KH Neochem Co.,Ltd. (4189) AI Stock Analysis

• Market Cap: ¥115.56B
• Dividend Yield: 3.88%
• Average Volume (3M): 110.95K
• Price to Earnings (P/E): 14.3
• Beta (1Y): 0.77
• Revenue Growth: 2.61%
• EPS Growth: 30.29%
• Country: JP
• Employees: 829
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): 61.88
• Shares Outstanding: 37,149,400
• 10 Day Avg. Volume: 104,350
• 30 Day Avg. Volume: 110,953
• PEG Ratio: -3.35
• Price to Book (P/B): 1.27
• Price to Sales (P/S): 0.77
• P/FCF Ratio: 9.70
• 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): 325.6
• Revenue Forecast (FY): ¥134.70B

• Rating: 67 Neutral
• Price Target: ¥3,255.00 ▲(31.41% Upside)
• Action: Reiterated Date: 02/11/26
• Date: Action: Reiterated 02/11/26

The score is driven primarily by solid underlying financial stability (notably conservative leverage) but tempered by mixed operating performance and historically uneven free cash flow. Technicals are supportive of an uptrend but look overextended, while valuation is a meaningful positive with a moderate P/E and strong dividend yield.

Positive Factors

Strong balance sheet

Conservative leverage (D/E ~0.26) and growing equity provide durable financial flexibility in a cyclical chemicals sector. This balance-sheet strength supports capital spending, dividend continuity and stress absorption during downturns, reducing structural refinancing and liquidity risk.

Improved cash generation (2025)

A meaningful improvement in operating and free cash flow in 2025 shows the company can convert earnings to cash at scale. Durable cash generation supports reinvestment, steady dividends and deleveraging over the medium term, improving financial resilience versus prior weak years.

Diverse product and end-market exposure

A portfolio of higher alcohols, plasticizers and intermediates sold into construction, automotive, packaging and industrial customers reduces reliance on any single market. This product and end-market diversity supports steadier demand and long-term customer relationships, tempering cycle swings.

Negative Factors

Choppy revenue trend

Range-bound top line with a recent ~6% decline signals limited secular growth visibility. For a manufacturer reliant on volume and pricing, persistent revenue volatility constrains long-term capacity planning, margin recovery and sustained reinvestment programs.

Margin normalization from cycle peak

Net margins have normalized materially from cyclical highs, indicating weaker pricing power or less operating leverage. Lower sustainable margins reduce return on capital and limit the company's ability to fund growth or buffer downturns, making earnings more sensitive to raw material swings.

Uneven free cash flow history

Volatile free-cash-flow across recent years suggests working-capital swings or lumpy capex, complicating reliable capital allocation. This inconsistency raises the risk that dividends, buybacks or investment plans could be harder to sustain through adverse cycles.

KH Neochem Co.,Ltd. Business Overview & Revenue Model

Company Description

KH Neochem Co., Ltd. researches, manufactures, and sells petrochemical products in Japan and internationally. It offers a range of chemical products, such as alcohols, esters, ketones, glycol ethers, synthetic fatty acids, aldehydes, diols, hydrocarbons, and functional monomers. The company provides basic chemicals, including butyl alcohol and acetate, 2-ethyl hexyl alcohol, and isononyl alcohol for use in paints, inks, thinners, detergents, plasticizer raw materials, and resin raw materials. It also offers performance materials, such as 2-ethyl hexanoic and isononanoic acid, diacetone acrylamide, and 1,3-butylene glycol for use in lubricants, water-borne paints, and cosmetics. In addition, the company provides electronic materials comprising propylene glycol monomethyl ether acetate–P, and propylene glycol monomethyl ether-P for LCD panels and semiconductors. KH Neochem Co., Ltd. was founded in 1966 and is headquartered in Tokyo, Japan.

How the Company Makes Money

KH Neochem generates revenue through the production and sale of its specialty chemical products. Its primary revenue streams include the sale of fine chemicals, which are utilized in various applications across multiple industries. The company maintains strong partnerships with key players in the pharmaceutical and electronics sectors, which contribute significantly to its earnings. Additionally, KH Neochem invests in research and development to innovate and expand its product offerings, thereby enhancing its market position and driving sales growth. The company's focus on high-quality products and customer service further solidifies its revenue generation capabilities.

KH Neochem Co.,Ltd. Financial Statement Overview

Summary

Balance sheet strength is the key positive (conservative and improving leverage; steady low-teens ROE). Offsetting this, income statement trends are mixed with a ~6% revenue decline in 2025 and margins well below the 2021 peak, while cash flow has been volatile despite a strong 2025 rebound and improved conversion.

Income Statement

Revenue has been broadly range-bound, with modest growth in 2024 followed by a ~6% decline in 2025, indicating a choppy demand/pricing backdrop. Profitability remains solid for the sector, with 2025 gross margin ~22% and net margin ~6.8%, but margins are well below the 2021 peak (net margin ~11.7%), pointing to a less favorable cycle and weaker operating leverage versus prior years. Overall, earnings quality looks acceptable, but the trajectory is mixed with recent top-line contraction and lower peak-to-trough profitability.

Balance Sheet

Leverage is conservative and improving versus earlier years: debt-to-equity is ~0.26 in 2025 (down from ~0.49 in 2020), providing balance-sheet flexibility in a cyclical chemicals environment. Equity has grown over time and returns on equity are steady in the low-teens (~11% in 2025), though below the outsized 2021 level (~25%). The main limitation is that returns have normalized, suggesting less efficient capital deployment than at the cycle peak, but overall financial risk appears well-contained.

Cash Flow

Cash generation is uneven: free cash flow swung from deeply negative in 2022 and slightly negative in 2024 to strongly positive in 2023 and 2025 (about ¥9.1B in 2025). Operating cash flow improved meaningfully in 2025 (about ¥13.8B) and free cash flow covered a majority of net income (~66%), but the history of negative free cash flow in multiple years suggests working-capital and/or capital spending volatility. Net-net, current-year conversion is healthy, but consistency remains a key watch item.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	122.59B	115.10B	119.76B	115.22B	114.88B	117.11B
Gross Profit	26.90B	24.87B	25.25B	21.94B	24.45B	32.23B
EBITDA	18.72B	17.32B	17.00B	14.46B	16.01B	24.19B
Net Income	8.99B	7.80B	8.36B	6.83B	8.07B	13.69B
Balance Sheet
Total Assets	125.88B	130.10B	131.46B	124.50B	131.25B	122.07B
Cash, Cash Equivalents and Short-Term Investments	5.40B	6.72B	7.16B	9.68B	10.93B	16.93B
Total Debt	20.63B	18.29B	19.20B	16.39B	22.52B	20.16B
Total Liabilities	55.23B	57.47B	59.54B	58.01B	69.18B	64.57B
Stockholders Equity	67.80B	69.68B	69.09B	63.74B	59.35B	54.92B
Cash Flow
Free Cash Flow	0.00	9.13B	-1.45B	7.94B	-5.36B	13.00B
Operating Cash Flow	0.00	13.78B	6.98B	13.20B	5.13B	17.40B
Investing Cash Flow	0.00	-4.63B	-8.90B	-4.94B	-10.08B	-4.39B
Financing Cash Flow	0.00	-9.57B	-645.00M	-9.50B	-1.08B	-5.17B

KH Neochem Co.,Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2477.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4189, the sentiment is Positive. The current price of 2477 is below the 20-day moving average (MA) of 2905.65, below the 50-day MA of 2666.51, and below the 200-day MA of 2587.29, indicating a bullish trend. The MACD of 123.96 indicates Negative momentum. The RSI at 74.41 is Negative, neither overbought nor oversold. The STOCH value of 78.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4189.

KH Neochem Co.,Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5013	78 Outperform	¥43.82B	8.53	―	3.53%	-3.45%	30.52%
4045	73 Outperform	¥204.68B	16.43	4.41%	3.80%	-1.50%	-32.46%
4042	68 Neutral	¥868.55B	25.35	4.79%	4.21%	-1.21%	-27.21%
4189	67 Neutral	¥115.56B	14.28	―	3.88%	2.61%	30.29%
4970	65 Neutral	¥91.59B	35.93	―	0.67%	10.18%	-14.36%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
3405	60 Neutral	¥566.51B	78.15	1.08%	3.37%	-1.94%	-84.08%

KH Neochem Co.,Ltd. Corporate Events

KH Neochem Lifts Dividends as Profitability Set to Improve Despite Flat Sales

KH Neochem reported a slight decline in performance for the fiscal year ended December 31, 2025, with net sales down 3.9% year on year to ¥115.1 billion and operating income falling 7.8% to ¥11.2 billion, while net income attributable to owners of the parent decreased 6.7% to ¥7.8 billion. Despite softer profits, the company maintained a solid financial position, with total assets of ¥130.1 billion, an equity ratio of 53.6%, and strong operating cash flow of ¥13.8 billion that comfortably funded investments and higher shareholder returns. The annual dividend was raised from ¥90 to ¥105 per share for 2025, lifting the payout ratio to 48.1%, and management plans a further increase to ¥110 per share in 2026, signaling continued commitment to shareholder returns. For the 2026 fiscal year, KH Neochem forecasts marginally lower full-year sales of ¥114.0 billion but expects operating income to rise 20.0% and net income to grow 11.5% to ¥8.7 billion, implying improved profitability and a more efficient earnings structure even in a flat or slightly weaker revenue environment.

The most recent analyst rating on (JP:4189) stock is a Hold with a Yen2798.00 price target. To see the full list of analyst forecasts on KH Neochem Co.,Ltd. stock, see the JP:4189 Stock Forecast page.

KH Neochem Cuts FY2025 Earnings Forecast on Weak Demand but Signals Profit Recovery in 2026

KH Neochem has cut its full-year consolidated forecast for the fiscal year ending December 31, 2025, trimming expected net sales from 127.4 billion yen to 115.0 billion yen and lowering projected operating income, ordinary income and net income by roughly 20–23% versus its previous outlook, bringing all major profit metrics below FY2024 levels. The downgrade reflects weak domestic demand and intensified competition from low-cost imports in basic chemicals, as well as a sharper-than-expected downturn in performance materials following a post-regulation demand recoil in the U.S. and a temporary slowdown in the air conditioner market linked to reduced impact from China’s appliance replacement subsidies, which has weighed on sales of refrigeration lubricant raw materials; nevertheless, the company is maintaining its dividend forecast for FY2025 and currently anticipates a recovery in FY2026 operating profit to around 13 billion yen, suggesting expectations of gradual operational improvement despite near-term headwinds.

The most recent analyst rating on (JP:4189) stock is a Hold with a Yen2772.00 price target. To see the full list of analyst forecasts on KH Neochem Co.,Ltd. stock, see the JP:4189 Stock Forecast page.