Sugai Chemical Industry Co., Ltd. (4120) AI Stock Analysis

• Market Cap: ¥3.32B
• Dividend Yield: 3.15%
• Average Volume (3M): 370.00
• Price to Earnings (P/E): 6.8
• Beta (1Y): 0.31
• Revenue Growth: 1.14%
• EPS Growth: 50.47%
• Country: JP
• Employees: 182
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 85.51
• Shares Outstanding: 1,373,000
• 10 Day Avg. Volume: 390
• 30 Day Avg. Volume: 370
• PEG Ratio: -0.33
• Price to Book (P/B): 0.42
• Price to Sales (P/S): 0.47
• P/FCF Ratio: -6.72
• 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: 71 Outperform
• Price Target: ¥2,935.00 ▲(31.03% Upside)

The score is driven primarily by solid underlying financial performance and a strong balance sheet, tempered by the recent net income and free cash flow decline. Valuation is a key positive with a low P/E and supportive dividend yield, while technicals show a strong uptrend but overbought conditions (high RSI) limit upside confidence near term.

Positive Factors

Specialty product mix / B2B focus

Sugai's strategic focus on higher value‑added specialty chemicals and intermediates underpins durable pricing power and customer stickiness in B2B industrial markets. This product mix supports higher margins and recurring demand from downstream manufacturers, helping revenue stability over months.

Multi-year revenue growth and stable margins

Consistent multi‑year revenue expansion paired with stable gross and strong EBIT/EBITDA margins indicates efficient operations and sustained product demand. This combination supports predictable operating cash generation and resilience against short cyclical swings over the coming quarters.

Relatively robust balance sheet

A moderate leverage profile and strong equity ratio provide financial flexibility to fund capex, maintain supply reliability for industrial customers, and withstand demand volatility. This balance sheet strength supports capital allocation for growth and preserves credit resilience over time.

Negative Factors

2025 net income decline

A drop in net income in 2025 signals underlying profitability pressure that may persist absent corrective actions. Reduced earnings can constrain reinvestment and dividend capacity, and may reflect margin or volume challenges that affect sustainable cash generation in the medium term.

Significant free cash flow drop and capex pressure

A notable fall in free cash flow driven by heavy capex reduces liquidity available for discretionary uses. If elevated investment levels persist without commensurate returns, FCF weakness can limit flexibility for dividends, debt reduction, or strategic initiatives across the next several quarters.

Declining return on equity

A falling ROE signals weakening capital efficiency, either from profit compression or an expanding equity base. Sustained declines can indicate deteriorating shareholder returns and may pressure management to improve margins or reallocate capital to restore long‑term profitability metrics.

Sugai Chemical Industry Co., Ltd. Business Overview & Revenue Model

Company Description

Sugai Chemical Industry Co., Ltd. manufactures and sells various chemicals in Japan. The company offers pharmaceutical intermediates that are used in manufacturing circulatory systems, respiratory systems, antimicrobial and antiviral, cancer, and central nervous system agents; and active ingredients and intermediates, such as fungicides, insecticides, herbicides, and veterinary pharmaceuticals. It also provides functional chemicals that are used in manufacturing of optical and electronic materials, resins and monomers, cosmetics, and fragrances; dye and pigment intermediaries; and surfactants. The company was formerly known as Sugai Chemical Factory and changed its name to Sugai Chemical Industry Co., Ltd. in 1952. Sugai Chemical Industry Co., Ltd. was founded in 1928 and is headquartered in Wakayama, Japan.

How the Company Makes Money

Sugai Chemical Industry Co., Ltd. generates revenue primarily through the sale of its specialty chemical products to a diverse range of industries. The company's revenue model is based on direct sales to manufacturers and distributors, providing them with essential raw materials for their production processes. Key revenue streams include long-term contracts with major clients in the automotive and construction sectors, as well as spot sales to smaller enterprises. Additionally, Sugai Chemical benefits from strategic partnerships with research institutions and industry leaders, enabling them to innovate and expand their product offerings, which in turn drives revenue growth. The company's focus on sustainable practices also attracts environmentally-conscious clients, contributing positively to its earnings.

Sugai Chemical Industry Co., Ltd. Financial Statement Overview

Summary

Solid multi-year revenue growth and strong EBIT/EBITDA margins support the score, but the 2025 decline in net income and a significant drop in free cash flow are meaningful near-term risks. The balance sheet remains relatively robust with moderate leverage and a strong equity ratio, though declining ROE bears watching.

Income Statement

Sugai Chemical Industry Co., Ltd. has demonstrated solid revenue growth over the years, with a notable increase from 2020 to 2024. Gross profit margins have been stable, indicating efficient cost management. However, there was a decline in net income in 2025, impacting the net profit margin. The EBIT and EBITDA margins are strong, reflecting healthy operational efficiency.

Balance Sheet

The company's balance sheet is relatively robust, with a moderate debt-to-equity ratio and a strong equity ratio, indicating financial stability. The return on equity has been declining, which could be a concern if it continues. Overall, the company maintains a balanced financial structure, although the decreasing net income affects ROE.

Cash Flow

Sugai Chemical Industry Co., Ltd. has experienced fluctuations in free cash flow, with a significant drop in 2025. The operating cash flow to net income ratio indicates that the company generates sufficient cash from its operations, but the recent decline in free cash flow needs attention. The capital expenditures have been substantial, impacting free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.88B	6.62B	7.62B	7.06B	6.23B	6.01B
Gross Profit	1.31B	1.44B	1.55B	1.53B	1.37B	1.30B
EBITDA	972.30M	997.01M	944.80M	1.21B	954.14M	734.12M
Net Income	283.83M	363.12M	489.11M	578.93M	404.47M	317.90M
Balance Sheet
Total Assets	10.71B	11.48B	11.38B	11.29B	11.21B	11.60B
Cash, Cash Equivalents and Short-Term Investments	857.81M	409.42M	731.01M	431.08M	693.99M	791.07M
Total Debt	1.02B	1.89B	1.71B	2.02B	2.50B	3.20B
Total Liabilities	3.22B	4.02B	4.12B	4.57B	4.83B	5.59B
Stockholders Equity	7.49B	7.45B	7.26B	6.72B	6.37B	6.01B
Cash Flow
Free Cash Flow	0.00	-465.36M	707.05M	315.88M	466.48M	-388.94M
Operating Cash Flow	0.00	71.85M	1.19B	931.90M	1.44B	245.25M
Investing Cash Flow	0.00	-543.51M	-495.88M	-658.30M	-948.86M	-634.30M
Financing Cash Flow	0.00	149.69M	-396.23M	-537.75M	-595.84M	599.01M

Sugai Chemical Industry Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2240.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4120, the sentiment is Positive. The current price of 2240 is below the 20-day moving average (MA) of 2369.90, below the 50-day MA of 2284.56, and above the 200-day MA of 2187.87, indicating a bullish trend. The MACD of 53.53 indicates Positive momentum. The RSI at 56.02 is Neutral, neither overbought nor oversold. The STOCH value of 18.92 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4120.

Sugai Chemical Industry Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4625	78 Outperform	¥3.85B	10.68	―	2.27%	1.79%	31.63%
4120	71 Outperform	¥3.32B	6.78	―	3.15%	1.14%	50.47%
4361	68 Neutral	¥1.83B	6.12	―	4.20%	-0.77%	-29.54%
4098	64 Neutral	¥3.48B	37.26	―	1.28%	-1.01%	―
5199	64 Neutral	¥2.56B	9.21	―	4.05%	-4.09%	59.57%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
5103	52 Neutral	¥3.41B	-12.92	―	―	-3.45%	56.08%