Kawaguchi Chemical Industry Co., Ltd. (4361) AI Stock Analysis

• Market Cap: ¥1.83B
• Dividend Yield: 4.2%
• Average Volume (3M): 1.80K
• Price to Earnings (P/E): 6.1
• Beta (1Y): 0.66
• Revenue Growth: -0.77%
• EPS Growth: -29.54%
• Country: JP
• Employees: 171
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 124.80
• Shares Outstanding: 1,220,000
• 10 Day Avg. Volume: 3,060
• 30 Day Avg. Volume: 1,800
• PEG Ratio: -0.52
• Price to Book (P/B): 0.56
• Price to Sales (P/S): 0.20
• P/FCF Ratio: 18.91
• 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: 68 Neutral
• Price Target: ¥1,846.00 ▲(29.27% Upside)

The score is driven by attractive valuation (low P/E and solid yield) and strong technical momentum (trading above major moving averages with positive MACD). Offsetting these positives, financial performance is mixed with a 2025 revenue decline, modest profitability, relatively high leverage, and historically volatile cash flow despite a notable 2025 rebound.

Positive Factors

Improved cash generation (2025)

A return to positive OCF and FCF in 2025 improves the firm's ability to service debt, fund working capital and necessary capex without relying on external financing. Sustained cash conversion would materially reduce rollover and liquidity risk over the next several quarters.

Strengthening capital base

A growing equity base and historically improving debt-to-equity provide a firmer capital foundation. This enhances resilience to cyclical revenue swings, supports working capital needs and gives management more flexibility to invest or withstand short-term margin pressure in coming months.

Niche specialty-chemical franchise

Concentration on rubber additives and processing agents targets durable industrial end-markets (automotive, industrial goods), implying technical know-how, recurring formulations demand and customer stickiness. Such niche specialization tends to sustain steady volume streams over cycles.

Negative Factors

Declining revenue (2025)

A significant top-line drop in 2025 signals demand softness or lost volumes in key end-markets. Persistent revenue contraction pressures fixed-cost absorption, restricts margin expansion and can erode bargaining power with suppliers and customers over the medium term.

Elevated leverage and rising debt

Material leverage with rising absolute debt increases sensitivity to earnings and cash-flow volatility. Higher interest and principal commitments reduce strategic flexibility, constrain capital allocation and elevate refinancing risk if operating performance weakens in the next several quarters.

Volatile cash generation and past negative FCF

Wide swings in operating cash flow and a recent year of negative free cash flow indicate inconsistent cash conversion. This irregularity complicates reinvestment planning, dividend sustainability and debt servicing, leaving the company exposed if margins or volumes soften again.

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

Company Description

Kawaguchi Chemical Industry Co., Ltd manufactures and sells fine chemicals in Japan. The company offers organic rubber chemicals, such as vulcanization accelerators, antioxidants, curing agents, and other rubber chemicals; and plastic chemicals, including antioxidants and polymerization inhibitors. It also provides dye pigment, pharmaceutical, and agrochemical intermediates; photo chemicals; and lubricant additives and corrosion inhibitors. Kawaguchi Chemical Industry Co., Ltd was founded in 1935 and is headquartered in Chiyoda, Japan.

How the Company Makes Money

Kawaguchi Chemical Industry Co., Ltd. generates revenue through the sale of its chemical products, which include specialty resins, adhesives, and coatings that serve various industrial applications. The company has established key revenue streams through long-term contracts with major manufacturers in sectors such as automotive and electronics, where reliable and high-performance materials are crucial. Additionally, Kawaguchi Chemical invests in research and development to create innovative products that meet specific customer demands, thereby enhancing its market competitiveness. Strategic partnerships with other chemical manufacturers and suppliers further bolster its revenue by expanding its distribution channels and product offerings. Overall, the company’s ability to adapt to market trends and customer needs plays a significant role in driving its earnings.

Kawaguchi Chemical Industry Co., Ltd. Financial Statement Overview

Summary

Financials are serviceable but uneven. Revenue declined in 2025 (-10.6%) and margins are modest (2024 net margin ~3.8%). Leverage remains relatively high (debt-to-equity ~1.07x in 2024) and debt rose in 2025, while cash flow has been volatile despite a strong 2025 rebound (OCF ¥830M; FCF ¥93M) following weak 2024 (OCF ¥143M; FCF -¥214M).

Income Statement

Revenue growth has been inconsistent, with a decline in 2025 (-10.6%) after modest growth in 2022–2024. Profitability is positive but not expanding: net income dipped in 2025 (¥298M vs. ¥336M in 2024), and 2024 margins were modest (gross margin ~18.1%, net margin ~3.8%, EBITDA margin ~9.6%). Overall, the business shows steady baseline profitability, but limited margin strength and a weaker latest-year top-line trend temper the outlook.

Balance Sheet

Leverage is elevated for the earnings profile: debt-to-equity was ~1.07x in 2024 (improving from ~1.65x in 2020), but total debt rose in 2025 (¥3.52B vs. ¥3.09B in 2024). Equity has been building over time (¥1.97B in 2020 to ¥3.13B in 2025), supporting a stronger capital base, and returns on equity were solid in 2024 (~11.7%). Still, the balance sheet remains meaningfully debt-funded, which increases sensitivity to earnings or cash-flow volatility.

Cash Flow

Cash generation has been volatile. Operating cash flow swung from strong years (e.g., 2021 ¥785M; 2023 ¥470M) to weak/negative in 2022 (-¥21M) and very low in 2024 (¥143M), alongside negative free cash flow in 2024 (-¥214M). 2025 shows a sharp rebound in operating cash flow (¥830M) and positive free cash flow (¥93M), but the multi-year variability and the 2024 dip indicate uneven cash conversion and reinvestment pressure.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	8.82B	8.81B	8.92B	8.61B	8.37B	7.94B
Gross Profit	1.59B	1.64B	1.61B	1.51B	1.50B	1.57B
EBITDA	762.65M	868.62M	858.26M	765.47M	697.01M	789.17M
Net Income	239.77M	298.39M	336.27M	255.53M	218.86M	281.27M
Balance Sheet
Total Assets	9.01B	8.87B	8.53B	8.34B	8.32B	7.89B
Cash, Cash Equivalents and Short-Term Investments	1.38B	1.21B	744.64M	1.04B	910.92M	1.32B
Total Debt	3.64B	3.52B	3.09B	3.26B	3.17B	3.20B
Total Liabilities	6.05B	5.73B	5.65B	5.70B	5.91B	5.64B
Stockholders Equity	2.96B	3.13B	2.88B	2.64B	2.41B	2.25B
Cash Flow
Free Cash Flow	0.00	93.00M	-214.14M	91.86M	-271.47M	520.95M
Operating Cash Flow	0.00	829.95M	143.37M	469.93M	-20.80M	785.46M
Investing Cash Flow	0.00	-738.67M	-305.08M	-370.24M	-242.94M	-245.70M
Financing Cash Flow	0.00	359.98M	-138.97M	20.86M	-162.17M	-119.43M

Kawaguchi Chemical Industry Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1428.00
• 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:4361, the sentiment is Neutral. The current price of 1428 is below the 20-day moving average (MA) of 1534.15, below the 50-day MA of 1481.21, and above the 200-day MA of 1400.98, indicating a neutral trend. The MACD of 24.15 indicates Positive momentum. The RSI at 47.76 is Neutral, neither overbought nor oversold. The STOCH value of 7.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:4361.

Kawaguchi 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%
4623	72 Outperform	¥6.56B	10.51	―	3.50%	-8.27%	-3.23%
4361	68 Neutral	¥1.83B	6.12	―	4.20%	-0.77%	-29.54%
4624	66 Neutral	¥5.63B	11.44	―	1.39%	2.67%	37.55%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4616	51 Neutral	¥1.94B	26.87	―	2.34%	-2.27%	-12.76%
4615	44 Neutral	¥4.32B	-22.10	―	―	8.66%	-239.07%