Nippon Felt Company Limited (3512) AI Stock Analysis

• Market Cap: ¥16.72B
• Dividend Yield: 2.41%
• Average Volume (3M): 15.25K
• Price to Earnings (P/E): 23.3
• Beta (1Y): 0.28
• Revenue Growth: -4.23%
• EPS Growth: -5.96%
• Country: JP
• Employees: 570
• Sector: Industrials
• Sector Strength: 72
• Industry: Conglomerates
• EPS (TTM): 9.65
• Shares Outstanding: 18,342,089
• 10 Day Avg. Volume: 7,750
• 30 Day Avg. Volume: 15,253
• PEG Ratio: -2.09
• Price to Book (P/B): 0.43
• Price to Sales (P/S): 0.89
• P/FCF Ratio: 43.73
• 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: 73 Outperform
• Price Target: ¥1,195.00 ▲(69.74% Upside)
• Action: Upgraded Date: 03/12/26
• Date: Action: Upgraded 03/12/26

The score is driven primarily by a strong capital structure (minimal leverage and high equity ratio) and bullish price momentum (price above key moving averages with positive MACD). Offsetting factors include weakening profitability and margins, pressured free cash flow, and a less attractive valuation given a P/E of 23.3 and only a modest dividend yield (~1.87%).

Positive Factors

Strong balance sheet

Very low leverage and an equity ratio above 80% provide durable solvency and financial flexibility. This capital structure lowers refinancing risk, supports investment or M&A optionality, and cushions the firm through manufacturing cycles common in industrial consumables.

Stable gross margins

A persistently ~30% gross margin signals underlying product pricing power or consistent cost structure in felt-based consumables. Stable gross margins support long-term margin recovery if operating expenses are addressed and help preserve unit economics across cyclical industrial demand.

Robust operating cash flow

Consistent operating cash generation and healthy cash conversion from net income provide durable funding for working capital, routine capex, dividends, or restructuring. Strong OCF reduces reliance on external financing and supports strategic investments despite revenue pressure.

Negative Factors

Declining revenue

A multi-year top-line decline reduces scale benefits and raises questions about demand for core felt products or competitive positioning. Sustained revenue weakness makes it harder to leverage fixed costs, limits reinvestment capacity, and pressures long-term growth prospects.

Shrinking EBIT margin

A steep fall in operating profitability signals structural cost or pricing pressure. Lower EBIT reduces internal funding for capex and R&D, weakens return on capital, and makes the business more sensitive to input-cost inflation or further revenue drops over the medium term.

Material free cash flow decline

A marked decline in free cash flow limits the company's ability to finance growth initiatives, pay sustained dividends, or absorb shocks without altering capital allocation. Even with strong OCF, lower FCF constrains strategic optionality and could force prioritization of near-term liabilities.

Nippon Felt Company Limited Business Overview & Revenue Model

Company Description

Nippon Felt Co., Ltd. manufactures and sells press felts, shoe press belts, and industrial textile products in Japan and internationally. The company offers papermaking felts and pulp-making felts; felts for slate and building materials manufacturing; synthetic textiles for paper making or other industrial uses; industrial use felts; industrial tubular needle-felts for industrial use; industrial woven jackets; industrial detergents and industrial chemicals; and high-pressure shower equipment for paper-making. It is also involved in leasing and managing real estate properties, as well as producing and selling industrial machinery and anti-pollution devices. The company was founded in 1917 and is headquartered in Tokyo, Japan.

How the Company Makes Money

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Nippon Felt Company Limited Financial Statement Overview

Summary

Financials are mixed: a strong balance sheet (very low debt-to-equity of 0.04 and >80% equity ratio) supports stability, but the income statement shows weakening operations with declining revenue and notably shrinking EBIT margin (8.0% in 2023 to 2.1% in 2025). Cash generation is solid, yet free cash flow has materially declined, pressuring flexibility.

Income Statement

The company's gross profit margin has shown stability around 30% over the years. However, the net profit margin has decreased from 4.1% to 4.4% in recent years, indicating potential inefficiencies or increased expenses. Revenue has declined slightly over the years, with a notable drop of 6.5% from 2024 to 2025, affecting overall top-line growth. Despite this, the company maintains a reasonable EBIT margin, although it decreased from 8.0% in 2023 to 2.1% in 2025, suggesting operational challenges.

Balance Sheet

The balance sheet remains strong with a low debt-to-equity ratio of 0.04, reflecting minimal leverage risk. The company's equity ratio is high at over 80%, indicating a solid equity position and long-term solvency. Return on equity has decreased from 4.2% in 2023 to 2.1% in 2025, which may concern investors seeking high returns. Overall, the company maintains a strong capital structure with a healthy equity base.

Cash Flow

Operating cash flow remains robust, though it shows some volatility. Free cash flow has decreased significantly from previous years, indicating increased capital expenditure or reduced cash generation from operations. The operating cash flow to net income ratio remains healthy, demonstrating strong cash conversion, but the free cash flow to net income ratio has declined, suggesting potential liquidity constraints in capital allocation.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	9.62B	9.70B	10.08B	10.40B	9.84B	10.01B
Gross Profit	2.88B	3.09B	3.31B	3.61B	3.36B	3.02B
EBITDA	775.50M	743.24M	1.03B	1.38B	1.15B	873.07M
Net Income	442.54M	429.90M	487.51M	750.10M	499.18M	329.71M
Balance Sheet
Total Assets	24.70B	25.26B	25.07B	23.59B	22.79B	22.65B
Cash, Cash Equivalents and Short-Term Investments	3.41B	3.70B	3.96B	5.33B	5.06B	4.42B
Total Debt	800.00M	800.00M	801.46M	1.61B	1.62B	1.66B
Total Liabilities	4.21B	4.55B	4.70B	5.38B	5.39B	5.36B
Stockholders Equity	20.04B	20.24B	19.93B	17.81B	17.02B	16.96B
Cash Flow
Free Cash Flow	0.00	198.34M	111.80M	499.41M	1.01B	639.04M
Operating Cash Flow	0.00	1.06B	611.39M	1.06B	1.28B	1.05B
Investing Cash Flow	0.00	-753.61M	-934.50M	-562.01M	-251.25M	-690.90M
Financing Cash Flow	0.00	-623.28M	-1.33B	-262.46M	-431.97M	411.60M

Nippon Felt Company Limited Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 704.00
• 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:3512, the sentiment is Neutral. The current price of 704 is below the 20-day moving average (MA) of 950.95, below the 50-day MA of 919.94, and above the 200-day MA of 662.24, indicating a bullish trend. The MACD of 28.71 indicates Negative momentum. The RSI at 51.64 is Neutral, neither overbought nor oversold. The STOCH value of 43.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3512.

Nippon Felt Company Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5393	78 Outperform	¥541.43B	12.74	13.63%	1.95%	-1.33%	9.21%
3106	75 Outperform	¥140.41B	9.78	―	2.66%	-1.63%	67.13%
3512	73 Outperform	¥16.72B	23.32	―	2.41%	-4.23%	-5.96%
3167	68 Neutral	¥151.56B	9.03	―	3.17%	3.99%	20.63%
3105	65 Neutral	¥238.00B	14.72	8.35%	2.73%	3.35%	810.44%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
3401	53 Neutral	¥301.20B	-15.81	-20.43%	3.72%	-8.20%	―