ENVALITH
北興化学工業株式会社 logo

HOKKO CHEMICAL INDUSTRY CO.,LTD.

4992・Standard Market・Chemicals

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北興化学工業株式会社 logo
HOKKO CHEMICAL INDUSTRY CO.,LTD.4992

Business

Hokko Chemical Industry, founded in 1950, is a specialized manufacturer of agrochemicals and fine chemicals. In its Agrochemicals Business, the company manufactures and sells agrochemicals for paddy rice and horticultural use both domestically and internationally, with Zen-Noh (National Federation of Agricultural Cooperative Associations) as a major customer. In its Fine Chemicals Business, the company manufactures and sells Electronic Material Raw Materials such as curing accelerators for semiconductor encapsulants and monomer raw materials for photoresists, as well as Pharmaceutical & Agrochemical Intermediates and Resin Additives, with major chemical manufacturers such as Shin-Etsu Chemical Co., Ltd. as customers. The group consists of 5 consolidated subsidiaries (4 domestic, 1 in China) and 1 non-consolidated subsidiary (in the United States), and is listed on the Standard Market of the Tokyo Stock Exchange. Consolidated net sales for FY2025 (ending November 2025) were ¥49,125 million.

Business Model

The Agrochemicals Business generates revenue through stable domestic sales via a long-term basic sales agreement with Zen-Noh, supported by production at its own plants (Hokkaido, Niigata, and Okayama), as well as through expanded exports driven by the overseas registration expansion of its proprietary active ingredient, Ipfencarbazone. The Fine Chemicals Business conducts contract manufacturing and sales of proprietary products across three fields—electronic materials, pharmaceuticals & agrochemicals, and resins—achieving a high operating margin of 22.5%. Through the consolidation of Agrochemicals Business production sites, the Okayama plant is being dedicated exclusively to fine chemicals, creating a structure that simultaneously strengthens the earnings base of both businesses.

Company Strengths

In FY2025 (ending November 2025), the Fine Chemicals Business posted operating profit of ¥4,004 million, with an operating margin of 22.5%. The business specializes in high-value-added products such as Electronic Material Raw Materials (curing accelerators for semiconductor encapsulants and monomer materials for photoresists) and Pharmaceutical & Agrochemical Intermediates, capturing growth in the semiconductor market driven by the spread of generative AI.

The basic agrochemical sales agreement with the National Federation of Agricultural Cooperative Associations (Zen-Noh) has continued since 2004, with sales to Zen-Noh in FY2025 (ending November 2025) amounting to ¥20,652 million (42.0% of net sales). Under a framework in which price agreements are concluded annually, the Agrochemicals Business enjoys a high degree of revenue stability.

The company's proprietary active ingredient Ipfencarbazone had been registered in 8 countries as of the end of FY2025. Following the highly dispersible granule formulation "Rakuryu®," the company obtained registration in 2025 for a new drone-application formulation, "Kairyu" ("Double Kick Kairyu" and "Guardman Kairyu"). R&D expenses of ¥1,696 million were invested in FY2025 (ending November 2025), enabling the continuous creation of proprietary products.

ENVALITH's Perspective

In the first half of FY2026 (ending November 2026), operating profit in the Agrochemicals Business was ¥2,673 million (up 56.1% year on year), a significant increase. Domestically, the external factor of heightened pest control demand provided a tailwind, but the main drivers were the results of ongoing sales promotion activities and strong sales of Paddy Rice Agents and Horticultural Agents. Overseas, advance orders from India and Brazil and the effect of yen depreciation also contributed. First-half net sales of ¥32,849 million represent 63.2% of the full-year forecast of ¥52,000 million, and given the seasonality of the Agrochemicals Business (weighted toward the first half), progress toward achieving the full-year forecast is judged to be generally on track.

In the first half of FY2026 (ending November 2026), the Fine Chemicals Business recorded net sales of ¥8,051 million (down 4.2% year on year) and operating profit of ¥1,477 million (down 22.6% year on year), continuing the decline in both revenue and profit. The main causes were fluctuations in customer demand and delayed demand timing in the pharmaceutical and agrochemical field, as well as inventory adjustments by customers in the electronic materials field. Other Fine Chemical Products in the resin field increased due to demand recovery, but this was insufficient to offset the declines. Order trends from the second half onward, ahead of the completion of the dedicated KrF resist plant (scheduled for January 2027), will be a touchstone for medium-term growth.

In the first half of FY2026 (ending November 2026), comprehensive income increased substantially to ¥8,409 million (up 141.0% year on year), but the main driver was a ¥4,870 million increase in valuation difference on available-for-sale securities (due to the external factor of rising stock markets). Operating cash flow deteriorated to an outflow of ¥8,711 million (compared with an outflow of ¥6,212 million in the same period of the previous year), primarily due to a seasonal increase in trade receivables in the Agrochemicals Business (¥18,361 million). Given the implementation of share buybacks (with an upper limit of ¥2.0 billion), attention should also be paid to cash allocation from the second half onward.

Growth Strategy

Aiming for net sales of ¥55,000 million in FY2029 through growth investments across both the Agrochemicals and Fine Chemicals businesses

The Company is expanding registration countries for its proprietary active ingredient Ipfencarbazone (8 countries as of the end of FY2025) and promoting overseas sales growth centered on India and Brazil. Domestically, it aims to enhance added value by expanding the product lineup and adoption of the high-dispersibility granule "Rakuryu®". In the first half of FY2026 (ending November 2026), overseas sales increased, including some orders received ahead of schedule, and the Agrochemicals Business as a whole achieved a year-on-year increase in net sales of +12.0%.

The Company is constructing a dedicated plant for KrF resist raw materials aimed at increasing production capacity in the electronic materials field. It is building a system to capture growth in the semiconductor market (an external factor) driven by the spread of generative AI. In the first half of FY2026 (ending November 2026), the electronic materials field was affected by inventory adjustments at customers, but order growth is expected following completion of the dedicated plant.

The Company is promoting the consolidation of production sites into the Hokkaido Plant and Niigata Plant, targeted for around FY2030, to reduce manufacturing costs and improve production efficiency. Expenditure for the acquisition of property, plant and equipment in the first half of FY2026 (ending November 2026) increased to ¥2,502 million from ¥2,058 million in the same period of the previous year, indicating steady progress in growth investment.

The Company has set its annual dividend forecast for FY2026 (ending November 2026) at ¥54 per share (an increase of ¥8 from the previous fiscal year), continuing its policy of raising dividends. In addition, at the Board of Directors meeting held on July 10, 2026, the Company resolved to acquire treasury shares up to a maximum of 1,200,000 shares and a total acquisition price of ¥2.0 billion (acquisition period: July 13, 2026 to July 12, 2027). The policy aims to simultaneously improve capital efficiency and enhance shareholder returns.

Last updated: July 17, 2026