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Japan Tobacco Inc. (JP:2914)
:2914
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Japan Tobacco (2914) AI Stock Analysis

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JP:2914

Japan Tobacco

(OTC:2914)

Rating:71Outperform
Price Target:
¥4,897.00
▲(14.71%Upside)
Japan Tobacco's strong financial performance and positive earnings call are major strengths, driving the overall score. Technical indicators show an upward trend, though valuation concerns with a high P/E ratio present risks. The earnings call's strategic insights contribute positively despite uncertainties in certain business areas.

Japan Tobacco (2914) vs. iShares MSCI Japan ETF (EWJ)

Japan Tobacco Business Overview & Revenue Model

Company DescriptionJapan Tobacco Inc. (JT) is a leading international tobacco company headquartered in Tokyo, Japan. It operates in the Tobacco, Pharmaceutical, and Processed Food sectors. JT is renowned for its production and sale of cigarettes and other tobacco products, with a diverse portfolio that includes globally recognized brands such as Winston, Camel, and Mevius. In addition to its core tobacco business, JT is involved in the pharmaceutical industry, focusing on the development and commercialization of prescription drugs, as well as in the processed food sector, offering a range of food products including beverages and frozen foods.
How the Company Makes MoneyJapan Tobacco Inc. generates revenue primarily through the sale of tobacco products, which account for the majority of its earnings. The company operates in both domestic and international markets, with its Global Tobacco Business being the most significant revenue contributor. This includes the manufacture and sale of cigarettes and other tobacco-related products. JT also derives income from its Pharmaceutical Business, where it engages in the research, development, manufacturing, and marketing of prescription drugs. Additionally, the Processed Food Business contributes to the company's revenue through the sale of food and beverage products. Strategic acquisitions and partnerships, particularly in expanding its international tobacco market presence, also play a crucial role in enhancing JT's revenue streams.

Japan Tobacco Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: -2.67%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented strong growth in the tobacco segment and promising developments in the Ploom ecosystem, offset by uncertainties and strategic shifts in the pharmaceutical business, currency impacts, and cost challenges.
Q1-2025 Updates
Positive Updates
Strong AOP Growth
AOP increased by 20.8% year-on-year on a constant FX basis, driven by the tobacco business's pricing contributions and volume growth, particularly from the Vector Group acquisition.
Tobacco Business Volume Growth
Total tobacco volume grew by 0.2% year-on-year when excluding inventory adjustments, with a significant increase in RRP and HTS volumes by 19.0% and 27.7%, respectively.
Ploom Ecosystem Expansion
Ploom HTS segment share increased by 3.6 percentage points since the end of 2022, reaching 8.2%, with plans to introduce a new Ploom ecosystem this year.
Financial Performance of Clusters
Strong pricing contributions in markets like the Philippines, Russia, and the U.K. led to core revenue and AOP growth across various regional clusters.
Processed Food Business Revenue Increase
Revenue in the processed food business increased by JPY 0.8 billion year-on-year due to price revisions and sales growth of packaged cooked rice.
Negative Updates
Pharmaceutical Business Uncertainty
Transfer of the pharmaceutical business to Shionogi due to international competition and restrictions on joint R&D activities. Profit attributable to owners is expected to decrease by approximately JPY 6 billion.
Currency Impact on AOP
Depreciation of some emerging market currencies and appreciation of cost-related currencies, such as the U.S. dollar, partially offset the positive impact from the yen depreciation.
Delivery Delays in Japan
IT system issues caused a delay in product delivery in Japan, with the financial impact still being evaluated.
Cost Increases
Higher raw material costs in the processed food business and increased amortization costs related to the Vector acquisition impacted overall profit.
Company Guidance
During the first quarter earnings briefing for 2025, JT Group provided comprehensive guidance on various metrics. The company announced the transfer of its pharmaceutical business, including Torii, to Shionogi, citing an uncertain growth outlook under the current structure and the changing environment. This move is expected to decrease the profit attributable to owners of the parent company by approximately JPY 6 billion, which will be recorded under discontinued operations from the third quarter. Despite this, the dividend for FY 2025 remains unaffected as it is based on a payout ratio calculated on a continuing operation basis. The tobacco business continues to be a core profit driver, with AOP at constant FX increasing by 20.8% year-on-year, fueled by pricing in combustibles and the inclusion of Vector Group. Total tobacco volume grew by 1.3% year-on-year, and RRP and HTS volumes saw significant year-on-year increases of 19.0% and 27.7%, respectively. Operating profit rose by 15.3% year-on-year, while profit remained stable due to higher financing costs and tax expenses. The processed food business saw a revenue increase of JPY 0.8 billion year-on-year, although AOP decreased due to higher raw material costs. Overall, the company reported a strong start to 2025 with robust top-line growth and remains on track to achieve its full-year forecast.

Japan Tobacco Financial Statement Overview

Summary
Japan Tobacco demonstrates sound financial health with strong profit margins and consistent revenue growth. The balance sheet reflects financial stability with moderate leverage. Despite a decline in free cash flow, cash generation remains robust.
Income Statement
82
Very Positive
Japan Tobacco's income statement shows a strong financial performance with a consistent increase in total revenue over the years, indicating a healthy growth trajectory. The gross profit margin for TTM is 54.92%, and the net profit margin is 14.32%, both reflecting efficient cost management. The EBIT and EBITDA margins are 21.77% and 28.38% respectively, showing solid operational efficiency. The revenue growth rate from the previous annual report to TTM is 2.75%, which is moderate but steady.
Balance Sheet
78
Positive
The balance sheet indicates financial stability with a debt-to-equity ratio of 0.44, suggesting moderate leverage. The return on equity (ROE) for TTM is 12.25%, showcasing effective management of equity capital. The equity ratio stands at 47.63%, reflecting a strong equity base. While the company maintains a substantial amount of cash and equivalents, its total assets have slightly declined from the previous period, warranting monitoring.
Cash Flow
75
Positive
The cash flow statement reveals robust cash generation capabilities with a high operating cash flow to net income ratio of 1.21. The free cash flow has decreased compared to the previous period, with a free cash flow growth rate of -14.64%. Despite this decline, the company's free cash flow to net income ratio remains strong at 0.92, indicating solid cash profitability.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue3.15T2.84T2.66T2.32T2.09T
Gross Profit1.74T1.62T1.57T1.37T1.19T
EBITDA837.14B824.78B829.17B687.13B622.71B
Net Income179.24B482.29B442.72B338.49B310.25B
Balance Sheet
Total Assets8.37T7.28T6.55T5.77T5.38T
Cash, Cash Equivalents and Short-Term Investments1.20T1.04T904.56B721.73B557.67B
Total Debt1.78T1.14T958.31B918.62B958.88B
Total Liabilities4.52T3.37T2.93T2.89T2.78T
Stockholders Equity3.77T3.83T3.54T2.81T2.52T
Cash Flow
Free Cash Flow502.24B445.80B384.39B495.99B411.21B
Operating Cash Flow630.01B567.01B483.80B598.91B519.83B
Investing Cash Flow-439.77B-126.13B-101.82B-97.50B5.35B
Financing Cash Flow-94.91B-270.50B-306.18B-353.14B-297.40B

Japan Tobacco Technical Analysis

Technical Analysis Sentiment
Positive
Last Price4269.00
Price Trends
50DMA
4273.90
Negative
100DMA
4155.37
Positive
200DMA
4048.13
Positive
Market Momentum
MACD
10.14
Negative
RSI
51.20
Neutral
STOCH
70.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2914, the sentiment is Positive. The current price of 4269 is above the 20-day moving average (MA) of 4240.86, below the 50-day MA of 4273.90, and above the 200-day MA of 4048.13, indicating a neutral trend. The MACD of 10.14 indicates Negative momentum. The RSI at 51.20 is Neutral, neither overbought nor oversold. The STOCH value of 70.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2914.

Japan Tobacco Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
¥244.46B15.09
2.48%6.87%1.26%
71
Outperform
$2.92T15.307.40%2.76%4.38%13.44%
71
Outperform
$7.63T42.554.55%4.54%10.98%-63.74%
67
Neutral
¥1.42T15.997.61%2.50%3.98%0.28%
65
Neutral
$27.21B15.46-4.29%3.19%1.01%3.46%
64
Neutral
$556.74B101.812.87%0.73%2.69%-47.13%
63
Neutral
$1.60T28.254.91%3.63%9.00%-57.41%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:2914
Japan Tobacco
4,269.00
107.87
2.59%
JP:2531
Takara Holdings Inc.
1,252.00
158.79
14.53%
JP:2502
Asahi Group Holdings
1,961.50
140.47
7.71%
JP:2503
Kirin Holdings Company
2,008.50
-23.27
-1.15%
JP:2587
Suntory Beverage & Food
4,606.00
-758.80
-14.14%
JP:2501
Sapporo Holdings
7,174.00
957.04
15.39%

Japan Tobacco Corporate Events

Japan Tobacco to Receive Dividend from Subsidiary
Jun 24, 2025

Japan Tobacco Inc. announced that its subsidiary, JT International Holding B.V., will distribute a dividend of approximately USD 560 million, which will be recorded as non-operating income in JT’s non-consolidated financial statements for the fiscal year 2025. However, this dividend will not materially impact JT’s consolidated financial results for the same period.

The most recent analyst rating on (JP:2914) stock is a Buy with a Yen4550.00 price target. To see the full list of analyst forecasts on Japan Tobacco stock, see the JP:2914 Stock Forecast page.

Japan Tobacco Reports Strong Q1 2025 Financial Performance
May 7, 2025

Japan Tobacco Inc. reported its consolidated financial results for the first quarter of 2025, showing a significant increase in revenue and operating profit compared to the same period last year. The company’s revenue rose by 11.7% to 826,981 million yen, and operating profit increased by 15.3% to 248,758 million yen. Despite a slight increase in profit attributable to owners of the parent company, comprehensive income for the period saw a substantial decline. The company maintains its forecast for the fiscal year ending December 31, 2025, with expected revenue growth of 3.9% and a significant increase in operating profit by 107.4%. These results and forecasts indicate a strong operational performance and strategic positioning in the industry, with a focus on sustainable growth.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: May 29, 2025