4099.T

• 2025 Full Year Performance Summary • All-time record consolidated revenue, operating income, and ordinary income, driven by strong sales growth in Fine Chemicals offsetting the Building Materials business decline • R&D expenses increased by ~300 million yen; R&D intensity is 3.3% for Chemicals and 2.4% for Building Materials, with management planning further concentrated R&D investment going forward • Additional cost increases: ~357 million yen from wage hikes and expanded employee training, ~600 million yen in acquisition-related costs for Indonesia's Timuraya

• Capital Efficiency and Corporate Value Improvement Strategy • 2025 year-end ROE is 9.5%, targeting stable ROE above 7-8% (the estimated cost of equity) and maintaining ROE above 10% even during the growth investment phase • The company holds excess financial assets of 74.8 billion yen as of end-2025, which has depressed ROE; management will deploy excess capital to growth investment via CMS introduction and working capital compression, and will consider using interest-bearing debt to leverage balance sheet efficiency while maintaining an A- credit rating to preserve financial health • Management will expand IR activities to reduce information asymmetry with investors, improve PER, and drive appropriate stock price valuation

• Long-Term Vision Challenge 1000 STAGE 3 Overview • Challenge 1000 is a 10-year plan running through 2029; STAGE 1 and STAGE 2 (3 years each) are complete, and the final 4-year STAGE 3 is now underway. The original end goals of 100 billion yen in revenue, 15 billion yen in operating income, and 10% ROE are maintained. • STAGE 1 achieved its 2022 targets; STAGE 2 missed overall targets due to underperformance from Inorganic Chemicals and Building Materials, despite Chemicals overall (driven by Fine Chemicals) exceeding targets • Total planned investment for STAGE 3 (2026-2029) is 66 billion yen, focused on growth investment for post-2030 expansion, including growth capacity, R&D infrastructure, DX, and workplace improvements. The capital allocation plan prioritizes growth investment, with expected temporary earnings pressure from increased depreciation, which management views as necessary for long-term growth • Shareholder return policy maintained: 30% payout ratio, 50% total return payout ratio, 3% DOE; the company will combine stable dividends and flexible share buybacks to balance growth investment and shareholder returns

• Chemicals Business STAGE 3 Strategy • Inorganic Chemicals: Focus on expanding sales of high-quality insoluble sulfur from the new plant and insoluble sulfur made with sustainable raw materials, and expanding new product development centered on sulfur utilization leveraging the company's legacy carbon disulfide expertise • Organic Chemicals: Focus on delivering hygiene solutions to underserved regions, expanding BtoC business (including the own-brand WASHMANIA line of cleaning products, with the first product a washing machine cleaner launched after the M&A of Niwakyusu to expand retail distribution) • Fine Chemicals: Target establishing de facto standards for proprietary key materials like historical product Tough Ace; "GliCAP" is seeing rapid demand growth driven by AI server and semiconductor packaging demand, and the new Sakade plant will expand capacity to meet growing demand

• Building Materials Business Transformation • External environment: Long-term decline in new housing starts (projected to fall to 600,000 units by 2040 from 1.674 million in 1987 and 750,000 in 2024), labor shortages from work style reform, and 40%+ increase in raw material costs (led by aluminum) over 5 years • Strategic pivot: Abandoned the previous strategy of competing directly with large generalist manufacturers on volume, shifted to focusing on the company's core strengths: design-phase participation, small-volume high-variety custom production, and no large fixed aluminum extrusion assets that become a burden in a declining market • New purpose brand MEGLIO launched, focused on the mission of "contributing to the creation of communities where everyone can live comfortably, with better cycles for people and nature"; naming rights acquired for Kagawa Prefecture Marugame Stadium (now Shikoku Kasei MEGLIO Stadium) to build brand awareness • Key strategic initiatives under MEGLIO: • Space value improvement: Pivoting traditional plaster wall business from declining Japanese-style residential use to non-residential use (offices, commercial facilities, hospitals, renovation projects), added in-house construction capability to guarantee finish quality, with business volume growing 2.6x in 2 years • Labor saving: Product ArtWall is a lightweight dry-process exterior wall that enables faster construction, improves disaster safety, and offers high design flexibility; sales have grown 1.3x in 3 years, with new variants launching in spring 2026 • Decarbonization: Launched Solis Roof solar integrated carport, which won a Good Design Award, with 170 ongoing commercial negotiations as of the call; this product leverages the company's core exterior design expertise to target the small-to-medium scale renewable energy market • Profit improvement plan: Assume existing market volume declines ~5%, full pass-through of aluminum cost increases, focus on high-margin non-residential products to restore operating margin to historical double-digit levels

• New Priority Areas • Exploring new products based on sulfur utilization in Inorganic Chemicals, targeting 1-3 billion yen in sales by 2029 • Expanding ODM/OEM and own-brand BtoC sanitary products in Organic Chemicals • Planning to establish a corporate venture capital fund to accelerate open innovation and new business creation, targeting 30% investment in extensions of existing business and 70% in new related areas, with multiple projects targeted for commercialization during STAGE 3

• Fiscal 2026 December Term Guidance • Consolidated net sales: +13.1% year-over-year to 80 billion yen, driven by recovery in Organic Chemicals and expanded Fine Chemicals sales, plus price hikes and high value-added product growth in Building Materials • Operating income: +32.5% year-over-year to 14.4 billion yen, driven by Fine Chemicals sales growth and profitability improvement from price hikes in Building Materials • Ordinary income: +21.6% year-over-year to 14.5 billion yen; net income: +18.2% year-over-year to 10 billion yen • Assumed exchange rates: 150 JPY/USD, 175 JPY/EUR, 21 JPY/CNY • 2026 capital expenditure plan: Total 14.06 billion yen, including 2.2 billion yen for Tokushima plant experimental office building, 1.8 billion yen for new R&D center building, and 1.5 billion yen for decarbonization-related investment. Most depreciation from new investments will start in 2027 or later, so 2026 depreciation is only expected to increase by ~200 million yen • 2026 dividend guidance: 60 JPY per share, up 5 JPY from 2025, with flexible share buybacks targeting 50% total return payout

• STAGE 3 (2026-2029) Guidance • The original STAGE 3 plan does not fully reflect recent rapid Fine Chemicals demand growth and does not include the acquisition of Timuraya, so management is recalculating targets and will release updated numbers at the August 2026 mid-term earnings briefing • Sales targets revised: Inorganic Chemicals up from 18 billion yen to 20 billion yen (upward), Organic Chemicals up from 21 billion yen to 27 billion yen (upward), Fine Chemicals up from 14 billion yen to 20 billion yen (upward), Building Materials down from 40 billion yen to 22 billion yen (downward) • 2026 is expected to hit the original STAGE 2 80 billion yen revenue target one year late, driven by rapid Fine Chemicals demand growth • Depreciation peak from the new Sakade plant's second phase (semiconductor process material equipment) is expected around 2029 after commercial operation starts • Management confirms the 2029 end targets of 100 billion yen consolidated revenue, 15 billion yen operating income, and 10% ROE are maintained

Total company 2025 December term net sales were 70.705 billion yen, operating income was 10.869 billion yen, and ordinary income was 11.921 billion yen, all hitting record highs driven by Chemicals business growth despite a decline in Building Materials business. 1. Inorganic Chemicals: Overall sales were nearly flat, but core product insoluble sulfur saw a sales decline due to falling selling prices from intensified competition. The 2029 sales target was revised upward from 18 billion yen to 20 billion yen. 2. Organic Chemicals: Sales declined due to a pullback after strong 2024 North American sales of "Neochlor," but sanitary products grew strongly. The 2029 sales target was revised upward from 21 billion yen to 27 billion yen. 3. Fine Chemicals: (Split into Functional Materials and Electronic Chemical Materials sub-segments) - Functional Materials: All product categories (resin curing agents, resin modifiers, semiconductor process materials) grew, with semiconductor process materials up ~90% year-over-year. - Electronic Chemicals: Both "Tough Ace" and "GliCAP" performed strongly, with "GliCAP" up 280% year-over-year. The 2029 sales target was revised upward from 14 billion yen to 20 billion yen, and it is the company's core high-margin growth driver. Overall Chemicals business: Fine Chemicals sales growth lifted gross margin, driving overall profit growth, with a segment ROIC of 21.1%. 4. Building Materials: Sales declined due to sluggish new housing starts and extended construction periods from work style reform; rising aluminum ingot prices also reduced profitability. The original 2029 sales target of 40 billion yen was revised downward to 22 billion yen, with a segment ROIC of 4.1% (below the weighted average cost of capital). Revenue contribution percentages for 2029 targets: Inorganic Chemicals ~20%, Organic Chemicals ~27%, Fine Chemicals ~20%, Building Materials ~22%, with remaining from new and other businesses.

• Long-term decline in new housing starts continues, with no clear bottom visible as of the call, pressuring Building Materials business volume • Intensified competition in core Inorganic Chemical product insoluble sulfur has driven selling price declines • Raw material costs (especially aluminum for Building Materials) have risen sharply, with incomplete pass-through in past years pressuring profitability • Labor shortages in the construction industry have reduced overall project volume, especially in the small-to-medium scale projects that are Shikoku Kasei's strength • The new Sakade plant expansion will lead to a temporary increase in depreciation that will pressure earnings in the late STAGE 3 period, though management views this as necessary investment for long-term growth • Fine Chemicals rapid current demand growth has outstripped existing production capacity, and capacity expansion will take time to complete

Q: Against a 2029 target of 8.5 billion yen in incremental sales for Organic Chemicals versus only 1.5 billion yen for Fine Chemicals from 2025 levels, why is the Fine Chemicals plan so conservative? Is there upside potential to the 20 billion yen 2029 Fine Chemicals target?

A: Organic Chemicals' target was raised 6 billion yen because the business mix has changed significantly: it is recovering from a temporary post-boom decline after strong sales from competitor production issues two years ago, the new NEO2022 plant is not yet at full capacity due to labor constraints, and the company is actively expanding BtoC business (including the WASHMANIA brand, with distribution expansion via the recent Niwakyusu M&A). For Fine Chemicals, management cannot yet fully forecast rapid demand growth, and the company is currently building a new plant in Sakade (the first new greenfield plant for chemicals in ~60 years) while expanding capacity at existing sites, so the target will likely be revised upward at the August 2026 briefing. The 20 billion yen target does have clear upside, as current demand already outstrips available capacity.

Q: What are the competitive strengths of GliCAP, and how does it compare to competing products?

A: GliCAP leverages Shikoku Kasei's longstanding expertise from products like Tough Ace in creating strong adhesion between copper circuits and organic materials, built on the company's core organic synthesis capability. The company has decades of experience researching copper-compatible compounds, and holds a leading market position in this space, with competitors active but the company maintaining a competitive edge from its long development history.

Q: What is the key to improving Building Materials operating margin from 3% to 9%?

A: The biggest driver is shifting product mix from low-margin residential products that compete directly with large sash manufacturers to high-margin non-residential products where Shikoku Kasei already holds strong competitive advantages. The second driver is expanding in-house construction capability: for plaster wall products, material costs are a small share of total project cost, and guaranteeing finish quality enables much higher margin than just selling materials. Expanding construction capability for non-residential exterior projects will also enable faster, lower-cost delivery, making the 9% margin target achievable.

Q: What are GliCAP's main sales destinations and geographic/end-market breakdown?

A: The main markets are Japan, East Asia, and Southeast Asia. By end market, ~80% of sales are for server boards and ~20% for package substrates; server boards drive most revenue growth due to larger processing area, but package substrates are also growing at the same rate.

Q: Will the market eventually shift entirely to chemical adhesion without roughing, and what is the product development roadmap for GliCAP?

A: Management expects the market will eventually shift entirely to rougher-free chemical adhesion, and product development for this transition is already underway. For 2026, existing products will continue to drive growth, and the company continuously updates product specifications to meet rising customer quality requirements.

Q: Can we expect Fine Chemicals sales to continue increasing steadily from 2027 to 2029, and when will depreciation from the new plant peak?

A: GliCAP has grown rapidly after 10 years of development because the company correctly anticipated demand and had product ready when AI-driven demand surge happened. Management expects this pattern of anticipating future demand will continue to deliver growth, so Fine Chemicals will keep growing, and the revised plan coming in August will likely reflect higher GliCAP demand assumptions. For depreciation: the first phase of the Sakade plant (GliCAP capacity) is not a large investment, and the second phase (semiconductor process material capacity) is expected to be completed around 2029, so the depreciation peak will start after that.

Q: What is the growth outlook for landscape exteriors, and what is the growth outlook for other Fine Chemical products beyond GliCAP?

A: For landscape exteriors, management does not expect natural growth, and will grow by expanding beyond aluminum into iron and stainless steel products to enter larger non-residential projects (such as station rotaries and airport roofs), expanding gradually one project at a time with no specific numerical target set yet. For other Fine Chemical products beyond GliCAP: imidazole-based products continue to see stable growth as more applications adopt imidazole for improved performance; benzoxazine resin is progressing toward commercialization for CFRP and semiconductor encapsulant applications; isocyanuric acid derivatives are already used as encapsulant modifiers; glycoluril derivatives are seeing growing adoption in high-performance electronic materials due to their high crosslinking capability; and a new adhesion promoter (VD) is also in development, so multiple new products are expected to drive growth beyond GliCAP.

Q: What are the plans for fixed cost reduction in the Building Materials business?

A: Over the past three years, the company has increased fixed costs to invest in advertising and trade shows to support the strategic pivot, so no large fixed cost cuts have been implemented yet. The business has not yet been able to make a bold shift in sales team structure due to the relationship-driven nature of the industry. The main upcoming change is rationalizing production facilities: many production facilities are over 50 years old and outdated, so the company will need to invest in new, more efficient facilities over the next several years, and any efficiency gains from this rationalization will offset the new depreciation cost.

Q: What sectors is the company targeting for M&A?

A: M&A activity will focus first on strengthening existing business, including the recently acquired Timuraya in Indonesia. The company also considers M&A for new business creation, targeting areas that can leverage the company's existing technology and customer relationships, rather than completely unrelated sectors.