While MEC’s (4971 JP) FY25 (Dec year-end) 1H sales fell short of guidance by 2.2% to ¥9,387mil (+5.7% YoY), OP improved +3.3% YoY to ¥2,440mil, coming in 8.5% above the firm’s guidance of ¥2,250mil. This was primarily due to less than expected SG&A spending – something the firm had flagged in an earlier release. Net profit [NP] was revised from ¥1,450mil (-23.2% YoY) to ¥1,893mil (+0.2% YoY), thanks to the receipt of a subsidy from the Ministry of Economy, Trade and Industry [METI] specifically for smaller sized companies to support growth investment. MEC is guiding for FY25 full-year OP of ¥5,000mil (+9.6% YoY) on sales of ¥20,000mil (+9.7% YoY). The main growth driver will be CZ-series chemicals, especially MEC’s core product CZ-8101. Demand for packages for generative AI servers will likely remain solid. Those for other applications are expected to show signs of a recovery from FY25 2H onwards, according to management. MEC completed a share buyback programme to repurchase a maximum of 500,000 shares in the market, which was announced on 12 May. The firm will cancel all the 500,000 shares, or 2.49% (based on number of shares outstanding prior to cancellation) on 29 August. Management commits to the prompt and proactive buyback of shares during the ongoing MTP.
