[Summary]
Muromachi Chemical (4885)'s rapid rise is more natural to see as a re-evaluation of the company as a water treatment infrastructure stock that combines semiconductor ultrapure water, PFAS removal, and high-performance separation materials, rather than just an "AI-related stock."
The company is involved in pharmaceuticals, chemicals, and health foods, and its strengths in the chemical business are sales and processing of ion exchange resins. As interest in water treatment, ultrapure water, and industrial water reuse increases around semiconductor factories and AI data centers, it is becoming easier to direct short-term funds to these areas.
However, Muromachi Chemical is not a company specializing in semiconductors. Although the company's current performance is strong, expectations for multiple themes such as AI, semiconductors, PFAS, and water infrastructure are starting to rise in the stock price. From here on, it is time to check the financial results to see if speculation turns into actual demand.
First, the conclusion
This time, the Muromachi Chemical market is a small-cap stock market where the theme stock market and performance improvement occurred at the same time.
If you look at it simply as ``people bought it because it's related to AI semiconductors,'' it's a little shallow. What the market is responding to is the water treatment infrastructure behind AI semiconductor factories and data centers.
Ultrapure water is essential in semiconductor manufacturing. Furthermore, when we include tightening of PFAS regulations, industrial water reuse, and advanced wastewater treatment, water treatment becomes a modest bottleneck outside of AI infrastructure.
Muromachi Chemical's ion exchange resin is a material that has this association.
Why is it not just “AI semiconductors”?
In the AI semiconductor market, GPUs, memory, manufacturing equipment, and inspection equipment are bought first.
However, as the number of semiconductor factories increases, it is not just equipment that is needed.
| Surrounding infrastructure | Easy-to-see themes |
|---|---|
| Power | Data centers, transformers, power transmission and distribution |
| Cooling | Air conditioning, cooling water, thermal management |
| Water treatment | Ultrapure water, wastewater treatment, and reuse |
| Chemical materials | Cleaning, purification, separation, adsorption |
| Environmental response | PFAS, wastewater regulations, resource recycling |
Muromachi Chemical is seen in water treatment and high-performance separation materials.
The company's ion exchange resin information center explains that the high-purity resin "Muromac HG series" is suitable for the production and purification of pure water, chemicals, organic solvents, and process fluids. In addition, one possible use for highly cross-linked cationic resins is the final stage polisher of ultrapure water production equipment such as semiconductor manufacturing equipment.
It cannot be said that ``semiconductor sales will rapidly expand'' based on this explanation alone. However, it is a sufficient material to be associated with the semiconductor ultrapure water supply chain.
Strong business performance is also a reason why it is easy to buy
If it's just a theme, it's hard for the market to last long.
Muromachi Chemical can easily attract short-term funds because its current numbers are strong.
In the cumulative third quarter of the fiscal year ending May 2026, sales were 5.651 billion yen, operating income was 546 million yen, and net income was 337 million yen. Compared to the same period last year, sales increased by 16.8%, operating income increased by 59.1%, and net income increased by 35.7%.
Furthermore, the company's full-year forecast is for sales of 7.7 billion yen, operating income of 700 million yen, and net income of 470 million yen. The plan is for operating income to increase by 62.0% and net income to increase by 94.8% from the previous fiscal year.
| Item | Cumulative 3Q for the fiscal year ending May 2026 | Year-on-year comparison |
|---|---|---|
| Sales | 5.651 billion yen | +16.8% |
| Operating income | 546 million yen | +59.1% |
| Ordinary profit | 514 million yen | +44.8% |
| Net profit | 337 million yen | +35.7% |
Even though it is a theme stock, its performance is increasing. In small-cap stocks, this combination creates a fairly strong supply and demand balance.
Still not specialized in semiconductors
This is a place I would like to see calmly.
Muromachi Chemical's business consists of three pillars: pharmaceuticals, chemicals, and health foods. Although it is starting to be seen in the market as being related to semiconductors and AI, this does not mean that the entire company specializes in semiconductors.
The chemical business has ion exchange resins, and this has led to associations with ultrapure water and PFAS removal.
In other words, the current stock price has the following theme premium in addition to the improved performance that can be confirmed as a track record.
- AI related
- Semiconductor supply chain
- Ultrapure water related
- Related to PFAS removal
- Water treatment infrastructure related
When it comes to small-cap stocks, it is difficult to stop by just looking at PER. On the other hand, funds also disappear quickly.
PFAS could become a favorite theme in the medium to long term
Personally, I think it is more important in the medium to long term whether it becomes a real thing related to PFAS removal than the short-term association with AI semiconductors.
There is a trend toward stricter regulation of PFAS as organic fluorine compounds that tend to persist in the environment. The Ministry of the Environment has published information on water quality guideline values for PFOS and PFOA, and the US EPA has also set legally binding standards for PFAS in drinking water.
In February 2025, Muromachi Chemical released a document titled "Introduction to PFAS removal technology using ion exchange resin," which has technical connections to underwater PFAS removal.
However, even here, overestimation is prohibited.
At this point, it is difficult to gauge the extent to which PFAS removal is boosting Muromachi Chemical's sales just by looking at the company's financial results. At the moment, it is still at the stage where there is a possibility that it will become a long-term theme.
To be authentic, the following verifications are required:
| Points to check | Reasons to watch |
|---|---|
| Government/local government projects | Will demand for public water treatment expand? |
| Industrial wastewater project | Can it be developed for semiconductor and chemical factories |
| Continuing orders | Will it end with a temporary trial introduction |
| Profit margin | Is it profitable as a high-performance material |
| Overseas expansion | Can we expand in regions with stricter PFAS regulations |
PFAS tends to be a topic of discussion for a long time as a water treatment topic. That's why it's worth keeping track of whether they've been mentioned in IR or have received any orders.
Risk is liquidity and theme drop
Muromachi Chemical is not a large-cap stock. When a theme develops in small-cap stocks, price movements can become quite wild.
There are three things to keep in mind.
1. Semiconductor sales ratio needs confirmation
Although it is treated as a semiconductor-related product in the market, its sales consist mainly of pharmaceuticals, chemicals, and health foods.
The fact that ion exchange resin is related to semiconductor ultrapure water is different from the fact that the company's overall performance is driven solely by semiconductor factory investment.
2. AI themes circulate quickly
In Japanese stocks, short-term funds are flowing rapidly into AI, data centers, power, cooling, semiconductor materials, and water treatment.
When that money is withdrawn, stock prices suddenly drop, even if business performance is not bad. For theme stocks, the expiry date of supply and demand may come before the material.
3. It’s easy to get ahead of performance expectations.
Full-year forecasts are strong. You can also appreciate the dividend increase.
However, if the stock price rises first based on this assumption, "good numbers" alone will not be enough for the next financial results. You can see the profit margin of the chemicals business, orders received, actual demand for semiconductors, and even the materialization of PFAS-related products.
Points to look at in your next financial results
The following items should be checked during the next financial statement:
| Points to note | Why it's important |
|---|---|
| Chemicals Division Profit Margin | Is the cost ratio continuing to improve |
| Growth of ion exchange resins | Is the theme turning into actual demand? |
| Explanation related to semiconductors and ultrapure water | Will it change from speculation to performance material |
| References related to PFAS | Will it grow as a medium- to long-term theme |
| Order backlog/inventory | Temporary demand or continuous demand |
| Capital investment plan | Do you have the will to respond to increasing demand |
| Continued dividend increase | Can cash generation ability be confirmed |
When looking at Muromachi Chemical, sales alone are not enough.
Profit over sales, cash over profit. Furthermore, it is necessary to separately look at whether the profit is from pharmaceuticals, chemicals, or ion exchange resins.
Investment stance
The current market valuation can be organized in terms of time as follows:
| Time axis | View |
|---|---|
| Short-term | Easy to concentrate funds as an AI/semiconductor small-cap stock |
| Mid-term | Verifying profit growth and profitability improvement in the chemicals business |
| Long term | Can we evolve into a water treatment infrastructure company by reusing PFAS, ultrapure water, and industrial water? |
In the short term, watch out for a rebound after a sharp rise.
In the medium term, the focus is on achieving full-year forecasts and improving profit margins.
In the long term, the key point will be whether Muromachi Chemical will be evaluated not just as a pharmaceutical and chemical company, but as a water treatment infrastructure company with highly functional separation materials.
Summary
Muromachi Chemical's sharp rise is not just a sign of AI-related stocks.
Due to the combination of multiple themes such as semiconductor ultrapure water, PFAS removal, high-performance separation materials, and industrial water reuse, the company is beginning to be reevaluated as a water treatment infrastructure stock.
Current performance is also strong, with operating income increasing 59.1% year-on-year in the cumulative third quarter of the fiscal year ending May 2026. The full-year forecast is for operating income to increase by 62.0% and net income to increase by 94.8%.
However, the company is not specialized in semiconductors, and the contribution of PFAS-related sales to sales is not yet clear in the financial results. Whether the company's reputation will continue from here will be determined by the profit margin of its chemicals business, actual demand for ion exchange resins, PFAS projects, and its ability to generate cash.
The theme is strong. The numbers aren't bad either. That is why the next stage is to look at actual demand rather than expectations.
Source/Reference materials
- Muromachi Chemical “Summary of financial results for the third quarter of the fiscal year ending May 2026 [Japanese GAAP] (non-consolidated)”, disclosure date: 2026-04-14
- Muromachi Chemical “Ion Exchange Resin General Information Center High Purity Resin (Highly Crosslinked Resin)”
- Muromachi Chemical “Introduction of PFAS removal technology using ion exchange resin”, February 19, 2025
- Ministry of the Environment “About organic fluorine compounds (PFAS)”
- U.S. Environmental Protection Agency (EPA) “Per- and Polyfluoroalkyl Substances (PFAS)”
- Confirmation date: 2026-05-27