JSR Corporation

Basis and sources:

• FY2021–FY2023 from the former JSR's Tanshin. FY2022 balance-sheet figures use the restated version in the FY2023 Tanshin.

• FY2024–FY2025 from AR2026, with FY2024 restated for discontinued operations.

• EBITDA is computed as operating profit plus depreciation and amortisation (cash-flow statement figure, which includes discontinued operations). "Adjusted EBITDA" adds back impairment losses.

• Ratios are analyst-computed unless labelled "reported".

Income statement

Notes on the income statement:

Management "core OP" for FY2024: (excluding LS impairment and PPA amortisation) was ¥0.2bn on ¥405.0bn revenue, before the discontinued-operations restatement (FY2024 briefing).

FY2025 core OP: AR2026 shows segment profit before corporate adjustment of ¥45.0bn. Management guided "over ¥30bn". Half-year FY2025 core OP was ¥26.0bn (Quartr summary of the company's H1 briefing). The exact management full-year figure could not be retrieved; the briefing PDF host blocks automated access.

FY2021 revenue: is shown as ¥340,977m in the FY2022 Tanshin header and ¥340,997m in its P&L. The P&L figure is used here.

EPS from FY2024: reflects the successor entity's much smaller share count (about 94–102m weighted shares) and is not comparable with prior years.

Dividends from FY2024: the company is private; no public dividend. Only ¥3m was paid to owners in FY2025, and ¥580m was paid to non-controlling interests.

Margins and growth

FY2024 growth is on the restated, continuing-operations basis and is distorted by the reclassification. On the like-for-like FY2024 basis (¥405.0bn), growth versus FY2023 was +0.1%.

Revenue CAGR FY2021–FY2025: 6.6% per year. This is distorted by the elastomers exit, the Life Sciences build-up and later unwind, and FX (the yen weakened from about ¥112 to about ¥150/US$ over the period). The Digital Solutions CAGR over the same window is 11.2%.

Trend commentary.

FY2021 to FY2023: profit compression: Revenue grew, but operating profit collapsed from ¥43.8bn to ¥3.6bn. Causes:

• the 2022–23 semiconductor inventory correction (memory especially);

• NIR-filter weakness;

• KBI start-up costs and repairs, inventory write-downs and bad-debt allowances in CDMO;

• higher SG&A, up from ¥87bn to ¥126bn, driven by Life Sciences overheads.

FY2024: reset year: The headline loss reflects about ¥210bn of special items, according to management:

• LS goodwill impairment ¥139.3bn and business-restructuring impairment ¥18.3bn;

• PPA amortisation ¥40.5bn;

• restructuring ¥5.6bn, TOB costs ¥3.4bn, delisting costs ¥3.0bn.

• Finance costs also jumped by ¥19.4bn because of the ¥360bn acquisition debt.

FY2025: inflection: - Gross margin expanded 13 points to 42.5%, driven by semiconductor mix (advanced photoresists and AI-related demand), the end of one-off CDMO charges, and portfolio exits.

• Net profit of ¥59.3bn is flattered by ¥58.9bn of discontinued-operations profit, mainly gains on the IVD sale (¥64.3bn gain on subsidiary shares) and the bioprocess sale (¥29.3bn gain on business sale).

• Profit from continuing operations was only ¥1.8bn. Finance costs of ¥31.1bn and an 86% effective tax rate absorbed most of the ¥40.5bn operating profit.

Balance sheet

Notes on the balance sheet:

• FY2021 assets and working capital include ¥191.3bn of elastomer assets held for sale.

• Net debt for FY2023 (¥78.5bn) and FY2024 (¥466.1bn) reconciles with the company's FY2024 briefing.

• Lease liabilities were ¥17.0bn at FY2025 and derivative liabilities ¥22.4bn. Both are excluded from net debt above.

• Equity ratio (attributable equity / total assets): 46.5% (FY2021), 48.7% (FY2023), 29.6% (FY2024), 34.8% (FY2025). Management had targeted "approx. 40%" for FY2025; this was not met on attributable equity, and total-equity basis was 37.5%.

Cash flow

FY2024 investing outflow was ¥834.6bn. It included ¥813.1bn for purchase of subsidiaries: the former JSR at ¥803.2bn net of acquired cash, and Yamanaka at ¥9.8bn net.

FY2024 financing inflow was ¥894.7bn:

• ¥534.8bn from "disposal of treasury stock" and ¥32.3bn new share issuance (sponsor equity);

• ¥440.1bn of new long-term borrowings;

• offset by repayments of the former JSR's commercial paper and loans.

FY2025 investing inflow was ¥72.2bn. It included ¥85.0bn proceeds from subsidiary sales (IVD) and ¥8.2bn from business sales (bioprocess).

FY2025 financing outflow was ¥108.8bn. Long-term borrowings of ¥81.1bn were repaid, a ¥13.0bn bond was redeemed, and short-term borrowings were cut by ¥22.6bn.

Key ratios

Methodology notes:

ROE: FY2021–FY2023 as reported. FY2024 uses period-end equity because the successor's opening equity was nil. FY2025 uses average equity.

ROA: FY2021 uses period-end assets; other years use average assets.

ROIC: NOPAT = operating profit × (1 − 30.6% statutory rate); invested capital = total equity + net debt (period-end).

Net debt / adjusted EBITDA for FY2024: is not meaningful because EBITDA was depressed by one-offs.

Cash conversion cycle: computed on "trade and other" receivables and payables against cost of sales. The FY2025 figure is inflated by ¥43.9bn of other receivables (likely divestiture-related), not by trade working capital.

Interest coverage: FY2025 adjusted EBITDA covers cash interest paid (¥18.7bn) 5.4x.

Ratio commentary.

Leverage: The LBO structure is visible in the leap in debt-to-equity to 1.40x in FY2024. By FY2025 de-leveraging had cut net debt by ¥122.7bn to ¥343.4bn, and net debt / adjusted EBITDA fell to about 3.4x.

Interest cost: Debt carries a 3.53% average rate on borrowings (AR2026). Interest is the main drag on continuing earnings.

Covenant: A financial covenant prohibits a consolidated net loss in any fiscal year from FY2025 onward, excluding PPA amortisation. FY2025 complied. This makes earnings stability a lender-monitored metric.

Security: Assets of ¥196.0bn are pledged as security against ¥364.1bn of borrowings.

Management guidance

Bull case

1. AI-driven operating leverage. DS profit tripled in one year to ¥55.7bn at about 22% margin. Sustaining semiconductor growth at double digits and the absence of Life Sciences losses puts the ¥100bn FY2030 target within reach. That implies EBITDA well above ¥130bn and leverage below 2x.

2. Scarcity value in M&A. Strategic buyers (Fujifilm, Mitsubishi Chemical) and peer valuations (TOK at about ¥1.4tn) suggest a materially higher exit value than the ¥904bn entry. The R&I upgrade and divestiture proceeds de-risk the credit story.

3. MOR and High-NA optionality. Cross-licences with Lam and Entegris convert IP disputes into ecosystem partnerships at the leading edge. The Quantinuum stake (¥35.9bn) adds a hidden asset.

Bear case

1. Leverage meets cyclicality. Finance costs of ¥31bn absorbed about 77% of FY2025 operating profit. A 2022-style downturn, when DS profit fell 48% over two years, would threaten the no-net-loss covenant and force further asset sales.

2. Concentration risk. Growth relies on a handful of leading-edge customers and on Taiwan/China (about 34% of revenue). Export controls or customer dual-sourcing could erode share.

3. Stranded remnants and execution distraction. The CDMO remains loss-making with ¥28.9bn goodwill. A protracted sale process may unsettle talent and customers, and an industrial buyer could face antitrust remedies in photoresists.

Catalysts and monitorables (next 12 months)

1. JIC sale process: formal launch, bidder line-up, signing, and regulatory filings (JFTC, SAMR, KFTC, CFIUS-type reviews).

2. FY2026 H1 results (expected around November 2026): DS growth, core OP run-rate versus the ¥100bn trajectory, and net debt.

3. Closing of the Crown Bioscience sale to Adicon, and any decision on KBI/Selexis.

4. EUV MOR / High-NA customer qualification news; progress under the Lam collaboration.

5. Ramp of the Taiwan JV and planarisation centre.

6. Refinancing of the ¥187.6bn tranche due in years 4–5, and any further rating actions.

7. Semiconductor cycle indicators: WSTS forecasts and hyperscaler capex.

Analyst verdict

JSR in late 2026 is a fundamentally better business than the one JIC bought, wrapped in a financial structure that is only gradually catching up.

Operations. The take-private allowed management to do what the listed company had struggled with. It confronted and exited a failed Life Sciences diversification, recognising about ¥150bn of impairments and selling IVD, bioprocess, CRO, ETEC, D-MEC and Heartnote within roughly 18 months. It also refocused on electronic materials just as AI demand lifted leading-edge lithography and packaging volumes. FY2025 shows the result: 42.5% gross margin, ¥101.5bn adjusted EBITDA, and a DS segment earning ¥55.7bn despite heavy PPA amortisation.

IP and portfolio. The Inpria MOR patent estate has been converted from a litigation liability into strategic currency through the Lam and Entegris cross-licences. Yamanaka broadens JSR's reach across process steps.

Balance sheet. The weaknesses are financial rather than franchise-related:

• net debt of ¥343bn at a 3.5% average borrowing rate;

• an 86% effective tax rate;

• a covenant that leaves little room for a cyclical downturn;

• a goodwill and intangibles base equal to half of total assets.

Continuing-operations profit of just ¥1.8bn in FY2025 is the clearest symptom.

Ownership. The JIC exit consideration is the decisive near-term variable. An industrial buyer would likely pay for scarcity in Japanese photoresist capacity and the MOR roadmap, though antitrust scrutiny and integration complexity would be real.

Conclusion. On fundamentals JSR is a high-quality, niche-dominant specialty materials franchise in an up-cycle. On risk it is a leveraged, cyclical, ownership-transitional credit. For counterparties, suppliers and potential acquirers, the profile is "constructive with monitoring": a positive franchise trajectory and an improving credit (R&I A+), with key watch-points in the sale process, the semiconductor cycle and covenant headroom. Verified data are insufficient for a valuation-based rating because there is no traded equity.

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• FY2026 guidance and the FY2025 management core-OP figure (briefing host blocks automated retrieval).

• R&D expense, patent counts, MSCI/Sustainalytics ratings, executive compensation, and the 26 June 2026 board composition.

• Crown Bioscience closing status; the June 2026 capital increase implied by the share-capital discrepancy.

• Exact semiconductor market-share data.