Osaka Organic Chemical (4187.T) Q3 positive - results well ahead, revised guidance conservative, but some concerns

Results beat our expectations, revised guidance looks conservative, positive for the stock. Q3 OP was ¥3.15bn, comfortably beating our forecast of ¥1.9bn-¥2.1bn. The company raised full-year OP guidance from ¥7.5bn to ¥9.3bn, exceeding our forecast of ¥8.1bn, but the projections for Q4 look conservative, calling for sales to decline 17% and OP from ¥3.15bn to ¥1.72bn. The company appears to anticipate a demand pullback and rising costs, but in reality there are no notable signs of demand declining for most products. For electronic materials, sales were up 15% QoQ in Q3 but guidance is for a 20% decline in Q4: while semiconductor materials volume grew particularly strongly from Q2 to Q3, display materials appear to have corrected significantly. Q4 guidance assumes a slowdown for both semiconductor materials and display materials, but we see no signs of deceleration in semiconductor materials at this point. We had forecast FY11/27 OP of ¥9.3bn, but the company looks set to achieve this o