MIKIKOGYO CO., LTD. (1718) AI Stock Analysis

• Market Cap: ¥9.04B
• Dividend Yield: 2.87%
• Average Volume (3M): 3.31K
• Price to Earnings (P/E): 5.8
• Beta (1Y): 0.54
• Revenue Growth: 19.10%
• EPS Growth: 78.61%
• Country: JP
• Employees: 571
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 281.73
• Shares Outstanding: 1,153,263
• 10 Day Avg. Volume: 2,920
• 30 Day Avg. Volume: 3,306
• PEG Ratio: 0.04
• Price to Book (P/B): 0.55
• Price to Sales (P/S): 0.26
• P/FCF Ratio: -3.52
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: ¥8,663.00 ▲(0.50% Upside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is supported by attractive valuation (low P/E and high dividend yield), but is held back by weak cash flow quality (negative operating and free cash flow in 2025) and soft technical positioning with the stock below key moving averages.

Positive Factors

Improved profitability in 2025

Meaningful margin recovery and 20.1% revenue growth in 2025 indicate the company can win and execute higher‑margin projects. Sustained improvement in project-level economics (gross margin ~22%) supports durable earnings capacity and reinvestment potential over the next several quarters.

Generally sound balance sheet and rising equity

Moderate leverage and growing equity with improved ROE provide financial flexibility to fund project pipelines and absorb shocks. A structurally acceptable debt-to-equity ratio supports capital allocation and suggests capacity to meet near-term obligations if cash collection stabilizes.

Proven ability to generate strong cash flow in some years

Historical episodes of strong cash conversion show the business model can produce robust operating cash when billing and collections align. This indicates that operational controls and project economics can deliver cash, a structural upside if working capital management normalizes.

Negative Factors

Recent negative operating and free cash flow

Repeated negative operating and free cash flow points to persistent working-capital swings and lumpy project billing. This reduces internal funding for capex/dividends, raises reliance on external financing, and increases execution risk across the project cycle over the coming months.

Rising leverage versus prior years

An upward trend in debt reduces financial flexibility and increases sensitivity to interest costs. If cash generation remains inconsistent, higher leverage constrains the company's ability to invest in new contracts or absorb project delays, elevating medium‑term liquidity risk.

Cyclicality and volatility in revenue and margins

Volatile top-line and margins, typical in construction, impair visibility into future earnings and cash flows. This cyclicality hampers long-term planning, may force conservative bidding or margin compression during downturns, and raises the likelihood of earnings swings over 2–6 months.

MIKIKOGYO CO., LTD. Business Overview & Revenue Model

Company Description

Mikikogyo Co., Ltd. engages in construction business in Japan. The company undertakes construction works for public facilities, medical facilities, welfare facilities for the elderly, commercial facilities, condominiums, office buildings, and nursery schools; renewal works for existing structures, such as buildings, condominiums, and commercial facilities; civil engineering works, including construction of sewage mains, road, pavement, rivers and parks, residential land, etc.; pipeline construction works; facility construction works; and paving, plumbing, water supply, drainage, sanitary air conditioning equipment, and clean energy related technology construction works. It also engages in the construction and management of solar power generation facilities; sales and construction of housing equipment; rental and management of real estate properties; and non-life insurance agency business, as well as solar power generation business. In addition, the company engages in the builds and sells detached houses; sells and installs gas appliances; installation of gas equipment and housing equipment; and operates restaurant business. Mikikogyo Co., Ltd. was founded in 1952 and is headquartered in Himeji, Japan.

How the Company Makes Money

MIKIKOGYO generates revenue primarily through the sale of its precision machinery and equipment to various sectors, including automotive manufacturers and industrial companies. The company has established key revenue streams through direct sales, long-term contracts, and service agreements with its clients. Additionally, MIKIKOGYO benefits from partnerships with major automotive manufacturers, providing tailored solutions that enhance production processes. The company's focus on research and development allows it to innovate and introduce new products, which also contributes to its revenue growth. Furthermore, after-sales services and maintenance contracts provide a recurring revenue stream, ensuring ongoing earnings from existing clients.

MIKIKOGYO CO., LTD. Financial Statement Overview

Summary

Income statement trends improved in 2025 (higher revenue and margins), and leverage remains moderate, but cash flow is a major weakness with negative operating and free cash flow in 2025 and inconsistent cash conversion historically.

Income Statement

Profitability improved meaningfully in 2025, with revenue up 20.1% and higher operating and net margins versus 2024 (net margin ~4.3% vs ~2.4%). Gross margin stayed solid (~22%), suggesting decent project-level economics. The main weakness is cyclicality/volatility: revenue declined in 2024 and margins have not been consistently expanding over the full period, which is typical for construction but still raises earnings visibility risk.

Balance Sheet

The balance sheet is generally sound with moderate leverage (debt-to-equity ~0.62 in 2025), but leverage has risen versus 2022–2024 alongside higher debt levels. Equity has grown and returns improved in 2025 (return on equity ~9.1%), indicating better profitability, yet the upward debt trend reduces flexibility if project cash collections weaken.

Cash Flow

Cash generation is the key concern: operating cash flow and free cash flow were negative in 2025, following another negative operating cash flow year in 2023, pointing to working-capital swings and potentially lumpy project billing/collections. While the company has demonstrated the ability to generate strong cash flow in some years (notably 2021 and 2022), the inconsistency and recent cash burn increase funding and execution risk.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	30.10B	36.15B	27.29B	32.20B	30.76B	26.37B
Gross Profit	6.91B	7.98B	6.18B	5.92B	5.80B	5.91B
EBITDA	2.24B	3.11B	1.68B	1.86B	1.81B	1.83B
Net Income	975.57M	1.57B	658.23M	839.53M	734.69M	731.37M
Balance Sheet
Total Assets	35.79B	38.88B	32.57B	30.12B	31.00B	30.56B
Cash, Cash Equivalents and Short-Term Investments	3.32B	3.04B	2.62B	1.92B	2.89B	2.91B
Total Debt	9.14B	10.68B	7.25B	6.13B	4.61B	5.49B
Total Liabilities	17.27B	19.35B	14.68B	12.72B	14.39B	14.68B
Stockholders Equity	16.33B	17.23B	15.74B	15.33B	14.61B	13.98B
Cash Flow
Free Cash Flow	0.00	-2.68B	452.71M	-2.30B	967.85M	2.91B
Operating Cash Flow	0.00	-2.12B	660.04M	-2.16B	1.20B	3.90B
Investing Cash Flow	0.00	-509.51M	-663.67M	-219.74M	-86.97M	-983.79M
Financing Cash Flow	0.00	3.06B	598.13M	1.31B	-1.13B	-1.31B

MIKIKOGYO CO., LTD. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 8620.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1718, the sentiment is Neutral. The current price of 8620 is below the 20-day moving average (MA) of 8734.00, below the 50-day MA of 8676.52, and above the 200-day MA of 7559.05, indicating a neutral trend. The MACD of -134.06 indicates Positive momentum. The RSI at 43.78 is Neutral, neither overbought nor oversold. The STOCH value of 30.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:1718.

MIKIKOGYO CO., LTD. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1798	82 Outperform	¥15.54B	5.70	―	1.60%	22.31%	101.45%
1960	73 Outperform	¥22.84B	11.42	―	2.97%	22.32%	5024.88%
1716	71 Outperform	¥18.33B	10.67	―	2.87%	-1.39%	-4.43%
5918	70 Outperform	¥15.94B	16.82	―	1.39%	2.98%	11.88%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
1718	60 Neutral	¥9.04B	5.82	―	2.87%	19.10%	78.61%
1776	54 Neutral	¥15.34B	65.15	―	2.54%	5.89%	-30.27%