1D·

SHARES for the weekend, More important than gold, Hidden semi-conductor play from Japan

Hello my dears,

we are once again traveling to Japan this weekend.

Without further ado, I would like to take you straight to the introduction. Because this one has become a bit longer again.

But maybe not quite so bad at the weekend.

Your opinions and assessments are welcome in the comments.

$6370 (-0.47%)

⚡ Is Kurita a beneficiary of the semiconductor industry?

Yes - one of the most important water infrastructure suppliers for the global chip industry.

Kurita is not just "somehow" active in the semiconductor sector. The company is deeply anchored in the chip production value chain - and the company presentation shows that the electronics sector is the key growth driver.

🧩 The company presentation clearly shows that electronics is the core segment

Kurita names electronics as one of the two main pillars:

"Electronics Industry - Global Expansion of Service Business based on Facility Projects"

This means:

Pure water (UPW)
Waste water treatment
Reclaim systems
Process water
Chemicals
AI-optimized operation

→ All essential for semiconductor factories.

💧 Why semiconductors wouldn't work without Kurita

Chip production is one of the most water-intensive industries in the world:

Ultrapure water (UPW) for wafer cleaning
Process water for etching and CMP steps
Waste water treatment (chemical + biological)
Reclaim
cooling water
Membrane technology
Chemicals for water quality

Kurita supplies all these systems.

And: Kurita offers "Ultra-pure water supply services" and "AI-optimized operation".

This is a recurring revenue model that is directly linked to the capacity utilization of semiconductor factories.

📈 Figures from the presentation: Electronics is growing strongly

For FY2028, Kurita states:

230 billion yen sales in the Electronics segment
18% business profit margin

This is the most profitable segment of the entire company

🔥 Why Kurita is a "hidden semiconductor play"

Most investors are looking at ASML, TSMC, Applied Materials. But the infrastructure suppliers like Kurita are:

less cyclical
less volatile
extremely sticky (high switching costs)
tied to long-term capacity expansions

When TSMC, Samsung, Intel, GlobalFoundries or SMIC build new fabs, they need:

UPW plants
Waste water recycling
chemicals
Membrane technology
AI-optimized operations management

→ Kurita earns money from every new Fab project.

🧠 AI + semiconductor = double tailwind

Kurita benefits twice over:

(a) AI boom → more chips → more fabs → more water systems

Every new AI GPU factory (TSMC, Samsung, Intel) needs huge amounts of water.

b) Kurita itself uses AI to increase efficiency

The presentation shows:

"AI-driven design automation"
"AI-optimized operation"

This increases margins and scalability.

🌍 Why water is becoming increasingly valuable globally

🔥 a) Water stress is increasing worldwide

The presentation shows that Kurita is already active in 3 critical river basins (Colorado, Citarum, PCJ) and plans to expand to 5 basins by 2028.

You don't do that if there was plenty of water.

📈 b) Industries consume more and more water

Especially:

Semiconductors
Batteries / lithium
Chemicals
Pharmaceuticals
food
Energy

These industries are growing - and with them their water requirements.

🌡️ c) Climate change exacerbates the shortage

Droughts, extreme weather, falling groundwater levels → water is becoming a geopolitical risk.

🏭 Why water is gaining "gold status" in the industry

Water is not just a raw material - it is a production factor without which the modern economy cannot function.

Particularly extreme: the semiconductor industry

A single modern fab (TSMC, Intel, Samsung) requires

up to 20-60 million liters of water per day
of which >70% is ultrapure water (UPW)

Kurita is massively active in precisely this segment:

Global Expansion of Service Business based on Facility Projects
Focus regions: Japan, Korea, Taiwan, USA, EMEA, India
Expansion of production capacities
AI-supported facility planning

This is a direct lever for the semiconductor supercycle.

🧠 Why water is not "gold" - but more important

Gold is:

rare
storable
speculative
not essential for life

Water is:

essential for life
not replaceable
locally limited
politically sensitive
industrially indispensable
expensive to transport
extremely regulated

Water is therefore more strategic than gold.

🏁 Conclusion: Yes - water is the new gold. And Kurita is one of the best picks for it.

Why?

Water is becoming scarcer → value is rising
Industries need more water → Demand is rising
Regulation forces recycling → Kurita benefits
Semiconductor boom → Kurita benefits massively
AI optimization → Margins increase
New business areas (PFAS, lithium, space) → Future security

Kurita is not a "water play". Kurita is a water infrastructure champion.

$6370 (-0.47%)

Kurita Water Industries Ltd. is a Japan-based company mainly engaged in the provision of water treatment products, technologies and maintenance services. The company operates in two business segments. The Water Treatment Chemicals segment is engaged in the manufacture and sale of water treatment-related chemicals and related equipment, as well as the provision of maintenance services. The Water Treatment Plants segment is engaged in the manufacture and sale of water treatment plants and equipment, the provision of ultra-pure water, the provision of dry cleaning and precision cleaning services, the cleaning of soil and groundwater and the provision of maintenance services such as the operation and maintenance of water treatment plants.

Number of employees: 8,151

Kurita will start operating a local company for the sale of water treatment chemicals in Mexico

March 16, 2026

https://www.kurita-water.com/en/news/20260316-01/

Kurita Group solutions for the electronics industry

In the production of silicon wafers, semiconductors and various electronic components in precision devices, chemical substances and foreign matter can affect product yield. Therefore, a purification process is essential to remove chemical substances and foreign matter, using ultra-pure water that is as close as possible to pure H₂O, or functional water in which chemicals or gases are dissolved. Kurita Group provides an ultra-pure water production system and a functional water production system that combines pretreatment equipment (such as filters), deionized water production system (such as reverse osmosis (RO) membranes and ion exchange resin towers), and subsystems (such as UV sterilization equipment and UF membranes). In addition, the Kurita Group offers treatment plants for the treatment of organic and inorganic wastewater, wastewater treatment plants for the recovery and collection of water, and equipment for the recovery and reuse of phosphoric acid, hydrofluoric acid and other substances in wastewater.

Segment strategies

📡 Electronics industry

Expansion of global engineering and production capacities
M&A to strengthen value creation
AI-supported design and process optimization

🏭 General industry

Focus on emerging markets (India, Africa, Middle East, Latin America)
CSV share of sales to be increased to ~30% increase

Presentation of Shareholder Relations Meeting for the Fiscal Year Ending March 31, 2026

Vision & sustainability focus

Vision 2030: "Pioneering new value for water" - Sustainable water management, decarbonization, circular economy.
Materiality focus areas:
Securing water resources
decarbonization
circular economy
Innovation, human resources, quality & compliance

🔑 Strategic pillars

Global expansion of the service business (primarily electronics industry)
CSV business expansion (Shared Value)
New business areas:
PFAS removal
Direct Lithium Extraction (DLE)
Water recycling for space applications

Sales distribution by business segment:

(2025 JPY)

General Water Treatment Market 228 billion

Electronic Market 181 billion

Geographical distribution of sales:

(2025 JPY)

Japan 197 bn

Asia 99.64 bn

North and South America 74.13 bn

Europe, The Middle East, and The Africa 38.49 bn.

JPY in millions

Estimates

Year Turnover Change

2025 408.888 6,25 %

2026 420.033 2,73 %

2027 444.450 5,81 %

2028 466.167 4,89 %

Year EBIT Change

2025 31.275 -24,15 %

2026 54.660 74,77 %

2027 61.080 11,75 %

2028 66.900 9,53 %

Year Net result Change

2025 20.305 -30,44 %

2026 37.547 84,92 %

2027 41.979 11,8 %

2028 45.977 9,53 %

Year Net debt CAPEX

2025 30.519 56.150

2026 -1.250 22.467

2027 -30.600 32.500

2028 -58.350 36.667

Year EBIT margin ROE

2025 7,65 % 6,1 %

2026 13,01 % 10,98 %

2027 13,74 % 11,64 %

2028 14,35 % 11,81 %

Year Earnings per share Change

2025 180,7 -30,44 %

2026 343,4 90,1 %

2027 385,1 12,12 %

2028 423 9,85 %

Year Dividend p share Return

2025 92 2 %

2026 112 1,46 %

2027 128,2 1,67 %

2028 140,8 1,84 %

Year FCF Yield

2025 5,78 %

2026 5,9 %

2027 5 %

2028 5,58 %

Year P/E ratio PEG

2025 25.4x 1.53x -0.8x

2026 22.3x 2.39x 0.2x

2027 19.9x 2.21x 1.6x

2028 18.1x 2.05x 1.84x

Market value 839,743

Number of shares (in thousands) 109,427

Date of publication 08.05.2025

Interpretation:

Margins rise significantly again FY2026.
ROIC already above target → capital allocation efficient.
ROE still low, but expected to rise sharply.

Segment targets:

Electronics: 230 bn sales, 18% margin
General Industry240 billion sales, 14% margin
CSV share increases to ~30% by FY2028

Source: Segment strategy & big picture PSV-27

🎯 Financial targets until FY2028

Sales: ¥470 bn.
Business profit margin: 16%
ROE: ≥12%
ROIC: ≥10%

Financial strategy & shareholder returns

ROIC-based capital allocation
Combination of organic growth, M&A and technology acquisitions
Dividend increase for 22 years in a row
Flexible share buybacks (FY2026: 2.79 million shares)

@PikaPika0105

$6370 (-0.47%)

22 Comments

Homer@Simpson

Awesome💪😊, I'd be interested to know how much time you put into a post like this?

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Tenbagger2024@Tenbagger2024

@Simpson Thank you my dear. Yes, it really does take time. But for great comments like yours and the recognition, it was really worth it

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Maximilian@Max095

Very interesting as always! 😊 And there's a dividend too. Thanks for your work and the inspiration

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Tenbagger2024@Tenbagger2024

@Max095 With pleasure, my dear. I'm already in the sector at $TTEK and $CECO also falls a little into that category.

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Maximilian@Max095

@Tenbagger2024 $TTEK is currently also very excitingly valued

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Tenbagger2024@Tenbagger2024

@Max095 could remain volatile as long as 🍊is at the helm. Because they also have some sizeable contracts, including for development aid. And this is where the great master has cut back. That's why you have to take another look at the situation and order situation. I have only just joined $CECO and am already up almost 10%. Momentum seems to be coming back. And are also active in water treatment, and some other exciting areas

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Maximilian@Max095

@Tenbagger2024 That's a good point. But things should pick up again when the 🍊is no longer in office. You've shown a good hand again with that $CECO

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Tenbagger2024@Tenbagger2024

@Max095 It's not all evening yet: ceco $CECO is merging with $THR Thermon. Which means dilution for the time being. But like most analysts, I take a very positive view of the merger. And it doesn't seem to be weighing on the share at the moment. Although it will go down after the announcement. That's why I thought it was a good time to get in. But perhaps also a little risky. But in the long term, I see a good company emerging from the merger.

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Francis@Underwood_F

Thank you :) I also find $7741 quite exciting. They do about 50% business with medical stuff and especially eyeglass wearers know them... and 50% with a specialized semiconductor stuff (forgive me for the inaccuracies. I'm not that technically savvy).
I find this particularly interesting in view of the fact that the steady cash flow from medical can be used for development in the tech area + they continue to earn good medical money in weak tech times.

But I think they are relatively expensive at the moment

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Tenbagger2024@Tenbagger2024

@Underwood_F Yes, I also find them exciting. Thanks for the reminder

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PikaPika0105@PikaPika0105

@Underwood_F good company. Quality value.

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Frank@schlimmschlimm

Many thanks for another great presentation! We've already talked about water before ;-)

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Tenbagger2024@Tenbagger2024

@schlimmschlimm oh yes. Will become more and more important in the future

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

Hello my dearest, your friend "Tenbagger" has served you a real Japanese gem. Kurita Water Industries (6370.T) sounds like a boring sewage treatment plant at first, but it's actually the gatekeeper for every modern chip factory. Without their "Ultrapure Water" (UPW), an Nvidia chip today would be as useful as a paperweight.

But before you transfer your savings to Tokyo, let "the analyst" take a look. We'll cheekily separate the hype from the hard yen here.

The expert's analysis ("The Analyst")

1. the business model: "No Water, No Chips"

Kurita is deeply rooted in the semiconductor value chain. The production of 300mm wafers requires thousands of liters of water per minute - water that is so pure that even a speck of dust in it would look like a skyscraper.

* The moat: Kurita not only builds the plants, they often operate them too (Ultrapure Water Supply Business). This is a classic "razor and blade" model: once in, the customer (TSMC, Sony, Intel & Co.) can hardly get out. The switching costs are astronomical, and the patents (over 2,500 worldwide) protect the territory.

* Structural advantage: While the chip industry is cyclical, the water requirement for ongoing production is stable. This smoothes out revenues.

2 The bare figures (as of March 2026)

I took a look at the latest Q3 figures (February 2026) and the forecasts for the current financial year. This is where it gets interesting:

* Sales & profit: the Group is heading for annual sales of around JPY 425 bn. The operating profit ("business profit") recently climbed by an impressive 10.1 %.

* Margin profile: The operating margin is around 12.7%. This is solid for an equipment manufacturer, but - and here I have to put the brakes on Tenbagger's euphoria - not at software level. Margins are higher in the Electronics division (~13-15%), but the General Industry division (paper, steel) pulls the average down somewhat.

* The one-time trap: Last year there was a huge write-down (approx. JPY 19 bn), which visually crushed net profit. This has now been digested, which is why EPS (earnings per share) for 2026 looks much friendlier again.

3rd valuation: Japan discount or expensive trap?

Kurita is currently trading at around JPY 7,700.

* P/E ratio (P/E): The price/earnings ratio is around 20-22x (adjusted for special effects). Compared to the Japanese mechanical engineering average (approx. 14x), this is a hefty premium.

* EV/EBITDA: At approx. 8-9x, the share is fairly valued, but certainly no longer a "bargain from the bargain bin". The market has long had the "AI water play" on its radar.

The analyst's conclusion

Does an investment make sense?
Yes, but not for the quick "tenbagger".

Why yes?

> Kurita is a quality share. If you believe in the long-term expansion of semiconductor capacities in Japan (keyword: Rapidus) and the USA, there is no way around Kurita. The moat through the service business is deep, and the margin profile is constantly improving thanks to the focus on the electronics sector.

Why not?

> If you are looking for a share that will double tomorrow, you are in the wrong place. The valuation is "priced in". In addition, weak Japanese domestic demand in the traditional industrial sectors is putting pressure on overall growth.

My assessment: Kurita is a first-class basic investment for the "shovel seller" portfolio. Solid dividend (yield approx. 1.5%), rising profits and an indispensable product. But don't expect miracles - Kurita flows steadily, like a well-filtered stream, it is not a torrential waterfall.

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Tenbagger2024@Tenbagger2024

@Get_Rich_or_Die_Tryin Good analysis. I take a similar view. But I see the share continuing to rise in the long term

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@Tenbagger2024 Me too. But presumably more in the stubborn and steady category. The previous chart also shows this. If you want an explosion, you're in the wrong place.🤷🏼‍♂️

What I really like is that you are virtually chips without being chips, i.e. without the usual, sometimes violent cyclicality.

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Tenbagger2024@Tenbagger2024

@Get_Rich_or_Die_Tryin e mobility and robotics should also provide a further boost. Lithium mining also needs a lot of water

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@Tenbagger2024 But they are far from exclusive everywhere, just like with chips.😉

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PikaPika0105@PikaPika0105

Nice quality company, but with a clear focus on the future. Something for those who don't like to look at the portfolio, I would say. No great potential but definitely solid.

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S.A.U.@SAUgut777

Take a closer look at $285A...a little tip on the side 🤫😇😉🫡

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Tenbagger2024@Tenbagger2024

@SAUgut777 Thank you dear, I have it on my watch. For memory chips, I'm already at $HY9H and $MU. One more value would be too much chunk risk for me. But otherwise an interesting value

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PikaPika0105@PikaPika0105

@Tenbagger2024 somehow it all comes down to the same thing. They go through the same cycles.

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