Sonec Corporation (1768) AI Stock Analysis

• Market Cap: ¥12.30B
• Dividend Yield: 2.16%
• Average Volume (3M): 9.52K
• Price to Earnings (P/E): 10.6
• Beta (1Y): 0.37
• Revenue Growth: 24.11%
• EPS Growth: 1644.12%
• Country: JP
• Employees: 128
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 54.11
• Shares Outstanding: 7,500,000
• 10 Day Avg. Volume: 4,500
• 30 Day Avg. Volume: 9,523
• PEG Ratio: 0.05
• Price to Book (P/B): 0.68
• Price to Sales (P/S): 0.41
• P/FCF Ratio: -6.32
• 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: 70 Outperform
• Price Target: ¥1,869.00 ▲(35.43% Upside)
• Action: Reiterated Date: 02/10/26
• Date: Action: Reiterated 02/10/26

Overall score reflects a solid balance sheet and attractive valuation as key positives, partially offset by cash flow weakness and inconsistent revenue/profitability. Technicals are supportive but look somewhat overextended, tempering the near-term outlook.

Positive Factors

Strong balance sheet / low leverage

Very low leverage and a healthy equity ratio reduce financial risk and increase resilience through construction cycles. This durable capital structure supports access to funding for projects, cushions cash-flow swings, and preserves strategic optionality over the next several months.

Operational margin resilience

Stable gross margins coupled with decent EBIT/EBITDA margins point to lasting operational efficiency. In engineering and construction, sustained margin control boosts cash generation potential (once cash flow normalizes) and enables competitive bidding and reinvestment into backlog.

Low business volatility & moderate ROE

A low beta signals lower external earnings volatility; a moderate ROE shows the company earns reasonable returns on equity. Together these durable traits support steadier capital allocation, reduced refinancing risk, and more predictable cash needs across 2-6 months.

Negative Factors

Negative operating and free cash flow

Persistent negative operating and free cash flow constrains liquidity and limits the firm's ability to fund capex, backlogs, or distributions from internal sources. Over months this increases reliance on external financing and raises execution risk on projects.

Inconsistent revenue growth / recent decline

Erratic top-line performance and recent revenue declines weaken long-term planning and scale economics. For a project-centric engineering firm, inconsistent revenue reduces predictability of margins, utilization and backlog conversion over multiple quarters.

Profitability volatility

Fluctuating net margins create earnings unpredictability and can erode retained earnings needed for growth. Margin swings make it harder to sustainably fund reinvestment or absorb cost inflation, increasing operational and financial strain over the medium term.

Sonec Corporation Business Overview & Revenue Model

Company Description

Sonec Corporation engages in the general construction business. It constructs medical, welfare, education/childcare/cultural, commercial, production/logistics, and religious facilities, as well as housing complexes. The company also engages in the civil engineering construction businesses, including road and bridge, and river/sabo construction activities. In addition, it offers building repair and maintenance, and other renewal services. Further, the company is involved in design and construction supervision; and lending of construction machinery and equipment. Sonec Corporation was founded in 1944 and is headquartered in Takasago, Japan.

How the Company Makes Money

Sonec Corporation generates revenue through multiple streams, primarily by selling its electronic components and industrial systems to OEMs (Original Equipment Manufacturers) and other businesses in various sectors. The company leverages long-term contracts with key clients, ensuring a steady flow of income. Additionally, Sonec invests in research and development to innovate its product offerings, which allows it to maintain a competitive edge and command premium prices. Partnerships with leading technology firms enhance its market reach and provide access to new customer bases, further contributing to its revenue. The company also offers after-sales services and maintenance contracts, providing a continuous revenue stream beyond the initial sale of its products.

Sonec Corporation Financial Statement Overview

Summary

Mixed fundamentals: a strong, low-leverage balance sheet supports stability, but income performance is uneven with inconsistent revenue/profitability, and recent negative operating/free cash flow raises liquidity and durability concerns.

Income Statement

Sonec Corporation has shown a mixed performance in its income statement. The gross profit margin has been relatively stable, but the net profit margin has seen fluctuations, indicating some volatility in profitability. Revenue growth has been inconsistent, with recent years showing a decline. However, the company maintains decent EBIT and EBITDA margins, suggesting operational efficiency.

Balance Sheet

The balance sheet of Sonec Corporation is strong, with a very low debt-to-equity ratio, indicating minimal leverage and financial risk. The return on equity is moderate, reflecting reasonable profitability relative to shareholder equity. The equity ratio is healthy, suggesting a solid capital structure with a significant portion of assets financed by equity.

Cash Flow

Cash flow analysis reveals challenges, with negative operating and free cash flows in recent periods, indicating potential liquidity issues. The free cash flow to net income ratio is high, suggesting that the company is generating cash relative to its net income, but the negative growth in free cash flow is concerning.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	16.97B	15.20B	16.18B	18.04B	17.16B	16.30B
Gross Profit	1.71B	1.44B	979.41M	1.62B	1.70B	1.78B
EBITDA	1.10B	739.00M	306.00M	1.01B	1.15B	1.25B
Net Income	678.67M	500.00M	144.95M	688.85M	800.15M	866.79M
Balance Sheet
Total Assets	13.66B	12.90B	11.62B	11.55B	11.29B	11.26B
Cash, Cash Equivalents and Short-Term Investments	5.79B	1.31B	2.66B	5.59B	3.94B	4.23B
Total Debt	15.72M	5.82M	7.34M	965.00K	2.38M	3.81M
Total Liabilities	4.59B	3.84B	2.91B	2.90B	3.18B	3.66B
Stockholders Equity	9.06B	9.06B	8.71B	8.65B	8.11B	7.60B
Cash Flow
Free Cash Flow	0.00	-982.00M	-2.68B	1.87B	-17.99M	1.45B
Operating Cash Flow	0.00	-654.00M	-2.67B	2.14B	177.89M	1.53B
Investing Cash Flow	0.00	-472.00M	-39.60M	-270.03M	-212.26M	-106.88M
Financing Cash Flow	0.00	-219.00M	-222.91M	-218.98M	-256.24M	-149.28M

Sonec Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1380.00
• 50DMA: Positive
• 100DMA: Positive
• 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:1768, the sentiment is Positive. The current price of 1380 is below the 20-day moving average (MA) of 1635.25, below the 50-day MA of 1512.52, and above the 200-day MA of 1152.63, indicating a bullish trend. The MACD of 45.71 indicates Positive momentum. The RSI at 59.60 is Neutral, neither overbought nor oversold. The STOCH value of 34.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:1768.

Sonec Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1841	82 Outperform	¥5.69B	10.02	―	1.88%	-16.60%	-19.91%
1807	71 Outperform	¥12.71B	12.02	―	4.39%	2.65%	45.12%
1768	70 Outperform	¥12.30B	10.64	―	2.16%	24.11%	1644.12%
1853	68 Neutral	¥11.46B	13.42	―	4.35%	-7.40%	60.55%
1848	64 Neutral	¥11.54B	4.48	―	2.33%	7.66%	562.50%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
1844	61 Neutral	¥10.95B	22.00	―	2.74%	4.36%	17.63%