impressive, with revenues increasing 11.8% year over year. The rise was driven by sales growth in PVC/Chlor-Alkali, Silicones, Semiconductor Silicon and Electronics & Functional Materials business segments. Operating income improved 23.5% while net profits increased 18.5%.

In the quarters ahead, Shin-Etsu Chemical will work toward improving its product quality and building strong customer relationships. Leveraging potential growth opportunities globally through expansion of existing manufacturing facilities and building new facilities will be a priority for the company. For fiscal 2018 (ending Mar 31, 2018), the company anticipates net sales to grow 9.1% year over year while predicts operating income to rise 12.3% and net profits to increase 8%. Also, the company remains committed toward rewarding shareholders with regular dividend payments. Its disbursement for fiscal 2018 will be roughly 8.3% higher than the previous year.

Additionally, Shin-Etsu Chemical will be expanding its silicone production capacity in the United States through expansion of its Ohio-based Akron plant. Also, the company will work for setting a new production facility for silicone emulsions. These projects are anticipated to be complete by mid-2019.

Shin-Etsu Chemical’s solid future prospects have led to positive revision in earnings estimates for the stock. Over the last 60 days, the Zacks Consensus Estimate for the stock increased 8.3% to $1.17 for fiscal 2018 and 14.5% to $1.34 for fiscal 2019.

Shin-Etsu Chemical Co. Price and Consensus