Ajinomoto Co (AJINF) AI Stock Analysis

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Positive Factors

Market Performance

Ajinomoto's share price has a potential upside of 32-39% based on the sum-of-the-parts analysis, reflecting a transformation in the company's earnings structure.

Product Innovation

Ajinomoto Co. monopolizes the sale of Ajinomoto Build-up Film (ABF), a critical component in high-end chips, maintaining its dominance through innovation and responsiveness to client demands.

Shareholder Actions

Ajinomoto continues to maintain a shareholder-friendly capital management stance, targeting a total shareholder return of 50% or more through a progressive dividend policy and share buybacks.

Negative Factors

Financial Performance

Frozen Foods margins have been softening again in FY3/25, with an estimated dip to 3.8%.

Industry Risks

A key downside risk will be industry-wide cutback on AI capex spend, which will hamper growth of its functional materials segment, a major growth driver.

Operational Risks

Ajinomoto has announced another round of layoffs in their North America Frozen Food business, signaling that the restructuring agenda continues unabated, despite the abrupt change of Global CEO last month.

Ajinomoto Co (AJINF) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$24.89B

Dividend Yield1.06%

Average Volume (3M)0.00

Price to Earnings (P/E)54.7

Beta (1Y)0.33

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees34,862

SectorConsumer Defensive

Sector Strength64

IndustryPackaged Foods

Share Statistics

EPS (TTM)-0.08

Shares Outstanding1,005,637,630

10 Day Avg. Volume0

30 Day Avg. Volume0

Financial Highlights & Ratios

PEG Ratio7.26

Price to Book (P/B)2.00

Price to Sales (P/S)0.00

P/FCF Ratio25.12

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$27.73

Price Target Upside10.57% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering6

Ajinomoto Co Business Overview & Revenue Model

Company DescriptionAjinomoto Co., Inc. engages in the seasonings and foods, frozen foods, and healthcare and other businesses in Japan and internationally. Its Seasonings and Foods segment offers sauces and seasonings products under the AJI-NO-MOTO, HON-DASHI, Cook Do, Ajinomoto KK Consommé, Pure Select Mayonnaise, Ros Dee, Masako, Aji-ngon, Sazón, Sajiku, and CRISPY FRY names; and solutions and ingredients to consumer foods and food service industries. This segment also provides instant noodles under the Knorr Cup Soup, and YumYum names; coffee under the Birdy and Blendy brands; powdered drink under the Birdy 3in1 name; MAXIM products; Chyotto Zeitakuna Kohiten products; and gift sets and office supplies comprising coffee vending machines, tea server, etc. The Frozen Foods segment offers Chinese dumplings, cooked rice, noodles, desserts, shumai, processed chicken, and other products. The Healthcare and Other segment provides amino acids to various industries, such as pharmaceuticals, foods, and cosmetics; sports nutrition products; personal care ingredients; and sterile products, as well as engages in the provision of contract manufacturing services for pharmaceutical intermediates and active ingredients. This segment also offers Ajinomoto Build-up Film, an interlayer insulating material for semiconductor packages. Ajinomoto Co., Inc. was founded in 1909 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Ajinomoto Co Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q3-2024)

% Change Since: 19.66%|

Next Earnings Date:Aug 01, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed sentiment with record-high sales and strong segment performance in seasonings and frozen foods, but significant challenges in healthcare, biopharma services, and the impact of the Forge acquisition. The company's strategic initiatives and new product successes provide optimism for future growth, yet current challenges weigh on the overall sentiment.

Q3-2024 Updates

Positive Updates

Record-High Q3 Sales and Business Profits

Q3 sales and business income reached record highs for both the 9-month period and the quarter. Sales were JPY 1.676 billion, 104% of the previous year's level, and business profit was JPY 124.4 billion, 104.4% of the previous year.

Strong Performance in Seasonings and Foods

Seasonings and foods achieved strong profit growth, almost meeting the full year profit increase forecast. Domestic and overseas sales were driven by price increases and recovery in volume.

Frozen Food Business Success

The frozen food business achieved more than JPY 10 billion in business profit, surpassing the target within the 9-month period of this fiscal year.

Innovative Product Launches

New personalized interactive communication strategy products, such as Cooked Tofu Kiwami premium Mala Mapo Tofu and women-targeted nutritious meals, have been successful in attracting new customer bases.

Negative Updates

Challenges in Health Care and Other Segments

Profit continues to decrease in every segment of health care and others, with an expectation of bottoming out in the fourth quarter.

Biopharma Services Underperformance

Biopharma services experienced a decline due to decreased orders from biopharmaceutical companies, largely impacted by higher interest rates in North America.

Impact of Forge Biologics Acquisition

The acquisition of Forge Biologics is expected to have a negative impact on profits in Q4 and fiscal '24, with anticipated costs in single-digit billions of yen.

Althea's Decline in Sales and Profits

Althea recorded a decrease in both sales and profits due to a decline in orders from its customers, with plans to recover growth trajectory together with Forge.

Company Guidance

During the Q3 2024 earnings call for 2802.T, the company reported record-high sales and business income for the nine-month period, with sales reaching JPY 1.676 billion, which is 104% of the previous year's level, and business profit at JPY 124.4 billion, representing 104.4% of the previous year. Excluding foreign exchange impact, sales increased by 100.6%, and business profit by 100.3%. The seasonings and foods, along with frozen foods segments, showed significant growth, with overseas volume at 102% and domestic at 99%. However, healthcare and other segments faced declines, with the company anticipating a recovery in electronic materials from Q4. The acquisition of Forge Biologics is expected to impact financials from Q4 onwards, with advanced investments leading to a temporary profit reduction. For fiscal 2024, the firm aims for steady profit growth to align with its 2030 roadmap, leveraging improved efficiency and cost reductions across its operations.

Ajinomoto Co Financial Statement Overview

Summary

Ajinomoto Co presents a strong financial profile with excellent profitability, efficient operations, and robust cash generation. The company is growing steadily with a solid capital structure. While there is moderate leverage, the firm manages its financials well, reflecting stability and potential for sustainable growth in the packaged foods industry.

Income Statement

Very Positive

Ajinomoto Co demonstrates strong profitability and growth. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 36.05%, and the net profit margin stands at 6.04%. Revenue growth is robust at 5.80% from the previous year. EBIT margin is healthy at 10.65%, and EBITDA margin is 16.15%, indicating efficient operational management. Overall, the company shows solid revenue growth and profitability.

Balance Sheet

Positive

The balance sheet reflects a sound financial position, with a debt-to-equity ratio of 0.66, which is manageable. The return on equity (ROE) is 11.33%, showing efficient use of equity capital. The equity ratio is 43.71%, suggesting a stable capital structure with a decent proportion of equity financing. While leverage is moderate, the company maintains a healthy equity base.

Cash Flow

Very Positive

Cash flow analysis reveals strong financial health. The free cash flow growth rate is impressive at 33.49%, and the operating cash flow to net income ratio is 2.33, indicating strong cash generation relative to net income. The free cash flow to net income ratio is 1.39, reflecting efficient cash management. Overall, cash flow metrics indicate robust cash generation and management.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
1.52T	1.44T	1.36T	1.15T	1.07T	1.10T
	Gross Profit
549.01B	511.45B	470.39B	425.90B	406.22B	403.87B
	EBIT
162.26B	146.68B	148.93B	124.57B	101.12B	48.77B
	EBITDA
245.98B	232.75B	226.85B	197.67B	168.07B	118.79B
	Net Income Common Stockholders
91.96B	87.12B	94.06B	75.72B	59.42B	18.84B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
229.37B	194.19B	145.09B	169.26B	193.69B	150.65B
	Total Assets
1.86T	1.77T	1.51T	1.46T	1.43T	1.35T
	Total Debt
538.16B	442.49B	288.56B	313.91B	350.42B	356.91B
	Net Debt
308.78B	270.96B	155.79B	162.45B	168.81B	215.21B
	Total Liabilities
976.07B	890.43B	688.77B	717.32B	763.44B	761.55B
	Stockholders Equity
811.41B	814.69B	768.68B	686.91B	620.26B	538.98B
Cash Flow		Free Cash Flow
128.19B	96.05B	44.59B	64.86B	79.61B	32.81B
	Operating Cash Flow
213.92B	168.07B	117.64B	145.58B	165.65B	114.86B
	Investing Cash Flow
-57.73B	-132.43B	-30.09B	-61.57B	-66.25B	-66.65B
	Financing Cash Flow
-169.22B	-6.75B	-111.06B	-123.06B	-60.39B	-52.31B

Ajinomoto Co Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AJINF		$24.89B	54.66	8.89%	1.06%	―	―
Sector *	65 Neutral	$8.88B	15.01	4.76%	203.76%	3.54%	-2.49%
KIKOF		$8.52B	20.81	12.17%	1.86%	―	―
MEJHF		$6.09B	18.31	6.71%	2.97%	―	―
NFPDF		$6.06B	17.00	11.20%	2.26%	―	―
TSUKF		$6.42B	15.42	13.14%	2.09%	―	―
YZZKF		$4.46B	17.25	8.78%	1.45%	―	―

* Consumer Defensive Sector Average

Performance Comparison

AJINF

Ajinomoto Co

25.08

6.59

35.64%

KIKOF

Kikkoman

8.87

-2.69

-23.27%

MEJHF

Meiji Holdings Co

22.26

0.34

1.55%

NFPDF

Nissin Foods Holdings Co

20.56

-5.05

-19.72%

TSUKF

Toyo Suisan Kaisha

63.34

1.77

2.87%

YZZKF

Yamazaki Baking Co

20.36

-2.57

-11.21%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.