New Japan Chemical Co., Ltd. (4406) AI Stock Analysis

• Market Cap: ¥8.65B
• Dividend Yield: 1.35%
• Average Volume (3M): 116.64K
• Price to Earnings (P/E): 18.5
• Beta (1Y): 0.85
• Revenue Growth: -2.76%
• EPS Growth: -25.24%
• Country: JP
• Employees: 410
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): -0.61
• Shares Outstanding: 37,286,903
• 10 Day Avg. Volume: 122,880
• 30 Day Avg. Volume: 116,640
• PEG Ratio: 0.10
• Price to Book (P/B): 0.40
• Price to Sales (P/S): 0.22
• P/FCF Ratio: -8.05
• 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: 61 Neutral
• Price Target: ¥244.00 ▲(8.93% Upside)

The score is driven primarily by moderate financial fundamentals—stable leverage and some operating efficiency improvement are offset by weak and inconsistent cash flow and slightly declining revenue. Technicals are supportive due to a strong trend above major moving averages, but very overbought momentum readings raise near-term risk. Valuation is average with a modest dividend yield.

Positive Factors

Balance sheet stability

A modest debt-to-equity (~0.4) and strong equity ratio indicate a resilient capital structure, reducing bankruptcy risk and giving management flexibility to fund working capital or targeted investments. This durability supports operations through cyclical industry swings over months.

Improving operating margins

Recent improvements in EBIT/EBITDA margins signal better cost control or mix improvements, which can sustainably enhance cash generation if maintained. Stronger operating margins help absorb raw-material volatility and support reinvestment without relying solely on revenue growth.

Specialty chemicals niche

A focus on functional and formulated specialty chemicals creates higher technical differentiation, customer stickiness, and application-specific demand. These structural attributes tend to produce more stable, contractable revenue streams and barriers to entry versus commodity chemicals.

Negative Factors

Volatile and negative free cash flow

Inconsistent operating cash flow and recent negative free cash flow constrain the company's ability to self-fund capex, R&D, dividends, or working capital. Over a multi-month horizon this limits strategic optionality and raises reliance on external financing during downturns.

Declining revenue and EPS pressure

Slightly declining revenue paired with steep EPS contraction indicates top-line pressure and earnings volatility. If sustained, this undermines scalability and signals potential market share erosion or demand weakness, impairing long-term free-cash-flow recovery.

Shrinking capital base

A gradual decline in assets and equity reduces the firm's capacity to expand production, invest in new formulations, or support larger contracts. Over months this can cap growth opportunities and constrain margin improvements despite operational gains.

New Japan Chemical Co., Ltd. Business Overview & Revenue Model

Company Description

New Japan Chemical Co., Ltd. produces and sells chemical products in Japan and internationally. The company provides oleo-chemicals, including hardened oils, fatty acids and esters, glycerin, alcohols, non-ionic surfactants, anion surfactants, amino acid-based surfactants, and amphoteric surfactants; and phthalate and non-phthalate plasticizers, and specialty plasticizers. It also offers plastic and coating materials, such as monomers, acid anhydrides for epoxy resin curing agents, synthetic resin materials, clarifiers and nucleating agents, epoxy resins, raw materials for resins, and antistatic agents; evaporation-resistant, low-viscosity, aromatic, high-flash point, and traction drive lubricants, as well as dibasic acid esters. In addition, the company provides custom services for hydrogenation reactions, including high-pressure hydrogenation and hydrogenation controlling for cis/trans isomers. New Japan Chemical Co., Ltd. was founded in 1919 and is headquartered in Osaka, Japan.

How the Company Makes Money

New Japan Chemical generates revenue through multiple streams, primarily by selling its specialty chemicals and advanced materials to various industries. The company benefits from long-term contracts with major clients in the electronics and automotive sectors, ensuring a steady demand for its products. Additionally, New Japan Chemical invests in research and development to innovate and expand its product portfolio, which helps capture new market opportunities. Significant partnerships with leading technology companies enhance its market position and contribute to its earnings by providing access to cutting-edge applications and increased sales volumes.

New Japan Chemical Co., Ltd. Financial Statement Overview

Summary

Moderate overall financial health: profitability is acceptable with improved EBIT/EBITDA margins and manageable leverage (debt-to-equity ~0.4), but cash flow is a key weakness with volatile operating cash flow and negative free cash flow in recent years alongside slightly declining revenue.

Income Statement

The company shows moderate profitability with a gross profit margin of around 16-17% in recent years. However, the net profit margin remains low, indicating significant expenses or inefficiencies. There is a slight decline in revenue over the past few years, but the EBIT and EBITDA margins have improved recently, reflecting better operational efficiency.

Balance Sheet

The balance sheet is relatively stable with a debt-to-equity ratio of approximately 0.4, suggesting manageable leverage. The equity ratio is strong, indicating a solid financial structure. However, there's been a slight decline in total assets and equity over the last few years, which might limit future growth.

Cash Flow

Cash flow performance is mixed with significant fluctuations. The operating cash flow to net income ratio has been volatile, and free cash flow has been negative in recent years, indicating potential liquidity issues. The inconsistency in free cash flow growth further adds to the concerns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	32.64B	32.70B	32.86B	33.10B	32.36B	24.44B
Gross Profit	5.61B	5.45B	5.32B	4.42B	5.88B	4.56B
EBITDA	1.60B	1.56B	1.31B	532.00M	1.97B	1.35B
Net Income	548.00M	522.00M	220.00M	-444.00M	811.00M	501.00M
Balance Sheet
Total Assets	37.81B	37.52B	40.11B	38.55B	40.09B	35.89B
Cash, Cash Equivalents and Short-Term Investments	3.05B	2.94B	3.82B	2.96B	3.50B	3.15B
Total Debt	6.17B	7.13B	7.58B	10.16B	9.96B	8.91B
Total Liabilities	18.07B	18.52B	21.64B	21.60B	23.09B	19.67B
Stockholders Equity	18.54B	17.79B	17.29B	15.86B	15.94B	15.21B
Cash Flow
Free Cash Flow	0.00	-889.00M	2.80B	-593.00M	-705.00M	-680.00M
Operating Cash Flow	0.00	-224.00M	3.58B	104.00M	1.08B	1.25B
Investing Cash Flow	0.00	-174.00M	-60.00M	-659.00M	-1.60B	-1.71B
Financing Cash Flow	0.00	-513.00M	-2.60B	-3.00M	861.00M	519.00M

New Japan Chemical Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 224.00
• 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:4406, the sentiment is Neutral. The current price of 224 is below the 20-day moving average (MA) of 241.10, below the 50-day MA of 228.80, and above the 200-day MA of 214.88, indicating a neutral trend. The MACD of 2.09 indicates Positive momentum. The RSI at 45.99 is Neutral, neither overbought nor oversold. The STOCH value of 7.42 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:4406.

New Japan Chemical Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4957	74 Outperform	¥14.06B	8.73	―	0.88%	5.90%	135.08%
4629	70 Outperform	¥7.77B	9.85	―	2.51%	2.26%	51.04%
4092	66 Neutral	¥28.74B	12.65	―	3.84%	-3.41%	-12.83%
4409	66 Neutral	¥16.10B	13.14	―	2.78%	1.30%	-5.03%
4112	65 Neutral	¥37.20B	19.44	―	2.37%	-11.70%	-54.82%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4406	61 Neutral	¥8.65B	18.48	―	1.35%	-2.76%	-25.24%