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NEWS RELEASE Mar 31, 2017 R&I Affirms BBB-, Stable: Yasuhara Chemical Co., Ltd. Rating and Investment Information, Inc. (R&I) has announced the following: ISSUER: Yasuhara Chemical Co., Ltd. Issuer Rating: BBB-, Affirmed Rating Outlook: Stable RATIONALE: Yasuhara Chemical Co., Ltd. primarily offers terpene resins made from natural materials. The company almost dominates the domestic market and is among the global market leaders for terpene resins. Strong relationships with suppliers allow for stable procurement of raw materials. Thanks to this, as well as the advantage of having blue-chip companies on its client list, the earnings base is solid. While users are in diverse industries, its products are mainly for niche markets. Expanding the business size is thus not easy. The company has broadly been able to pass changes in raw material costs on to product prices, partly because competition is limited and replacement of its products with other materials is difficult in some fields. Development of high value-added products, such as terpene-based copolymers for tires, is underway as well. Given intensifying competition in general use fields and other circumstances, no optimism is warranted on the business environment. Even so, the company as a whole will likely achieve a certain level of profits and cash flow. For stable supply of terpene products, which are largely made from natural materials, Yasuhara Chemical has a policy of stockpiling extra raw materials. Its working capital therefore tends to be high. For the past several years, the company has adjusted the volume of procurement due in part to a surge in raw material prices, resulting in a reduction in inventories. With the environment for raw material procurement becoming harsh, R&I will keep a close eye on future developments, inventory levels, etc. As evidenced by an equity ratio of about 80% and a net cash position, the financial balance is sound. The primary rating methodologies applied to this rating are provided at "R&I's Basic Methodology for Corporate Credit Ratings" and "Chemicals". The methodologies are available at the web site listed below, together with other rating methodologies that are taken into consideration when assigning the rating. http://www.r-i.co.jp/eng/cfp/about/methodology/index.html R&I RATINGS: ISSUER: RATING: Yasuhara Chemical Co., Ltd. (Sec. Code: 4957) Issuer Rating BBB-, Affirmed RATING OUTLOOK: Stable ■Contact : Investors Service Department TEL.+81-(0)3-6273-7471 ■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-6273-7273 Rating and Investment Information, Inc. E-mail. [email protected] TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan http://www.r-i.co.jp Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are not statements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment. R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is not liable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details, please refer to http://www.r-i.co.jp/eng/policy/policy.html. © Rating and Investment Information, Inc.