巩固价值：MUCC IPO可能提升MMC实力

Cementing Value: MUCC IPO Could BoostMMC Firepower Mitsubishi UBE Cement Corporation (MUCC), the 50/50 JV between MMCand UBE Corporation, posted solid earnings in FY3/25, with OP up 18%YoY to ¥50.8bn. This was driven by price increases (+¥5,000/ton in Japan),supply chain reorganization, and steady U.S. sales performance despite asoft construction backdrop. Equity-method profit allocated to MMC totaled¥14.0bn—accounting for ~80% of MMC’s total. MUCC IPO could supportMMC’s capital strategy. Steady recovery in FY3/25 despite slowing domestic demand.The cement business wasthe core driver of the earnings rebound, with OP rising to ¥39.0bn in FY3/25, up ¥8.5bn. Theincrease reflected strong contribution from both domestic and U.S. operations, with the latteradding ¥5.0bn and the former ¥3.4bn. The margin improvement was largely supported by¥2.3bn in pricing gains, along with a ¥7.1bn benefit from lower thermal energy costs, partiallyoffset by ¥4.1bn in other cost increases and a ¥1.0bn increase in concrete-related profitability.Meanwhile, the Environment & Energy segment saw profit fall from ¥10.9bn to ¥6.0bn, dueto lower power and coal sales volumes in Japan. The Resources segment reported stableperformance, with OP increasing from ¥2.3bn to ¥3.5bn thanks to higher pricing and costoptimization. However, the domestic cement business remains under pressure from fallingdemand (down 5.6% YoY) and elevated input costs, prompting further optimization measures,including plant consolidation and fuel mix adjustments. FY3/26 outlook: profit guidance stable.Looking ahead, MUCC guides FY3/26 OP to riseslightly to ¥52.0bn, with NI expected to decline modestly to ¥28.0bn due to increased taxburdens and financial expenses. Equity-method profit to MCC is expected to decline from¥14.0bn in FY3/25 to ¥13.2bn, still representing over 60% of MMC’s full-year forecast of¥21.3bn in equity-method earnings. By segment, cement OP is forecast to rise by ¥39.0bn to¥43.0bn, including a ¥6.3bn contribution from Japan and ¥2.3bn from the U.S., underpinned byan additional ¥2,000/ton price hike being implemented from April 2025. IPO preparations signal strategic shift.On May 16, MUCC announced plans to beginpreparations for a Tokyo Stock Exchange IPO, citing the need for flexible funding and greaterpublic profile to support its 2030 vision of becoming a high-profitability cement and buildingmaterials leader. While the listing timeline remains undecided and subject to regulatory review,MMC and UBE view the IPO as key to unlocking shareholder value, potentially reducing capitalburden while maintaining strategic influence. Our view:MUCC’s steady profit contribution provides valuable stability to MMC as it entersa reset year. MMC's FY3/26 RP is guided to decline by 45% YoY to ¥33.0bn, largely due to a¥24.3bn drop in Metals segment profit (to ¥16.8bn), stemming from weaker TC/RC margins,a stronger yen (¥140/$ vs. ¥153/$), and normalization of FX valuation gains. Details here andhere. With MUCC expected to deliver ¥13.2bn in equity income, it remains a critical pillar ofMMC’s ¥21.3bn equity-method forecast and overall bottom-line of ¥20.0bn. Importantly, theMUCC IPO—once executed—could support MMC’s capital strategy. FY3/26 FCF is projectedto recover to ¥55bn (vs. -¥20bn in FY3/25), while Capex will rise to ¥80bn (+36% YoY). Asuccessful listing could further bolster MMC’s cash position, enabling it to sustain shareholderreturns (¥100 DPS maintained) or reinvest selectively in growth and cost efficiency. In a yearof earnings volatility, MUCC’s contribution—and potential IPO upside—provide much-neededearnings quality and optionality. Thanh Ha Pham * | Equity Analyst81 3 5251 6160 | tpham@jefferies.com Carlos Furuya * | Equity Associate+81 3 6830 3618 | cfuruya@jefferies.com Company Description Mitsubishi Materials Mitsubishi Materials Corporation manufactures and processes non-ferrous metals, electronic materials, and cement. The company operatesthrough four segments: Advanced Products, Metalworking, Metals, and Environment & Energy. Company Valuation/Risks Mitsubishi Materials FY3/26 EV/EBITDA multiple of 10.2x leads to Price Target of ¥3,200. Risks include lower cement and copper prices, as well as operational issuesat copper smelting and cement plants. Analyst Certification: I, Thanh Ha Pham, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report. I, Carlos Furuya, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expre