Maruwa Q1 Start Weak, AI to Drive H2 Earnings Recovery

Overview

Goldman Sachs released an earnings review for Maruwa (5344.T) on June 12, 2026. The report notes that the company's Q1 (first quarter of FY3/27) started weakly, but expects earnings to significantly recover in the second half driven by demand for artificial intelligence (AI) applications. Goldman Sachs maintains its Buy rating and a target price of JPY 89,000, believing that the current stock price does not fully reflect the profit growth potential driven by AI.

Core views

Goldman Sachs has updated its full-year and quarterly forecasts for Maruwa for FY3/27. The core view is: while the company's Q1 performance showed a weak start, AI-related sales are entering a phase of accelerated growth, with a significant recovery expected in the second half. **AI-Driven Growth is the Core Logic** Goldman Sachs expects Maruwa's AI-related sales to double year-over-year in FY3/27. This growth benefits from both overall market expansion and the company's own capacity increase—the Seto No. 2 Factory is scheduled to commence production around the second quarter, contributing fully to sales in the second half. In 4Q3/26 (January-March 2026), AI-related sales grew significantly quarter-over-quarter, aligning with prior company guidance and Goldman Sachs' expectations, with some revenue being recognized early from 1Q3/27 sales. **Potential for Outperformance in Automotive and Semiconductor Applications** Automotive Applications: Goldman Sachs expects full-year sales in FY3/27 to remain flat year-over-year, but management believes there is potential to exceed expectations based on currently strong order intake. Goldman Sachs remains cautious, assuming quarterly sales will remain at approximately JPY 3.5 billion. Semiconductor Applications: Given the semiconductor market conditions, led by memory chips, Goldman Sachs believes that a full recovery in demand for Maruwa's semiconductor products is only a matter of time. Both management and Goldman Sachs maintain their previous judgment that a full sales recovery will occur in the second half of FY3/27. To cope with rapid demand growth, the company's guidance for the completion of the Miharu No. 6/7 factories within FY3/27 remains unchanged.

Analysis framework

Goldman Sachs' analysis adopts a method of **performance tracking and forecast updates**, making minor adjustments to full-year forecasts based on the latest quarterly data and company guidance. The specific analytical path is as follows: 1. **Quarterly Performance Breakdown**: Splits FY3/27 quarterly revenue and operating profit, compares them with previous forecasts, and identifies changes in the seasonal distribution of revenue and profit. Q1 was lowered, while Q4 was raised. 2. **Business Segment Analysis**: Evaluates revenue growth rates and exposure to AI demand for each segment individually, including telecommunications, automotive, SPE (semiconductor production equipment), industrial equipment, and lighting. 3. **Capacity and Order Tracking**: Aligns the timeline for capacity expansion (Seto No. 2 Factory, Miharu Factory) with sales growth expectations, forming a judgment chain of "capacity release → accelerated performance in H2". 4. **Valuation Method**: Based on FY28E EBITDA, derives a target multiple of 12.5x through the historical correlation between EBITDA margins and EV/EBITDA multiples, and calculates the target price.

Methodology notes

• Industry/Sector Analysis FrameworkSupply and Demand Framework

  Supply and Demand Framework

  The report analyzes the match between demand growth for AI-related products (expansion of downstream AI application markets) and supply capacity (own capacity expansion, new factory commissioning) to judge the momentum and pace of the company's profit growth.

• Industry/Sector Analysis FrameworkVolume-Price Split

  Volume-Price Split

  The report implicitly evaluates the impact of volume (orders, capacity) and price (product mix) in different application fields (telecommunications, automotive, SPE, industrial equipment, lighting) on overall revenue by splitting sales across these segments.

• Valuation MethodEV/EBITDA valuation

  EV/EBITDA Valuation

  Goldman Sachs uses the EV/EBITDA multiple to determine the target price. Specifically, it forecasts FY28E EBITDA and determines a reasonable target multiple of 12.5x based on the statistical relationship between the company's historical EBITDA margins and EV/EBITDA multiples. This is a common valuation method for growing manufacturing enterprises.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MARUWA (5344.T)

  Core subject of the report analysis, benefiting from growth in demand for ceramic heat dissipation substrates driven by AI applications

  Strengths

  High share in niche markets such as heat dissipation substrates; nearly 200 years of ceramic manufacturing history; successful transformation of business portfolio towards high-margin customized products; capacity expansion (Seto No. 2 Factory, Miharu No. 6/7 Factories) supports growth

  Risks

  The report does not list specific risks for this asset separately; see the risks field below for overall risks

Key data

• 12-Month Target Price¥89,000Implied upside of 35.3%
• Current Stock Price¥65,760As of close on June 12, 2026
• FY3/27 AI-Related Sales YoY GrowthDouble (Double yoy)Goldman Sachs Forecast
• FY3/27 Operating Revenue Forecast (New)¥92.2bnDown 2% from previous forecast
• FY3/27 Operating Profit Forecast (New)¥35.0bnDown 5% from previous forecast
• FY3/28 Operating Revenue Forecast¥113.8bnUnchanged from May forecast
• FY3/28 Operating Profit Forecast¥52.0bnUnchanged from May forecast
• FY3/29 Operating Revenue Forecast¥132.4bnUnchanged from May forecast
• FY3/29 Operating Profit Forecast¥67.0bnUnchanged from May forecast

Impact & implications

The report believes that the weak Q1 performance is temporary, mainly due to early revenue recognition, and does not change the growth trend driven by AI demand. The Seto No. 2 Factory will begin contributing fully to sales in the second half, directly driving accelerated growth in revenue and profits. There is potential for outperformance in automotive and semiconductor application areas. Overall, Goldman Sachs maintains an optimistic outlook on the company's profit growth prospects.

Risks

• Investment in end-market application areas supporting terminal demand (including AI/general servers, xEV, SPE) falls short of expectations
• Decline in terminal product demand due to supply chain disruptions and inventory adjustments
• Emergence of alternative technologies
• Recovery pace of the semiconductor market (especially memory chips) is slower than expected

What to watch

• Commissioning time of Seto No. 2 Factory and its sales contribution in the second half
• Whether AI-related sales can achieve significant growth in the second half
• Whether order intake in automotive application areas exceeds expectations
• Progress of demand recovery for semiconductor (SPE) products in the second half
• Construction progress of Miharu No. 6/7 Factories