Arakawa Chemical Industries,Ltd. (4968) AI Stock Analysis

• Market Cap: ¥22.54B
• Dividend Yield: 4.44%
• Average Volume (3M): 46.59K
• Price to Earnings (P/E): 13.0
• Beta (1Y): 0.88
• Revenue Growth: 5.72%
• EPS Growth: 28.92%
• Country: JP
• Employees: 1,668
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 9.65
• Shares Outstanding: 20,652,400
• 10 Day Avg. Volume: 30,800
• 30 Day Avg. Volume: 46,593
• PEG Ratio: -0.02
• Price to Book (P/B): 0.37
• Price to Sales (P/S): 0.27
• P/FCF Ratio: 30.68
• 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): 95.8
• Revenue Forecast (FY): ¥85.10B

• Rating: 64 Neutral
• Price Target: ¥1,207.00 ▲(13.23% Upside)

Arakawa Chemical Industries scores well due to its strong financial performance and stable valuation. Technical indicators support a positive trend, though MACD suggests caution. The absence of earnings call data and corporate events does not impact the score.

Positive Factors

Revenue Growth

The company's strong revenue growth indicates successful market penetration and increasing demand for its specialty chemical products, supporting long-term business expansion.

Improved Profitability

The improvement in profitability margins reflects enhanced operational efficiency and cost management, which can sustain long-term financial health and shareholder value.

Cash Flow Improvement

The significant improvement in free cash flow demonstrates the company's enhanced ability to generate cash, providing flexibility for reinvestment and debt management.

Negative Factors

Low Free Cash Flow to Net Income Ratio

A low free cash flow to net income ratio suggests that despite profitability, the company may face challenges in converting earnings into cash, potentially limiting reinvestment capacity.

Modest Return on Equity

The modest return on equity indicates limited efficiency in generating profits from shareholders' equity, which could affect investor confidence and long-term capital growth.

Moderate Leverage

While moderate leverage provides some financial stability, it may also constrain the company's ability to take on new opportunities without increasing financial risk.

Arakawa Chemical Industries,Ltd. Business Overview & Revenue Model

Company Description

Arakawa Chemical Industries, Ltd. (4968) is a leading Japanese manufacturer specializing in the production of chemical products and materials. The company operates primarily in the chemical sector, focusing on the development and distribution of specialty chemicals, including resins, adhesives, and coatings. Arakawa Chemical Industries is known for its commitment to innovation and quality, serving various industries such as automotive, electronics, and construction with tailored solutions to meet specific client needs.

How the Company Makes Money

The company generates revenue through the sale of its specialty chemical products, which are used across several industries. Key revenue streams include the production of resins, adhesives, and coatings, which are sold to manufacturers in sectors such as automotive, construction, and electronics. Arakawa Chemical Industries also engages in long-term contracts with major clients, providing a stable income source. Additionally, the company invests in research and development to create innovative products that meet emerging market demands, enhancing its competitive edge. Strategic partnerships with other firms in the chemical and manufacturing sectors further contribute to its revenue, as they often lead to collaborative projects and expanded market access.

Arakawa Chemical Industries,Ltd. Financial Statement Overview

Summary

Arakawa Chemical Industries has shown a recovery in profitability with improved margins and revenue growth. The balance sheet is stable with moderate leverage, and cash flow has improved, though there is room for better free cash flow conversion.

Income Statement

Arakawa Chemical Industries has shown a recovery in profitability. Current gross profit margin stands at 20.05%, and the net profit margin is 3.29%, indicating efficient cost management. Revenue has grown by 11.10% from the previous year, showcasing positive growth momentum. EBIT and EBITDA margins have significantly improved from negative to 1.32% and 11.22%, respectively, reflecting better operational efficiency and profitability.

Balance Sheet

The company's financial leverage is moderate with a debt-to-equity ratio of 0.67, indicating a balanced approach to financing. Return on equity is modest at 4.52%, reflecting moderate efficiency in generating profits from shareholders' equity. The equity ratio is 47.81%, suggesting a healthy capital structure with substantial equity funding relative to total assets. The balance sheet shows improvement in equity and asset management.

Cash Flow

The cash flow statement highlights a dramatic improvement in free cash flow, moving from a negative position in previous years to a free cash flow of ¥712 million. The operating cash flow to net income ratio is 1.94, indicating strong cash generation relative to reported earnings. However, the free cash flow to net income ratio remains low at 0.27, signaling some room for improvement in cash profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	80.87B	80.24B	72.22B	79.43B	80.52B	70.57B
Gross Profit	16.56B	16.09B	11.68B	11.57B	17.97B	16.69B
EBITDA	6.88B	9.00B	4.76B	49.00M	6.29B	7.14B
Net Income	1.38B	2.64B	-1.04B	-4.94B	1.50B	2.17B
Balance Sheet
Total Assets	120.43B	122.30B	125.42B	119.03B	117.74B	105.76B
Cash, Cash Equivalents and Short-Term Investments	9.10B	9.43B	11.58B	11.14B	10.37B	8.46B
Total Debt	40.95B	39.38B	42.68B	35.27B	26.76B	21.99B
Total Liabilities	64.41B	65.06B	68.50B	62.53B	55.16B	47.17B
Stockholders Equity	57.78B	58.47B	56.13B	54.08B	59.18B	57.23B
Cash Flow
Free Cash Flow	732.00M	712.00M	-5.70B	-6.69B	-2.43B	-2.34B
Operating Cash Flow	5.34B	5.12B	1.16B	-575.00M	3.99B	3.69B
Investing Cash Flow	-4.44B	-3.24B	-7.14B	-6.05B	-7.40B	-7.30B
Financing Cash Flow	-1.66B	-4.70B	5.48B	6.67B	4.93B	1.35B

Arakawa Chemical Industries,Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1066.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4968, the sentiment is Positive. The current price of 1066 is below the 20-day moving average (MA) of 1101.05, below the 50-day MA of 1096.26, and below the 200-day MA of 1075.23, indicating a bullish trend. The MACD of 7.26 indicates Negative momentum. The RSI at 61.21 is Neutral, neither overbought nor oversold. The STOCH value of 88.60 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4968.

Arakawa Chemical Industries,Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4275	80 Outperform	¥36.29B	14.36	―	2.18%	-0.86%	17.65%
4229	75 Outperform	¥22.73B	11.94	―	2.89%	3.53%	8.36%
4112	69 Neutral	¥29.74B	13.88	―	2.75%	-11.70%	-54.82%
4092	66 Neutral	¥25.66B	10.19	―	4.13%	-3.41%	-12.83%
4410	66 Neutral	¥21.47B	20.67	―	4.66%	7.19%	―
4968	64 Neutral	¥22.54B	13.00	―	4.44%	5.72%	28.92%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%

Arakawa Chemical Industries,Ltd. Corporate Events

Arakawa Chemical Industries Reports Mixed Financial Results for Q1 2025

Arakawa Chemical Industries, Ltd. reported a 3.3% increase in net sales for the three months ended June 30, 2025, compared to the same period in 2024. However, the company experienced a significant drop in profit attributable to owners of the parent, which decreased by 70.4%. Despite the challenges, the company maintains a stable equity ratio and has forecasted an increase in net sales and operating profit for the fiscal year ending March 31, 2026.