Sumitomo Chemical and Sumitomo Pharmaceutical (tickers: 4005, 4506): The ¥116 billion Swiss Shuffle

GOTHAM CITY RESEARCH’S OPINIONS

• Sumi Pharma’s FY2025 financial statements are misstated by 116-165 billion. Financial statements will be restated and the Company will face an investigation.

• Pharma manipulates receivables to fuel Pharma and Chemical’s profits. Without these, earnings collapse, and Chemical’s FY2025 Leverage is closer to 10x rather than 3x.

• Shares of both Chemical and Pharma are uninvestable, and face 50%-100% downside risk.

SUMMARY OF THE BASES OF OPINIONS

• Sumitomo Pharma FY2025 earnings account for 92% of Sumitomo Chemical FY2025 earnings.

• Chemical’s FY2025 earnings are inflated by non-recurring sources. Removing these, reduces its earnings 84%-111%.

• Pharma FY2025 earnings are inflated by non-recurring sources. Removing these reduces earnings by ~50%.

• Pharma FY2025 earnings are inflated by anomalous accounts receivable growth. Removing these, reduces earnings by an additional 50%.

• Pharma’s FY2025 Receivables grew 76% YoY while revenue grew 14%. We suspect channel stuffing, aggressive revenue recognition, or fictitious revenue.

• A March press release announced a 48 billion dividend to Pharma from its Switzerland subsidiary SMPS, weeks before Pharma’s 116.4 billion JPY public offering in April.

• Yet SMPS paid Pharma’s parent company a 164 billion dividend, not 48 billion, according to the notes to the Pharma’s parent company 2025FY financial statements.

• The 164 billion dividend does not appear on the income statement, even though it is explicitly described as an income statement activity within the 2025FY period.

• The 164 billion dividend is a distribution in-kind, in the form of accounts receivables previously held by SMPS.

• The 116 billion difference between the two differing dividend figures is not explained. We are unable to reconcile this difference to any accounts found within the FY 2025 Pharma financial statements.

• The 48 billion dividend represents ~42% of the parent company’s net income. The 164 billion amount represents 143%, implying the parent company is loss making.

• Although Pharma and Chemical share the same auditor, KPMG AZSA, the Swiss subsidiary’s auditor is KPMG. They are separate legal entities.

for the full report please download here:

2026 08 03 - SPC - Part I - TO PRINT.pdf

Download PDF • 2.25MB