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

• Market Cap: ¥20.89B
• Dividend Yield: 4.75%
• Average Volume (3M): 26.93K
• Price to Earnings (P/E): 7.9
• Beta (1Y): 0.88
• Revenue Growth: 11.10%
• EPS Growth: N/A
• Country: JP
• Employees: 1,668
• Sector: Basic Materials
• Sector Strength: 67
• Industry: Chemicals - Specialty
• EPS (TTM): 18.99
• Shares Outstanding: 20,652,400
• 10 Day Avg. Volume: 26,430
• 30 Day Avg. Volume: 26,933
• PEG Ratio: 0.30
• Price to Book (P/B): 0.53
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -23.07
• 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

• Rating: 71 Outperform
• Price Target: ¥1,203.00 ▲(14.25%Upside)

Arakawa Chemical Industries achieves a solid overall stock score due to its attractive valuation and stable technical indicators. The company's financial performance shows resilience with revenue growth and improved profitability, although further enhancements in cash flow efficiency could boost future scores.

Arakawa Chemical Industries,Ltd. Business Overview & Revenue Model

Company Description

Arakawa Chemical Industries, Ltd. (4968) is a Japan-based company primarily engaged in the production and distribution of chemical products. The company operates in various sectors, including the paper chemicals, resin-based functional materials, and adhesive industries. Arakawa Chemical Industries is well-known for its innovative solutions in rosin-based products, which are essential in manufacturing paper sizing agents, adhesives, and printing inks.

How the Company Makes Money

Arakawa Chemical Industries, Ltd. generates revenue through the sale of its chemical products, with a strong focus on rosin-based materials that serve diverse industrial applications. The company's key revenue streams include the production and distribution of chemicals used in paper manufacturing, adhesives, and printing inks. By supplying essential raw materials to these industries, Arakawa plays a critical role in the production processes of its clients. The company may also benefit from strategic partnerships and collaborations that enhance its market reach and product development capabilities. Additionally, Arakawa invests in research and development to innovate and expand its product offerings, which can contribute to sustained revenue growth.

Arakawa Chemical Industries,Ltd. Financial Statement Overview

Summary

Arakawa Chemical Industries exhibits strong financial performance with notable improvements in profitability and cash flow metrics. Revenue growth and margin recovery reflect a positive trend, while balance sheet health is stable with moderate leverage. However, there's room for enhancing 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
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
80.24B	72.22B	79.43B	80.52B	70.57B
	Gross Profit
16.09B	11.68B	11.57B	17.97B	16.69B
	EBIT
1.06B	-2.62B	-2.91B	3.30B	3.26B
	EBITDA
9.00B	4.76B	51.00M	6.50B	6.42B
	Net Income Common Stockholders
2.64B	-1.04B	-4.94B	1.50B	2.17B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.43B	11.58B	11.14B	10.37B	8.46B
	Total Assets
122.30B	125.42B	119.03B	117.74B	105.76B
	Total Debt
39.38B	42.68B	35.27B	26.76B	21.99B
	Net Debt
29.95B	31.11B	24.13B	16.38B	13.53B
	Total Liabilities
65.06B	68.50B	62.53B	55.16B	47.17B
	Stockholders Equity
58.47B	56.13B	54.08B	59.18B	57.23B
Cash Flow		Free Cash Flow
712.00M	-5.70B	-6.69B	-2.43B	-2.34B
	Operating Cash Flow
5.12B	1.16B	-575.00M	3.99B	3.69B
	Investing Cash Flow
-3.24B	-7.14B	-6.05B	-7.40B	-7.30B
	Financing Cash Flow
-4.70B	5.48B	6.67B	4.93B	1.35B

Arakawa Chemical Industries,Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1053.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4968, the sentiment is Negative. The current price of 1053 is below the 20-day moving average (MA) of 1089.25, below the 50-day MA of 1056.06, and below the 200-day MA of 1128.55, indicating a bearish trend. The MACD of -5.68 indicates Positive momentum. The RSI at 41.72 is Neutral, neither overbought nor oversold. The STOCH value of 18.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	77 Outperform	¥28.18B	10.88		3.04%	0.92%	-0.79%
4112	73 Outperform	¥23.63B	7.24		3.11%	9.75%	28.00%
4968	71 Outperform	¥20.89B	7.90		4.75%	11.10%	―
4229	71 Outperform	¥18.69B	9.74		3.55%	0.78%	-5.93%
4092	69 Neutral	¥17.52B	6.85		4.62%	0.79%	61.23%
4410	59 Neutral	¥19.78B	24.99		5.34%	9.40%	―
Sector *	51 Neutral	$2.03B	-1.27	-21.09%	3.98%	2.91%	-30.50%

Arakawa Chemical Industries,Ltd. Corporate Events

Arakawa Chemical Announces Director Retirement

Arakawa Chemical Industries, Ltd. has announced a management change with the retirement of Director Takashi Une, effective June 25, 2025, following the expiration of his term. This change is part of the company’s ongoing efforts to adapt its leadership structure, potentially impacting its strategic direction and stakeholder relations.

Arakawa Chemical Industries Increases Year-End Dividend for FY2025

Arakawa Chemical Industries, Ltd. announced an increase in its year-end dividend for the fiscal year ended March 31, 2025, raising it by 1 yen per share to 25 yen. This decision aligns with the company’s policy of actively returning value to shareholders and reflects its strong consolidated performance for FY2025.

Arakawa Chemical Reports Extraordinary Gains from Securities Sale

Arakawa Chemical Industries, Ltd. has reported extraordinary gains of 1,268 million yen from the sale of investment securities for the fiscal year ending March 31, 2025. These gains have been incorporated into the company’s consolidated financial results, potentially impacting its financial standing and market perception.

Arakawa Chemical Industries Reports Strong Financial Recovery in FY2025

Arakawa Chemical Industries, Ltd. reported a significant turnaround in its financial performance for the fiscal year ended March 31, 2025, with net sales increasing by 11.1% to 80,236 million yen and a return to profitability with a profit attributable to owners of the parent at 2,644 million yen. The company also improved its equity ratio to 47.8% and maintained a steady dividend payout, indicating a stable financial position and positive outlook for stakeholders.