MUROMACHI CHEMICALS INC. (4885) AI Stock Analysis

• Market Cap: ¥3.54B
• Dividend Yield: 4.25%
• Average Volume (3M): 8.80K
• Price to Earnings (P/E): 10.6
• Beta (1Y): 0.68
• Revenue Growth: 7.90%
• EPS Growth: -39.51%
• Country: JP
• Employees: 205
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): N/A
• Shares Outstanding: 4,095,500
• 10 Day Avg. Volume: 6,960
• 30 Day Avg. Volume: 8,803
• PEG Ratio: -0.53
• Price to Book (P/B): 1.43
• Price to Sales (P/S): 0.53
• P/FCF Ratio: -30.96
• 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: 69 Neutral
• Price Target: ¥1,045.00 ▲(26.36% Upside)

The score is driven primarily by mixed financial quality—solid growth and operating margins but pressured net profitability and weak cash conversion/negative free cash flow. Valuation is a key positive (low P/E and high dividend yield). Technicals show strong trend strength, but the stock appears overbought, tempering the overall rating.

Positive Factors

Consistent revenue growth

Sustained top-line expansion indicates enduring product demand across end-markets and supports capacity utilization and long-term investment. Reliable revenue momentum strengthens funding for R&D and strategic initiatives, improving resilience to cyclical downturns in chemicals markets.

Stable gross margins and healthy operating margins

Stable gross margins plus solid EBIT/EBITDA show the company can manage input costs and preserve operational efficiency. Margin durability supports reinvestment, competitive pricing flexibility, and the ability to fund product development over multiple cycles in specialty chemical segments.

Diversified end-market exposure and R&D focus

Broad exposure to automotive, electronics and pharma reduces dependence on any single cycle and aligns with structural demand for specialty materials. Ongoing R&D and manufacturer partnerships bolster product differentiation and long-term competitive moat in high-value chemical niches.

Negative Factors

Declining net profit margin

A falling net margin signals that costs or non-operating charges are eroding profitability despite revenue growth. If persistent, this reduces retained earnings, limits reinvestment capacity and weakens returns to shareholders, undermining long-term financial strength.

Weakening cash generation and negative FCF

Deteriorating OCF and negative free cash flow impair the firm's ability to self-fund capex, pay down debt, or return cash to investors. Over time, poor cash conversion increases reliance on external financing and raises execution risk for strategic investments.

Elevated leverage and falling ROE

Persistently high leverage and declining ROE constrain financial flexibility and amplify downside in cyclicality. Even with some improvement, elevated debt levels raise interest and refinancing risk, which can limit growth spending and pressure credit metrics over the medium term.

MUROMACHI CHEMICALS INC. Business Overview & Revenue Model

Company Description

Muromachi Chemicals Inc. plans, produces, and distributes pharmaceuticals and health foods in Japan. It offers active pharmaceutical ingredients and intermediate synthesis products; commissioned processing services for pharmaceuticals; and commissioned synthesis services for radioactive and stable isotope tagged compounds used in pharmaceutical and agricultural metabolic testing, as well as imports and sells active pharmaceutical ingredients. The company also provides jelly and non-alcoholic beverage products. In addition, it offers ion-exchange resins, separation membranes, and ion-exchange fibers; and solutions that meet customers' needs with water-treatment products, including filter media, equipment, and chemicals, as well as commissioned chemical processing services. Further, the company provides functional adhesives; and product contamination removal and dust removal mats, and antistatic products for use in the electronics industry, as well as engages in the commissioned manufacturing and processing of functional pastes. The company was founded in 1917 and is headquartered in Omuta, Japan.

How the Company Makes Money

MUROMACHI CHEMICALS INC. generates revenue primarily through the sale of its chemical products across multiple sectors. The company has established key revenue streams from its industrial chemicals and specialty chemicals divisions, which serve a wide array of applications. Significant partnerships with manufacturers in the automotive and electronics industries also contribute to its earnings, as these sectors require high-quality chemical materials for production. Additionally, the company invests in R&D to develop new products and improve existing ones, thus enhancing its competitive edge and expanding its market reach.

MUROMACHI CHEMICALS INC. Financial Statement Overview

Summary

Strong revenue growth and healthy EBIT/EBITDA margins support results, but declining net margin, relatively high leverage, and weakening cash generation (negative free cash flow) meaningfully increase risk.

Income Statement

Muromachi Chemicals Inc. has shown consistent revenue growth over the years, with a notable increase from 2024 to 2025. The gross profit margin remains stable, indicating efficient cost management. However, the net profit margin has decreased, suggesting rising expenses or other financial pressures. EBIT and EBITDA margins are healthy, reflecting strong operational performance.

Balance Sheet

The company's debt-to-equity ratio has improved over time, indicating better leverage management, but it remains relatively high compared to industry standards. Return on equity has decreased, which may concern investors. The equity ratio is stable, suggesting a balanced asset structure.

Cash Flow

Operating cash flow has decreased significantly, impacting the company's ability to generate cash from operations. Free cash flow has turned negative, indicating potential liquidity issues. The free cash flow to net income ratio is concerning, suggesting challenges in converting profits into cash.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.65B	6.37B	6.29B	5.68B	4.94B
Gross Profit	1.91B	1.82B	1.75B	1.73B	1.63B
EBITDA	540.83M	623.23M	493.14M	543.84M	351.62M
Net Income	241.28M	330.20M	256.30M	456.27M	180.71M
Balance Sheet
Total Assets	5.26B	5.06B	4.95B	4.80B	4.61B
Cash, Cash Equivalents and Short-Term Investments	1.06B	1.05B	852.61M	865.36M	1.00B
Total Debt	1.65B	1.44B	1.57B	1.69B	2.04B
Total Liabilities	2.81B	2.79B	3.03B	3.12B	3.28B
Stockholders Equity	2.45B	2.27B	1.92B	1.68B	1.33B
Cash Flow
Free Cash Flow	-112.86M	398.53M	206.91M	354.57M	431.82M
Operating Cash Flow	215.95M	637.70M	317.19M	524.90M	487.67M
Investing Cash Flow	-340.50M	-232.23M	-162.41M	-176.28M	-57.73M
Financing Cash Flow	123.20M	-209.95M	-172.39M	-483.63M	-310.51M

MUROMACHI CHEMICALS INC. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 827.00
• 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:4885, the sentiment is Positive. The current price of 827 is below the 20-day moving average (MA) of 926.20, below the 50-day MA of 838.08, and above the 200-day MA of 790.29, indicating a bullish trend. The MACD of 40.08 indicates Positive momentum. The RSI at 58.95 is Neutral, neither overbought nor oversold. The STOCH value of 17.51 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4885.

MUROMACHI CHEMICALS INC. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4531	72 Outperform	¥8.49B	12.65	―	2.97%	9.92%	-27.64%
4960	71 Outperform	¥12.82B	134.39	―	1.06%	-9.63%	-1.71%
4885	69 Neutral	¥3.54B	10.56	―	4.25%	7.90%	-39.51%
4102	62 Neutral	¥3.19B	18.48	―	2.12%	-5.18%	4.52%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4124	56 Neutral	¥2.57B	-79.19	―	1.46%	19.97%	-26975.44%
4360	53 Neutral	¥7.25B	-23.17	―	1.93%	13.64%	-151.98%