Nippon Felt Company Limited (3512) AI Stock Analysis

• Market Cap: ¥15.76B
• Dividend Yield: 2.41%
• Average Volume (3M): 15.25K
• Price to Earnings (P/E): 31.1
• Beta (1Y): 0.36
• 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: 67 Neutral
• Price Target: ¥998.00 ▲(41.76% Upside)
• Action: Downgraded Date: 01/07/26
• Date: Action: Downgraded 01/07/26

The score is driven primarily by a strong, low-leverage balance sheet and generally solid cash generation, offset by declining revenue and sharply weaker operating profitability. Technically, the stock is in a strong uptrend but momentum readings are stretched, and valuation is a headwind due to the high P/E versus a only moderate dividend yield.

Positive Factors

Low leverage / strong balance sheet

Minimal leverage and a very high equity ratio materially reduce solvency and refinancing risk. Over a 2–6 month horizon this balance sheet strength supports continued operations, discretionary investment, and capacity to weather cyclical weakness without needing external borrowing.

Stable gross margin and product niche

A steady ~30% gross margin indicates structural pricing or cost advantages in felt and industrial fabric manufacturing. Combined with a specialized product mix for industrial processes, this supports durable margin resilience even if volumes fluctuate, preserving core profitability over time.

Solid operating cash generation

Consistent operating cash flow and healthy cash conversion provide reliable internal funding for working capital and necessary capex. This cash generation capacity, together with low debt, sustains operations and strategic choices without dependence on volatile external financing.

Negative Factors

Declining revenue trend

A multi-year top-line contraction, highlighted by a 6.5% decline in 2025, undermines scale economics and raises the risk that fixed costs will press on margins. If demand or market share erosion persists, revenue weakness will constrain reinvestment and growth options.

Sharply weaker operating profitability

A rapid fall in EBIT margin signals deteriorating operational efficiency or adverse cost/price dynamics. Lower operating profitability reduces internal funding, weakens return on capital, and limits ability to absorb future price competition or commodity/cost shocks over the medium term.

Deteriorating free cash flow

A marked decline in free cash flow tightens discretionary liquidity for dividends, buybacks, and investment. Even with solid operating cash flow, reduced FCF increases sensitivity to capex or working capital needs and may force prioritization of essential spending over strategic projects.

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

Nippon Felt Company Limited generates revenue primarily through the sale of its felt and textile products to various industrial sectors. The company's revenue model is based on direct sales to manufacturers in key industries, including automotive and electronics, where felt is used for insulation, cushioning, and soundproofing. Additionally, Nippon Felt may engage in custom manufacturing services, providing tailored solutions to meet specific client needs, which can command premium pricing. The company also benefits from strategic partnerships with leading corporations in its targeted industries, enabling it to secure long-term contracts and stable revenue streams. Factors such as the growing demand for eco-friendly materials and advancements in textile technology further enhance its earning potential.

Nippon Felt Company Limited Financial Statement Overview

Summary

Financials are mixed: a very strong balance sheet (low debt-to-equity of 0.04 and high equity ratio) supports stability, but revenue has declined (including a 6.5% drop from 2024 to 2025) and profitability has weakened with EBIT margin falling to 2.1% in 2025. Cash generation is solid, though free cash flow has deteriorated, signaling pressure on discretionary liquidity.

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	3.17B	3.50B	3.25B	2.91B
EBITDA	891.65M	1.12B	1.23B	1.62B	1.24B	1.14B
Net Income	443.33M	429.90M	487.51M	750.10M	499.19M	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	109.10M	498.98M	1.01B	630.77M
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: Positive
• Last Price: 704.00
• 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:3512, the sentiment is Positive. The current price of 704 is below the 20-day moving average (MA) of 893.40, below the 50-day MA of 882.98, and above the 200-day MA of 627.90, indicating a bullish trend. The MACD of 8.25 indicates Positive momentum. The RSI at 55.48 is Neutral, neither overbought nor oversold. The STOCH value of 59.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	¥574.14B	20.33	13.63%	1.95%	-1.33%	9.21%
3106	75 Outperform	¥157.08B	13.38	―	2.66%	-1.63%	67.13%
3167	68 Neutral	¥158.63B	14.27	―	3.17%	3.99%	20.63%
3512	67 Neutral	¥15.76B	31.07	―	2.41%	-4.23%	-5.96%
3105	65 Neutral	¥278.88B	19.69	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	¥333.09B	-4.10	-20.43%	3.72%	-8.20%	―