Research · Initiation · 7 October 2026
Ajinomoto Tokyo: 2802
Ajinomoto is a food company with a chip film inside. At ¥5,346, most of the price is for the film.
- Price at publication
- ¥5,346.00close, 7 October 2026
- Target
- Noneno position at this price
- Conviction
- Low
What would prove the thesis wrongBy October 2027, Ajinomoto reports Functional Materials business profit for fiscal 2026 (the year to March 2027) below the ¥54.6 billion of fiscal 2025, a fall like fiscal 2023's, which points to my bear case; or its May 2027 forecast puts Functional Materials business profit for fiscal 2027 at ¥105 billion or more, which points to my bull case.
What would turn this into a callA price at or below about ¥3,799, which points long, or at or above about ¥5,825, which points short, with my numbers unchanged; or results that move my fiscal 2027 Functional Materials business profit to about ¥147 billion or more, which points long, or to about ¥73 billion or less, which points short.
The call in brief
- Ajinomoto is mostly a food company. Seasonings and frozen foods were 77.5 per cent of sales in the year to March 2026, and Functional Materials, the business built around its ABF chip film, only 6.4 per cent. But the film earned ¥54.6 billion of business profit at a 54 per cent margin, 24.4 per cent of the businesses' profit before shared costs, and about 29 per cent of group business profit after a sales-based share of those costs.
- The evidence since the piece supports the claim. Functional Materials sales rose 54 per cent and business profit 77 per cent in April to June 2026, at a 57.7 per cent margin, and Ajinomoto raised its full-year guide on the film alone. Servers and networks held at 70 per cent of film volume in fiscal 2025, as read from Ajinomoto's chart.
- On my numbers everything except the film is worth about ¥2,024 a share, 38 per cent of the price. The rest of ¥5,346 prices the film at about 40 times my fiscal 2027 estimate of its profit, against 24.5 times for electronic materials peers. So a call on these shares is mostly a call on the film, and every 10 per cent on the film's implied value moves the shares about 6 per cent.
- My call is no call, leaning short, with low conviction. Eighteen times for everything else and 28 times for the film gives ¥4,369, 18 per cent below the price, within a range of ¥2,898 to ¥6,164. On the peer medians alone it would be ¥3,929, 27 per cent below.