Tokushu Tokai Paper Co., Ltd. (3708) AI Stock Analysis

• Market Cap: ¥58.02B
• Dividend Yield: 2.69%
• Average Volume (3M): 62.07K
• Price to Earnings (P/E): 14.3
• Beta (1Y): 0.47
• Revenue Growth: 6.26%
• EPS Growth: -11.38%
• Country: JP
• Employees: 1,750
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Paper, Lumber & Forest Products
• EPS (TTM): 26.89
• Shares Outstanding: 39,000,000
• 10 Day Avg. Volume: 51,490
• 30 Day Avg. Volume: 62,070
• PEG Ratio: -0.15
• Price to Book (P/B): 0.52
• Price to Sales (P/S): 0.43
• P/FCF Ratio: -36.32
• 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: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: ¥1,690.00 ▲(9.17% Upside)

Tokushu Tokai Paper Co., Ltd. shows strong financial performance with revenue growth and operational efficiency, but faces challenges with declining net profit margins and negative free cash flow. The technical analysis indicates a positive trend, and the valuation is reasonable with a decent dividend yield. These factors collectively contribute to a moderate overall stock score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, positioning the company for continued expansion.

Operational Efficiency

Improved gross margins reflect better cost management and operational efficiencies, enhancing long-term profitability potential.

Balance Sheet Health

A robust balance sheet with moderate leverage and strong equity base provides financial stability and flexibility for future investments.

Negative Factors

Declining Net Profit Margin

Falling net profit margins indicate challenges in maintaining profitability, which could impact long-term financial health if not addressed.

Negative Free Cash Flow

Negative free cash flow suggests difficulties in cash generation, potentially limiting the company's ability to invest in growth opportunities.

Earnings Decline

A significant drop in EPS growth can signal underlying issues in profitability and may affect investor confidence and future earnings potential.

Tokushu Tokai Paper Co., Ltd. Business Overview & Revenue Model

Company Description

Tokushu Tokai Paper Co., Ltd. (3708) is a prominent Japanese company specializing in the production and sale of high-quality paper products. The company operates primarily in the specialty paper sector, producing various types of paper used in packaging, printing, and industrial applications. With a commitment to innovation and sustainability, Tokushu Tokai Paper leverages advanced technology to create products that meet the diverse needs of its customers across different industries.

How the Company Makes Money

Tokushu Tokai Paper Co., Ltd. generates revenue through the manufacturing and sale of specialty paper products. Its primary revenue streams include the production of paper used in packaging, industrial applications, and various printing needs. The company benefits from partnerships with other manufacturers and suppliers, enhancing its distribution capabilities and broadening its customer base. Additionally, Tokushu Tokai Paper has focused on creating eco-friendly products, tapping into the growing demand for sustainable materials, which further contributes to its revenue. The company's ability to adapt to market trends and customer preferences, combined with its operational efficiencies, plays a crucial role in its overall profitability.

Tokushu Tokai Paper Co., Ltd. Financial Statement Overview

Summary

Tokushu Tokai Paper Co., Ltd. demonstrates strong revenue growth and operational efficiency, supported by a sound balance sheet with moderate leverage. However, declining net profit margins and negative free cash flow pose challenges. The company should focus on improving profitability and cash flow management to sustain its growth trajectory and financial health.

Income Statement

Tokushu Tokai Paper Co., Ltd. has shown consistent revenue growth over the past years, with a notable increase in total revenue from 86.5 billion yen in 2024 to 94.8 billion yen in 2025. The gross profit margin improved to 12.95% in 2025 from 11.98% in 2024, indicating better cost management. However, the net profit margin decreased from 5.30% in 2024 to 3.80% in 2025, suggesting challenges in maintaining profitability. The EBIT and EBITDA margins showed improvement, reflecting a stronger operational performance.

Balance Sheet

The company's balance sheet is robust, with a debt-to-equity ratio of 0.37, indicating a moderate level of leverage. The equity ratio is strong at 56.43%, showcasing a solid equity base. Although there is a slight increase in total debt, the return on equity (ROE) stands at 4.58%, reflecting a steady return for shareholders. The company's asset base and equity have grown, highlighting financial stability.

Cash Flow

The cash flow situation presents a mixed picture. Operating cash flow has decreased from 11.4 billion yen in 2024 to 8.77 billion yen in 2025, while free cash flow turned negative this year, indicating challenges in cash generation. The free cash flow to net income ratio is negative, highlighting the need for better cash flow management. Despite these issues, the operating cash flow to net income ratio remains healthy, suggesting that the company's operations are still generating cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	96.38B	94.80B	86.52B	84.13B	80.71B	76.40B
Gross Profit	12.79B	12.28B	10.37B	8.80B	11.76B	11.09B
EBITDA	12.23B	12.35B	12.52B	7.81B	13.80B	14.57B
Net Income	3.57B	3.61B	4.59B	4.13B	5.25B	5.59B
Balance Sheet
Total Assets	137.66B	139.44B	132.98B	123.35B	125.43B	128.09B
Cash, Cash Equivalents and Short-Term Investments	8.90B	11.38B	13.43B	10.30B	12.06B	13.53B
Total Debt	28.75B	29.17B	26.91B	24.41B	24.79B	24.82B
Total Liabilities	51.90B	53.60B	49.05B	44.77B	46.87B	47.81B
Stockholders Equity	79.26B	78.68B	77.01B	72.23B	72.29B	73.60B
Cash Flow
Free Cash Flow	594.00M	-1.13B	5.01B	-2.18B	2.19B	3.17B
Operating Cash Flow	2.49B	8.77B	11.40B	2.58B	9.58B	11.64B
Investing Cash Flow	-2.66B	-9.37B	-6.10B	-1.15B	-4.70B	893.00M
Financing Cash Flow	-1.53B	-1.50B	-2.58B	-3.18B	-6.42B	-9.24B

Tokushu Tokai Paper Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1548.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3708, the sentiment is Positive. The current price of 1548 is above the 20-day moving average (MA) of 1517.80, above the 50-day MA of 1506.28, and above the 200-day MA of 1339.53, indicating a bullish trend. The MACD of 13.27 indicates Negative momentum. The RSI at 56.87 is Neutral, neither overbought nor oversold. The STOCH value of 83.40 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3708.

Tokushu Tokai Paper Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
8032	75 Outperform	¥76.02B	36.84	―	3.19%	4.06%	-73.92%
3708	71 Outperform	¥58.02B	14.30	―	2.69%	6.26%	-11.38%
3865	66 Neutral	¥146.04B	12.79	4.52%	2.76%	-0.03%	120.35%
3864	64 Neutral	¥29.25B	8.65	3.95%	2.31%	-10.04%	43.13%
9274	64 Neutral	¥50.88B	7.60	―	4.53%	-0.37%	-19.68%
3877	62 Neutral	¥27.04B	37.23	―	3.70%	-2.18%	-77.82%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%

Tokushu Tokai Paper Co., Ltd. Corporate Events

Tokushu Tokai Paper Introduces ESOP Trust with Treasury Share Disposal

Tokushu Tokai Paper Co., Ltd. has announced a resolution to dispose of 288,000 treasury shares as part of introducing a stock grant ESOP trust system. This initiative is designed to motivate employees and align their interests with shareholders by fostering a sense of unity and encouraging contributions to the company’s long-term performance. The disposal is expected to have minimal impact on the stock market due to the controlled release of shares.

Tokushu Tokai Paper Co., Ltd. Introduces Stock Grant ESOP Trust to Boost Employee Engagement

Tokushu Tokai Paper Co., Ltd. announced the introduction of a Stock Grant ESOP Trust as an employee incentive plan. This initiative aims to align employees’ interests with shareholders by allowing them to benefit from the company’s share price appreciation, thereby enhancing motivation and unity within the group. The plan is expected to drive employees to contribute proactively to the company’s long-term performance and corporate value, while also involving them in management decisions through voting rights.

Tokushu Tokai Paper Reports Strong Financial Performance for First Half of 2025

Tokushu Tokai Paper Co., Ltd. reported a 2.9% increase in net sales for the six months ending September 30, 2025, compared to the previous year. The company also saw significant growth in operating income and profit attributable to owners, indicating improved financial performance. The company conducted a stock split, impacting earnings per share calculations, and maintained its dividend forecast, reflecting confidence in its financial stability and future growth prospects.

Tokushu Tokai Paper Co., Ltd. Revises Shareholder Benefit Program

Tokushu Tokai Paper Co., Ltd. announced a change to its shareholder benefit program, effective from March 2026. The adjustments involve altering the shareholding criteria for receiving benefits, which now require a higher number of shares to qualify for certain rewards. This change may impact shareholder engagement and the attractiveness of holding company shares over the long term.

Tokushu Tokai Paper Announces Merger with Subsidiary to Boost Functional Materials Business

Tokushu Tokai Paper Co., Ltd. has announced an absorption-type merger with its wholly-owned subsidiary, TT Trading Co., Ltd., effective April 1, 2026. This strategic move aims to consolidate management resources, enhance organizational efficiency, and expand the Functional Materials Business, thereby increasing corporate value in the medium to long term. The merger will streamline operations by integrating TT Trading’s specialty paper trading functions into the company’s Specialty Materials Business.