Lonseal Corporation (4224) AI Stock Analysis

• Market Cap: ¥10.44B
• Dividend Yield: 3.73%
• Average Volume (3M): 8.67K
• Price to Earnings (P/E): 45.5
• Beta (1Y): 0.42
• Revenue Growth: 3.06%
• EPS Growth: -75.19%
• Country: JP
• Employees: 423
• Sector: Industrials
• Sector Strength: 72
• Industry: Construction
• EPS (TTM): 73.06
• Shares Outstanding: 4,625,309
• 10 Day Avg. Volume: 8,920
• 30 Day Avg. Volume: 8,670
• PEG Ratio: -5.53
• Price to Book (P/B): 0.37
• Price to Sales (P/S): 0.33
• P/FCF Ratio: 9.28
• 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: 65 Neutral
• Price Target: ¥2,435.00 ▲(30.49% Upside)
• Action: Reiterated Date: 07/29/25
• Date: Action: Reiterated 07/29/25

The stock score is primarily driven by the company's strong financial stability, evident in its low leverage and high equity. However, profitability challenges and a high P/E ratio raise concerns. While the technical analysis suggests strong bullish momentum, overbought conditions could lead to a correction.

Positive Factors

Low leverage and high equity ratio

Very low leverage and a ~73% equity ratio provide durable financial flexibility, lowering refinancing and interest risk. This balance sheet strength supports capital allocation for maintenance, targeted investment, and downturn resilience, enabling the firm to withstand sector cyclicality over months.

Positive operating and free cash flow

Sustained positive operating and free cash flow indicate the core business generates cash to fund operations and returns. Even with recent declines, continued positive cash generation supports working capital, modest reinvestment, and distribution capacity, underpinning medium-term financial stability.

Stable revenue growth and strong gross margin

Consistent top-line growth and a ~35% gross margin reflect durable product economics and effective cost control in manufacturing. These fundamentals suggest the company retains pricing power and production efficiency in institutional markets, supporting margin sustainability despite downstream pressures.

Negative Factors

Severe net profitability decline

A collapse in net margin to near zero materially curtails retained earnings and returns to shareholders. Persistently low net profitability reduces funds for strategic investment, weakens ROE recovery prospects, and signals margin erosion that could persist absent structural cost or pricing fixes.

Declining cash generation trends

Falling operating and free cash flow point to weakening cash conversion and operational strain. Over a multi-month horizon this reduces capacity for capex, working capital flexibility, and buffer against demand shocks, forcing trade-offs between investment, dividends, and balance sheet repairs.

High exposure to construction cycle demand

Heavy reliance on non-residential construction and renovation links revenue to macro and public-sector spending cycles. That structural sensitivity raises revenue volatility risk across quarters, limiting predictability of order flows and making medium-term growth contingent on sector activity and public budgets.

Lonseal Corporation Business Overview & Revenue Model

Company Description

Lonseal Corporation manufactures and sells plastic products in Japan and internationally. The company offers flooring materials; sheet waterproof materials; antivirus, antibacterial, deodorizing, and contamination-proof wall materials, as well as products for sick building syndrome; and flexible, rigid, and antiviral PVC films, as well as flexible acrylic films for use in various industrial purposes. It also provides floor coverings for railroad vehicles; floor coating materials for buses, specially equipped vehicles, and cars; substrate films for semiconductors and electronic components; and housing material products. Lonseal Corporation was founded in 1928 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Lonseal Corporation generates revenue primarily through the sale of its flooring products, which include vinyl sheets, tiles, and custom flooring solutions. The company’s revenue model is built on direct sales to distributors, contractors, and end-users, as well as partnerships with contractors and architects to specify its products in construction projects. Key revenue streams include sales from commercial flooring projects, maintenance of existing contracts, and the expansion into new markets. Additionally, Lonseal invests in marketing and branding to enhance product visibility and attract new clients, further contributing to its earnings.

Lonseal Corporation Financial Statement Overview

Summary

Lonseal Corporation demonstrates strong financial stability with minimal leverage and high equity. However, recent profitability challenges impact its income statement performance. The company shows resilience in maintaining positive cash flow, although there are signs of operational inefficiencies.

Income Statement

Lonseal Corporation exhibits a stable revenue growth trajectory with a 2% increase in the latest year. The gross profit margin remains strong at approximately 35%, indicating effective cost management. However, a significant drop in net profit margin from 4% to 0.06% raises concerns about profitability. The declining EBIT and EBITDA margins reflect operational challenges, reducing overall performance.

Balance Sheet

The company maintains a robust financial position with a low debt-to-equity ratio of 0.02, suggesting minimal leverage risk. The equity ratio is strong at around 73%, indicating financial stability. Return on equity decreased sharply from 4.4% to 0.07%, reflecting recent profitability issues, but the overall balance sheet remains solid with high equity.

Cash Flow

Operating cash flow remains positive, although it decreased from the previous year, reflecting some operational strain. The free cash flow is positive, but down from last year, indicating reduced cash generation. The company sustains a favorable operating cash flow to net income ratio, but declining free cash flow growth suggests the need for improved cash management.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	21.82B	21.43B	21.02B	19.56B	18.13B	17.17B
Gross Profit	7.80B	7.50B	7.38B	6.70B	7.08B	6.78B
EBITDA	996.75M	852.00M	1.76B	1.10B	1.88B	1.65B
Net Income	124.00M	13.00M	835.00M	448.00M	965.00M	872.00M
Balance Sheet
Total Assets	26.10B	25.90B	26.43B	25.34B	24.75B	23.90B
Cash, Cash Equivalents and Short-Term Investments	7.54B	7.55B	7.18B	6.44B	6.80B	7.00B
Total Debt	535.00M	494.00M	582.00M	682.00M	773.00M	1.54B
Total Liabilities	7.21B	6.89B	7.28B	7.09B	6.79B	6.69B
Stockholders Equity	18.89B	19.02B	19.15B	18.25B	17.96B	17.21B
Cash Flow
Free Cash Flow	0.00	762.00M	1.04B	-105.00M	1.08B	19.00M
Operating Cash Flow	0.00	1.13B	1.49B	341.00M	1.73B	1.66B
Investing Cash Flow	0.00	-474.00M	-468.00M	-450.00M	-666.00M	-1.67B
Financing Cash Flow	0.00	-347.00M	-302.00M	-316.00M	-1.30B	-378.00M

Lonseal Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1866.00
• 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:4224, the sentiment is Positive. The current price of 1866 is below the 20-day moving average (MA) of 2139.85, below the 50-day MA of 2020.64, and above the 200-day MA of 1835.29, indicating a bullish trend. The MACD of 80.45 indicates Negative momentum. The RSI at 70.89 is Negative, neither overbought nor oversold. The STOCH value of 87.26 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4224.

Lonseal Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7971	79 Outperform	¥42.72B	10.59	―	3.59%	6.91%	13.17%
7949	77 Outperform	¥52.96B	18.24	―	3.74%	3.70%	12.26%
7943	66 Neutral	¥123.62B	35.48	―	3.53%	-0.58%	-46.15%
5930	66 Neutral	¥141.07B	11.40	12.89%	3.40%	2.98%	41.11%
4224	65 Neutral	¥10.44B	45.49	―	3.73%	3.06%	-75.19%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
5936	63 Neutral	¥6.23B	8.23	―	4.13%	2.76%	-10.23%