Stock Analysis & Valuation SCREEN Holdings Co., Ltd. (7735.T)

• Previous Close: ¥19,660.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	10771.63	-45
Intrinsic value (DCF)	10193.02	-48
Graham-Dodd Method	5538.60	-72
Graham Formula	31623.06	61

Strategic Investment Analysis

Company Overview

SCREEN Holdings Co., Ltd. (7735.T) is a leading Japanese semiconductor production equipment manufacturer headquartered in Kyoto. Specializing in advanced semiconductor fabrication tools, the company provides a comprehensive portfolio including coat/develop trackers, wafer cleaning systems, annealing systems, measurement and inspection systems, and advanced packaging lithography equipment. SCREEN Holdings also offers solutions for printing, biosciences, and industrial applications, leveraging its expertise in high-precision manufacturing and automation. With a strong presence in Japan and global markets, the company serves semiconductor manufacturers, electronics producers, and printing industries. Its diversified product range and commitment to R&D position it as a key player in the semiconductor equipment sector, benefiting from the growing demand for advanced chip manufacturing technologies. SCREEN Holdings, formerly known as Dainippon Screen Mfg. Co., Ltd., has a long-standing history since 1943 and continues to innovate in semiconductor and industrial automation solutions.

Investment Summary

SCREEN Holdings presents a compelling investment opportunity due to its strong position in the semiconductor equipment market, supported by robust revenue (¥504.9B) and net income (¥70.6B) in FY2024. The company benefits from the global semiconductor industry's expansion, driven by demand for advanced chips in AI, IoT, and 5G applications. Its healthy balance sheet, with ¥167.3B in cash and minimal debt (¥7.2B), provides financial flexibility. However, investors should consider the cyclical nature of the semiconductor industry and potential supply chain risks. The stock's beta of 1.222 indicates higher volatility compared to the broader market. The dividend yield, with ¥308 per share, adds income appeal, but growth prospects hinge on continued innovation and market share gains against larger competitors.

Competitive Analysis

SCREEN Holdings competes in the highly specialized semiconductor equipment market, where precision and technological leadership are critical. The company's competitive advantage lies in its diversified product portfolio, particularly in wafer cleaning and coating/developing systems, which are essential for semiconductor fabrication. Its strong R&D focus allows it to cater to evolving industry needs, such as advanced packaging and inspection technologies. However, SCREEN faces intense competition from global giants like ASML, Applied Materials, and Tokyo Electron, which dominate high-end lithography and deposition equipment. SCREEN's smaller scale may limit its ability to match the R&D budgets of these larger players, but its niche expertise in cleaning and developing systems provides differentiation. The company's strong presence in Japan and partnerships with local semiconductor manufacturers (e.g., Toshiba, Sony) offer regional stability. To sustain growth, SCREEN must continue innovating in areas like EUV-compatible equipment and expand its footprint in emerging semiconductor markets like China and South Korea.

Major Competitors

• ASML Holding NV (ASML.AS): ASML is the global leader in extreme ultraviolet (EUV) lithography systems, a critical technology for advanced semiconductor manufacturing. Its monopoly in EUV gives it a significant edge over SCREEN, which does not compete in high-end lithography. However, ASML's focus on lithography means it does not directly compete with SCREEN in cleaning or developing systems. ASML's scale and technological dominance make it a formidable player, but its high-cost systems cater primarily to leading-edge fabs, leaving room for SCREEN in mid-tier segments.
• Applied Materials, Inc. (AMAT): Applied Materials is a broad-based semiconductor equipment provider with strengths in deposition, etching, and inspection systems. It competes with SCREEN in wafer cleaning and measurement but has a much larger global footprint and R&D budget. Applied's diversified portfolio and scale give it an advantage in serving large foundries like TSMC and Samsung. However, SCREEN's specialization in developing and cleaning systems allows it to maintain a niche presence, particularly in Japan.
• Tokyo Electron Limited (8035.T): Tokyo Electron is SCREEN's closest domestic competitor and a global leader in semiconductor production equipment. It offers a broader range of products, including coater/developers and etching systems, directly competing with SCREEN. Tokyo Electron's larger scale and international presence make it a stronger competitor, but SCREEN's focus on cleaning systems and regional customer relationships provide some insulation. Both companies benefit from Japan's strong semiconductor manufacturing ecosystem.
• Lam Research Corporation (LRCX): Lam Research specializes in wafer fabrication equipment, particularly etching and deposition systems. While it does not directly compete with SCREEN in cleaning or developing, its dominance in etch technology positions it as a key player in semiconductor equipment. Lam's strong ties to memory chip manufacturers (e.g., SK Hynix) give it an edge in certain segments, but SCREEN's expertise in wet processing remains a differentiating factor.
• KLA Corporation (KLAC): KLA is a leader in process control and inspection systems, competing with SCREEN's measurement and inspection offerings. KLA's advanced metrology solutions are critical for yield management in semiconductor fabs, giving it an edge in high-end applications. SCREEN's inspection systems are more niche, focusing on specific process steps, but KLA's broader portfolio and global reach make it a stronger competitor in this segment.