Kuraray Co (3405) AI Stock Analysis

• Market Cap: ¥566.51B
• Dividend Yield: 3.37%
• Average Volume (3M): 2.05M
• Price to Earnings (P/E): 78.2
• Beta (1Y): 0.79
• Revenue Growth: -1.94%
• EPS Growth: -84.08%
• Country: JP
• Employees: 11,941
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): -47.73
• Shares Outstanding: 307,963,600
• 10 Day Avg. Volume: 1,613,420
• 30 Day Avg. Volume: 2,049,506
• PEG Ratio: -0.89
• Price to Book (P/B): 0.68
• Price to Sales (P/S): 0.62
• P/FCF Ratio: 536.20
• 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): 129.28
• Revenue Forecast (FY): ¥841.90B

• Rating: 60 Neutral
• Price Target: ¥1,839.00 ▲(10.42% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is held back primarily by weakened profitability and sharply reduced free cash flow in 2025, alongside a very high P/E multiple. These negatives are partly balanced by a stable balance sheet and supportive technical momentum with the stock above major moving averages, plus a moderate dividend yield.

Positive Factors

Diversified, high-value product portfolio

Kuraray's portfolio of differentiated polymers (PVA, EVOH) and advanced materials used across packaging, automotive, electronics and healthcare underpins durable pricing power and customer stickiness. Global manufacturing and R&D networks support long-term product development and supply reliability, reducing single-market cyclicality and enabling sustained relationships with industrial customers.

Gross margin resilience and operating profitability

Steady gross margins around 30–32% despite recent earnings volatility indicate the business retains underlying product-level value capture. Consistent gross margin and continued operating profitability imply the company can sustain core manufacturing economics, absorb some cost shocks, and benefit from margin recovery if volumes normalise or pricing actions and mix improvements persist.

Stable balance sheet with manageable leverage

Improving and moderate debt metrics give Kuraray financial flexibility to fund capex, R&D and dividends while withstanding cyclical downturns. A growing equity base and controlled leverage reduce refinancing risk and support creditworthiness, allowing longer-term investments in specialty materials and capacity without immediate pressure to cut strategic programs.

Negative Factors

Sharp profitability compression

The collapse in net margin to near 1% materially reduces retained earnings and long-term return on capital. Persistent margin compression can impair the firm's ability to invest in higher-margin innovation, sustain dividends, and maintain ROE, suggesting structural pressure from cost pass-through limits, competitive pricing, or end-market weakness that may last beyond transitory cycles.

Free cash flow deterioration and weak cash conversion

Near-zero free cash flow and worsening cash conversion constrain funding for capex, debt reduction and shareholder returns, and increase reliance on external financing for strategic initiatives. Inconsistent free cash flow history points to working-capital volatility and reduces the margin for operational setbacks, making multi-year investment planning and balance-sheet improvement harder.

Top-line weakness in 2025

A reversal from prior expansion to slight revenue decline signals weakening demand or loss of volumes in key end markets. Reduced top-line growth undermines operating leverage and makes margin and cash recovery harder, indicating potential structural softness in end-market exposure (packaging, auto, electronics) or competitive/share pressures that could persist over several quarters.

Kuraray Co Business Overview & Revenue Model

Company Description

Kuraray Co., Ltd. is a Japanese chemical company that specializes in the production of advanced materials and specialty chemicals. Established in 1926, Kuraray operates in various sectors including healthcare, fibers and textiles, and industrial materials. The company's core products include polyvinyl alcohol (PVA) resins, which are used in a wide range of applications such as packaging, textiles, and construction, as well as medical products and high-performance materials for various industries.

How the Company Makes Money

Kuraray generates revenue primarily through the sale of its specialty chemicals and advanced materials across multiple sectors. Its key revenue streams include the manufacturing and sale of PVA resins, which are critical in industries such as packaging and textiles, as well as medical and pharmaceutical products. The company also earns income from its investments in healthcare, including dental and medical supplies. Significant partnerships with various industrial clients and healthcare providers enhance Kuraray’s market reach and contribute to its earnings. Additionally, the company’s focus on innovation and development of new products helps to maintain competitive advantages and drive revenue growth.

Kuraray Co Financial Statement Overview

Summary

Balance sheet is relatively stable with manageable leverage, but financial performance is pressured by a sharp profitability drop in 2025 (net margin down to ~0.9%) and a major deterioration in free cash flow to near breakeven, indicating weaker near-term earnings and cash efficiency.

Income Statement

Revenue expanded from 2021–2024, but turned slightly down in 2025 (annual revenue decline vs. 2024). Profitability has also compressed meaningfully: net margin fell from ~7.2% (2022) to ~0.9% (2025), with net income dropping sharply in 2025 versus prior years. Offsetting this, gross margin has remained relatively steady around ~30–32% and operating profitability is still positive, but the recent earnings volatility and margin erosion weigh on the score.

Balance Sheet

Leverage looks manageable for the sector, with debt-to-equity generally in the ~0.32–0.55 range and improving from the higher 2020–2022 levels to ~0.38 in 2025. Equity and assets have also grown over the period, supporting balance-sheet stability. The main drawback is that returns on equity (where provided) have trended down from 2022 to 2024, consistent with weaker profitability, which limits the overall strength despite acceptable leverage.

Cash Flow

Operating cash flow has been positive, but cash generation has been uneven. Free cash flow was negative in 2020 and 2022, strong in 2023–2024, and then collapsed to near breakeven in 2025. Cash conversion also weakened materially in 2025, with operating cash flow covering a smaller share of reported profit and free cash flow contributing very little relative to net income, raising questions about near-term cash efficiency and reinvestment/working-capital pressure.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	815.64B	808.45B	826.89B	780.94B	756.38B	629.37B
Gross Profit	251.87B	246.51B	267.52B	239.98B	241.66B	204.14B
EBITDA	139.79B	143.59B	141.17B	141.25B	144.91B	119.33B
Net Income	15.32B	7.47B	31.72B	42.45B	54.31B	37.26B
Balance Sheet
Total Assets	1.26T	1.30T	1.29T	1.25T	1.22T	1.09T
Cash, Cash Equivalents and Short-Term Investments	115.00B	108.32B	121.69B	134.62B	128.58B	155.80B
Total Debt	265.64B	284.92B	244.28B	282.02B	324.40B	307.44B
Total Liabilities	510.32B	548.33B	509.45B	518.33B	553.00B	511.41B
Stockholders Equity	730.13B	742.85B	764.28B	714.63B	647.09B	560.40B
Cash Flow
Free Cash Flow	0.00	936.00M	66.91B	68.75B	-20.93B	8.04B
Operating Cash Flow	0.00	98.59B	138.29B	129.30B	51.73B	78.22B
Investing Cash Flow	0.00	-98.13B	-76.01B	-63.15B	-68.62B	-65.59B
Financing Cash Flow	0.00	-16.30B	-82.50B	-64.96B	-12.05B	-47.45B

Kuraray Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1665.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3405, the sentiment is Positive. The current price of 1665.5 is below the 20-day moving average (MA) of 1776.35, below the 50-day MA of 1686.96, and below the 200-day MA of 1698.62, indicating a bullish trend. The MACD of 38.44 indicates Negative momentum. The RSI at 68.34 is Neutral, neither overbought nor oversold. The STOCH value of 71.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3405.

Kuraray Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4063	75 Outperform	¥12.17T	24.10	10.87%	2.17%	3.77%	0.35%
3407	68 Neutral	¥2.51T	15.94	7.48%	2.89%	3.55%	95.65%
4042	68 Neutral	¥868.55B	25.35	4.79%	4.21%	-1.21%	-27.21%
4188	66 Neutral	¥1.54T	17.55	1.09%	3.50%	-11.50%	25.86%
4005	65 Neutral	¥932.85B	9.58	8.79%	2.68%	-1.64%	―
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
3405	60 Neutral	¥566.51B	78.15	1.08%	3.37%	-1.94%	-84.08%

Kuraray Co Corporate Events

Kuraray Keeps Annual Dividend Steady at ¥54 Per Share for Fiscal 2025

Kuraray Co., Ltd. has proposed a year-end dividend of ¥27 per share for the fiscal year ended December 31, 2025, to be approved at its March 26, 2026 shareholders meeting. The payment, sourced from retained earnings and totaling ¥8,290 million, would be effective March 27, 2026.

The planned year-end dividend matches both the previous year’s payout and the company’s latest forecast, resulting in an unchanged annual dividend of ¥54 per share for 2025. Kuraray reaffirmed its policy of maintaining a total return ratio of at least 50% of net income attributable to owners and aims to hold steady or increase dividends, underscoring its commitment to stable shareholder returns.

The most recent analyst rating on (JP:3405) stock is a Sell with a Yen1540.00 price target. To see the full list of analyst forecasts on Kuraray Co stock, see the JP:3405 Stock Forecast page.

Kuraray Profit Slumps on Inventory Effects and Isoprene Impairment in FY2025

Kuraray reported fiscal 2025 net sales of ¥808.4 billion, down from ¥826.9 billion a year earlier, as operating income fell to ¥58.9 billion and ordinary income to ¥51.5 billion. Net income attributable to owners of the parent dropped sharply to ¥7.5 billion, mainly due to impairment losses in the Isoprene segment, despite relatively stable foreign exchange rates and lower domestic naphtha prices.

Management attributed the decline in operating income primarily to negative inventory valuation effects and lower sales volumes across its businesses. Compared with the company’s November 2025 forecast, results were broadly in line on sales and operating profit but significantly weaker at the bottom line, underscoring pressure on profitability in certain segments and highlighting ongoing challenges in demand and portfolio performance.

The most recent analyst rating on (JP:3405) stock is a Sell with a Yen1540.00 price target. To see the full list of analyst forecasts on Kuraray Co stock, see the JP:3405 Stock Forecast page.

Kuraray Marks 100th Anniversary With Higher Commemorative Dividend

Kuraray Co., Ltd., a Japanese specialty chemicals and advanced materials producer, is marking its 100th anniversary in 2026 with a one-off boost to shareholder returns. The company, which supplies high-value chemicals and materials to global industrial and consumer sectors, continues to emphasize stable shareholder rewards alongside its long-term growth strategy.

The board has approved commemorative dividends for the fiscal year ending December 31, 2026, raising both interim and year-end dividend forecasts to ¥32 per share, each including a ¥5 special payout. As a result, the total annual dividend is expected to increase to ¥64 per share from the prior forecast of ¥54, underscoring management’s intention to share the benefits of this milestone with investors and signaling confidence in the company’s financial position.

The most recent analyst rating on (JP:3405) stock is a Sell with a Yen1540.00 price target. To see the full list of analyst forecasts on Kuraray Co stock, see the JP:3405 Stock Forecast page.

Kuraray Launches ¥10 Billion Share Buyback to Boost Capital Efficiency

Kuraray Co., Ltd. is a Japanese chemical manufacturer specializing in advanced materials, synthetic resins, fibers, and performance materials that serve a wide range of industrial and consumer sectors. The company has articulated a capital policy that stresses improved capital efficiency, reduced cost of capital, and consistent shareholder returns through a combination of dividends and share repurchases.

The board of Kuraray has approved a share buyback of up to 8.0 million common shares, representing about 2.61% of outstanding shares, for a maximum total of ¥10 billion via market purchases between February 12 and May 31, 2026. The program, aligned with the company’s policy of maintaining a total shareholder return ratio of at least 50% of net income, is expected to support earnings per share and capital efficiency, with the company also planning to cancel the acquired treasury stock, thereby potentially enhancing value for existing shareholders.

The most recent analyst rating on (JP:3405) stock is a Sell with a Yen1540.00 price target. To see the full list of analyst forecasts on Kuraray Co stock, see the JP:3405 Stock Forecast page.

Kuraray Takes ¥25.6 Billion Impairment as Profit Undershoots Forecast but Keeps Dividend

Kuraray said it booked a ¥25.6 billion impairment loss on assets tied to its isoprene chemicals and styrenic thermoplastic elastomer operations for the year ended December 31, 2025, following a deterioration in the business environment and lower recoverable values. The company also recognized on a non-consolidated basis a ¥22.6 billion loss on valuation of shares in subsidiaries and a ¥13.1 billion allowance for loans to those subsidiaries, though these items are eliminated at the consolidated level.

Consolidated full-year results came in broadly in line with earlier forecasts for net sales, operating income and ordinary income, but net profit attributable to shareholders fell sharply short after the extraordinary losses, dropping to ¥7.47 billion and cutting earnings per share to ¥23.62. Despite the profit hit and weaker results versus the previous fiscal year, Kuraray is keeping its planned year-end dividend unchanged at ¥27 per share, signaling an intention to maintain shareholder returns while it absorbs the impact of the write-downs on its chemicals businesses.

The most recent analyst rating on (JP:3405) stock is a Sell with a Yen1540.00 price target. To see the full list of analyst forecasts on Kuraray Co stock, see the JP:3405 Stock Forecast page.

Kuraray Profit Plunges on Weaker Margins Despite Modest Sales Decline in 2025

Kuraray reported consolidated net sales of ¥808.4 billion for the fiscal year ended December 31, 2025, a 2.2% decline from the previous year, as profitability weakened across its operations. Operating income fell 30.8% to ¥58.9 billion and ordinary income dropped 36.8% to ¥51.5 billion, with net income attributable to owners of the parent plunging 76.5% to ¥7.5 billion, reflecting significant pressure on margins and returns.

Key profitability metrics deteriorated sharply, with return on equity sliding to 1.0% and operating margin down to 7.3%, compared with 4.3% and 10.3% respectively a year earlier. The steep fall in earnings, despite relatively modest top-line decline, signals rising costs or weaker pricing power, underscoring a more challenging operating environment for the specialty chemicals group and potentially dampening near-term shareholder returns.

The most recent analyst rating on (JP:3405) stock is a Sell with a Yen1540.00 price target. To see the full list of analyst forecasts on Kuraray Co stock, see the JP:3405 Stock Forecast page.