Dainichiseika Color & Chemicals Mfg.Co., Ltd. (4116) AI Stock Analysis

• Market Cap: ¥90.80B
• Dividend Yield: 3.04%
• Average Volume (3M): 35.30K
• Price to Earnings (P/E): 12.6
• Beta (1Y): 0.92
• Revenue Growth: 1.57%
• EPS Growth: -33.97%
• Country: JP
• Employees: 3,634
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 171.72
• Shares Outstanding: 18,113,110
• 10 Day Avg. Volume: 27,040
• 30 Day Avg. Volume: 35,296
• PEG Ratio: 0.03
• Price to Book (P/B): 0.40
• Price to Sales (P/S): 0.41
• P/FCF Ratio: -40.54
• 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: 76 Outperform
• Price Target: ¥5,717.00 ▲(36.93% Upside)
• Action: Reiterated Date: 10/23/25
• Date: Action: Reiterated 10/23/25

Dainichiseika's strong financial performance, characterized by stable revenue growth and a robust balance sheet, is the primary driver of its stock score. The attractive valuation with a low P/E ratio and high dividend yield further enhances its appeal. Technical indicators support a positive outlook, although recent cash flow challenges need attention for sustained growth.

Positive Factors

Strong balance sheet

A 65.03% equity ratio and falling leverage indicate durable financial resilience. A strong equity base reduces refinancing risk, supports capital allocation for R&D and capex, and provides buffer through industry cycles, enabling strategic investments without excessive debt.

Improved profitability

A large year-over-year rise in net income signals meaningful improvement in underlying earnings power and cost management. Sustained higher profitability can fund reinvestment, support dividends or debt reduction, and strengthen internal financing capacity over the medium term.

Specialized product portfolio

A focus on pigments and functional chemicals creates technical barriers and customer stickiness across plastics and industrial applications. This niche specialty-chemicals position supports stable demand, longer customer relationships, and the ability to extract premium pricing versus commodity peers.

Negative Factors

Negative free cash flow

A shift to negative free cash flow undermines the company’s ability to self-fund capex, pay consistent dividends, or accelerate deleveraging. Even with improved earnings, weak cash conversion increases reliance on external financing and constrains strategic flexibility over the medium term.

Recent revenue weakness

A reported negative revenue growth metric indicates recent demand softness or volume decline. If the trend persists it can erode gross margins and limit the payoff from operational improvements, making profit sustainability and cash recovery harder across the next several quarters.

Earnings and margin volatility

Large swings in EPS and noted EBIT margin variability point to operational volatility. Such earnings instability complicates budgeting, increases forecast risk, and can force conservative capital allocation, reducing ability to commit to long-term projects or consistent shareholder returns.

Dainichiseika Color & Chemicals Mfg.Co., Ltd. Business Overview & Revenue Model

Company Description

Dainichiseika Color & Chemicals Mfg. Co., Ltd. manufactures and sells a range of pigments and colorants. It provides inorganic, organic, and processed pigments for applications, including paints, printing inks, and information display and recording materials; colorants for industries comprising mass colorants for synthetic fibers, pigmented printing agents, and colorants for paper and construction materials; and functional materials for polyvinyl chloride, high-performance fluororesin, and various thermoplastic and thermosetting resins, as well as for electronics and information materials, automotive, and interior construction materials fields. The company also offers UV and EB curable coating materials, decorative, and functional coating materials; and polyurethane and colorants used in synthetic leather and molded products, coating agents, and adhesives, as well as imide-based resins. In addition, it provides Chitosan, a polymer product made from crab shells, as well as its derivatives; functional inks and offset printing inks used in paper media, such as flyers, books, and packaging materials; gravure inks; and coating agents and flexographic printing inks. The company was founded in 1931 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Dainichiseika generates revenue primarily through the sale of its wide range of chemical products, including pigments and specialty chemicals, to various industries such as paints, coatings, and plastics. The company leverages its expertise in color and chemical technology to develop high-performance products that command premium pricing in the market. Key revenue streams include direct sales to manufacturers, long-term contracts with large clients, and partnerships with distributors. Additionally, the company may benefit from research and development collaborations that lead to the commercialization of new products, further enhancing its earnings potential.

Dainichiseika Color & Chemicals Mfg.Co., Ltd. Financial Statement Overview

Summary

Dainichiseika exhibits a strong financial position with stable revenue growth and improving profitability. The balance sheet remains robust with decreasing leverage, enhancing the company's financial resilience. However, recent cash flow issues need to be addressed to ensure long-term sustainability.

Income Statement

The company exhibits strong revenue growth of 4.12% in the latest year, with an impressive jump in net income from 3.66 billion to 10.29 billion. The gross profit margin improved slightly, indicating efficient cost management. However, past fluctuations in EBIT margin suggest some volatility in operational efficiency.

Balance Sheet

The balance sheet is solid with a healthy equity ratio of 65.03% and a decreasing debt-to-equity ratio, indicating reduced financial leverage and increased financial stability over the years. The company's strong equity base supports a favorable return on equity of 8.04%.

Cash Flow

Cash flow stability is a concern, with free cash flow turning negative in the latest year. The operating cash flow to net income ratio has weakened, suggesting challenges in converting earnings into cash. However, the company has historically maintained positive operating cash flow, indicating potential for recovery.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	125.12B	124.76B	122.00B	138.49B	155.11B	170.39B
Gross Profit	25.98B	25.22B	21.31B	22.22B	23.78B	28.66B
EBITDA	14.04B	19.54B	8.87B	13.52B	9.57B	9.89B
Net Income	11.26B	10.29B	2.01B	6.34B	3.98B	3.88B
Balance Sheet
Total Assets	196.87B	196.78B	192.76B	197.72B	187.30B	190.70B
Cash, Cash Equivalents and Short-Term Investments	22.45B	24.25B	24.76B	36.65B	29.91B	23.52B
Total Debt	20.83B	21.04B	31.00B	42.70B	41.73B	42.97B
Total Liabilities	67.55B	66.28B	78.47B	94.06B	91.62B	94.65B
Stockholders Equity	127.00B	128.01B	112.06B	101.90B	93.80B	94.10B
Cash Flow
Free Cash Flow	0.00	-1.27B	-2.24B	4.26B	6.98B	-7.90B
Operating Cash Flow	0.00	4.17B	3.00B	11.52B	12.83B	266.00M
Investing Cash Flow	0.00	1.42B	-2.19B	-3.77B	-3.55B	-6.92B
Financing Cash Flow	0.00	-7.00B	-3.84B	-358.00M	-3.03B	-1.18B

Dainichiseika Color & Chemicals Mfg.Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4175.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4116, the sentiment is Positive. The current price of 4175 is below the 20-day moving average (MA) of 4722.25, below the 50-day MA of 4453.40, and above the 200-day MA of 3783.80, indicating a bullish trend. The MACD of 166.63 indicates Negative momentum. The RSI at 79.31 is Negative, neither overbought nor oversold. The STOCH value of 84.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4116.

Dainichiseika Color & Chemicals Mfg.Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4633	77 Outperform	¥134.02B	11.39	―	3.72%	5.40%	14.80%
4116	76 Outperform	¥90.80B	12.64	―	3.04%	1.57%	-33.97%
4611	74 Outperform	¥42.32B	5.50	―	3.70%	14.83%	51.42%
4635	71 Outperform	¥24.68B	10.51	―	3.61%	8.85%	110.05%
4078	70 Outperform	¥65.80B	15.82	―	4.37%	-1.09%	―
4119	66 Neutral	¥7.58B	-8.15	―	2.84%	37.67%	-117.29%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%