Toyo Gosei Co., Ltd. (4970) AI Stock Analysis

• Market Cap: ¥91.59B
• Dividend Yield: 0.67%
• Average Volume (3M): 57.46K
• Price to Earnings (P/E): 35.9
• Beta (1Y): 1.22
• Revenue Growth: 10.18%
• EPS Growth: -14.36%
• Country: JP
• Employees: 503
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals
• EPS (TTM): 99.21
• Shares Outstanding: 8,143,390
• 10 Day Avg. Volume: 36,350
• 30 Day Avg. Volume: 57,456
• PEG Ratio: 0.35
• Price to Book (P/B): 1.70
• Price to Sales (P/S): 1.09
• P/FCF Ratio: -10.22
• 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: ¥9,266.67
• Price Target Upside: -19.70% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 261.51
• Revenue Forecast (FY): ¥41.13B

• Rating: 65 Neutral
• Price Target: ¥12,879.00 ▲(11.60% Upside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is driven primarily by solid fundamental performance (growth and profitability) but is held back by negative free cash flow and increasing debt. Technicals are strong but look overbought, while valuation is the biggest detractor due to a high P/E and low dividend yield.

Positive Factors

Revenue Growth

Material year-over-year revenue growth demonstrates durable demand for Toyo Gosei’s specialty chemical products and effective customer qualification/scale-up in B2B channels. This trend implies expanding product adoption and contract-based volume growth that support sustainable top-line expansion over quarters.

Improving Profitability & ROE

Rising net margin and improved ROE indicate the company has pricing power and is converting revenue into shareholder returns more efficiently. These profitability gains reflect structural competitiveness in product mix and cost management that help sustain cash generation and investor returns over medium term.

Solid Equity Base

An improved equity ratio and a manageable debt-to-equity level provide a stronger capital base to support operations and growth investments. This balance-sheet resilience enhances financial flexibility, lowers solvency risk, and supports multi-quarter strategic spending or customer support programs.

Negative Factors

Negative Free Cash Flow

Negative free cash flow driven by large capex reduces internal funding available for dividends, debt paydown, or M&A. Even with strong operating cash to net income (2.07) signaling earnings quality, sustained negative FCF constrains liquidity and may require external financing, affecting long-term flexibility.

Rising Debt Levels

Increasing absolute debt elevates leverage and interest/ refinancing exposure. With debt up materially in a year, the company faces higher fixed obligations and reduced headroom for cyclical weakness, which can limit capital allocation choices and increase vulnerability to rising rates over the medium term.

High CapEx Pressure & Margin Squeeze

Sustained heavy capital expenditures paired with a slight decline in EBIT margin suggests new investments may not yet yield proportional operating returns. This combination can depress free cash generation and slow improvement in return on invested capital, pressuring profitability and payback timelines.

Toyo Gosei Co., Ltd. Business Overview & Revenue Model

Company Description

Toyo Gosei Co.,Ltd. manufactures and sells photosensitive materials for photolithography primarily in Japan. The company offers photosensitive materials primarily for use in the microfabrication of semiconductor integrated circuits and liquid crystal displays, and manufacture of color filters; and a range of high-purity photo acid generators and resins that are used in chemical amplifiers. It is also involved in the recovery of waste solvents and volatile organic compounds through its distillation plants; marketing of various synthetic products; and the supply of electrolytes and ionic liquids used in electric double-layer capacitors. In addition, the company produces aroma chemicals for daily-use products, including shampoos and body soaps, as well as for the flavors of food products; and researches and develops, manufactures, and sells materials for batteries and electrical double layer capacitors. Further, it provides logistics services, such as receiving and shipping systems, storage facilities, and analysis equipment; photosensitive materials for use in the culturing of cells and protein enzymes; and warehousing and goods transportation services. The company was formerly known as Nihon Acetylene Chemical Engineering Co., Ltd. and changed its name to Toyo Gosei Co.,Ltd. in May 1961. Toyo Gosei Co.,Ltd. was founded in 1954 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Toyo Gosei generates revenue through the production and sale of specialized plastic materials and synthetic resins, which are essential components in a variety of industries, including automotive and electronics. The company's revenue model is primarily driven by direct sales to manufacturers and distributors, with a focus on long-term contracts and partnerships that ensure a stable demand for its products. Key revenue streams include the development of custom formulations tailored to specific customer needs and the provision of technical support services. Additionally, Toyo Gosei benefits from strategic partnerships with major players in the automotive and electronics sectors, allowing for collaborative projects that enhance innovation and expand market reach, thus contributing significantly to its earnings.

Toyo Gosei Co., Ltd. Financial Statement Overview

Summary

Strong revenue growth and improved net profit margin support the score, along with a solid equity ratio and improved ROE. Offsetting factors include rising total debt and weak free cash flow (negative in 2025) driven by high capital expenditures.

Income Statement

Toyo Gosei Co., Ltd. exhibits strong revenue growth, with a significant increase from ¥31.96 billion in 2024 to ¥38.67 billion in 2025. The gross profit margin improved from 23.78% to 23.44%, indicating efficient cost management. The net profit margin also rose from 7.49% to 8.48%, showcasing enhanced profitability. However, the EBIT margin decreased slightly from 11.00% to 10.61%, which could indicate some operational cost pressures.

Balance Sheet

The balance sheet reflects a stable financial structure, with a debt-to-equity ratio of 1.15 in 2025, which is manageable but slightly elevated compared to industry norms. The equity ratio improved to 37.72%, indicating a solid equity base. Return on equity improved to 13.20%, reflecting efficient use of shareholder funds. However, the increase in total debt from ¥23.01 billion to ¥28.55 billion warrants monitoring.

Cash Flow

The company faces challenges with cash flow, as evidenced by the negative free cash flow in 2025 of ¥-4.12 billion due to high capital expenditures. The operating cash flow to net income ratio was strong at 2.07, suggesting good quality of earnings. However, the free cash flow to net income ratio was negative, indicating potential cash constraints that need to be addressed.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	31.50B	38.66B	31.96B	34.16B	33.14B	27.16B
Gross Profit	7.77B	9.06B	7.60B	9.03B	8.39B	6.21B
EBITDA	6.59B	7.79B	6.29B	7.83B	7.32B	5.28B
Net Income	2.81B	3.28B	2.40B	3.83B	3.46B	2.35B
Balance Sheet
Total Assets	56.83B	65.86B	59.52B	51.11B	46.89B	43.52B
Cash, Cash Equivalents and Short-Term Investments	3.52B	3.60B	3.65B	3.25B	3.68B	3.79B
Total Debt	21.18B	29.16B	23.02B	18.52B	18.55B	20.55B
Total Liabilities	35.74B	41.03B	37.70B	31.46B	30.82B	30.73B
Stockholders Equity	21.10B	24.83B	21.82B	19.64B	16.06B	12.79B
Cash Flow
Free Cash Flow	5.77B	-4.12B	-3.02B	-29.69M	2.39B	-1.27B
Operating Cash Flow	5.77B	6.79B	4.57B	3.66B	5.81B	4.42B
Investing Cash Flow	0.00	-11.97B	-7.59B	-3.27B	-3.42B	-5.69B
Financing Cash Flow	0.00	5.19B	3.60B	-406.16M	-2.56B	1.47B

Toyo Gosei Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 11540.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4970, the sentiment is Positive. The current price of 11540 is above the 20-day moving average (MA) of 10348.50, above the 50-day MA of 8704.40, and above the 200-day MA of 6394.59, indicating a bullish trend. The MACD of 918.85 indicates Negative momentum. The RSI at 70.52 is Negative, neither overbought nor oversold. The STOCH value of 73.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4970.

Toyo Gosei Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4045	73 Outperform	¥204.68B	16.43	4.41%	3.80%	-1.50%	-32.46%
4042	68 Neutral	¥868.55B	25.35	4.79%	4.21%	-1.21%	-27.21%
4970	65 Neutral	¥91.59B	35.93	―	0.67%	10.18%	-14.36%
4005	65 Neutral	¥932.85B	9.58	8.79%	2.68%	-1.64%	―
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4061	60 Neutral	¥317.04B	-33.94	-4.00%	3.71%	0.24%	-234.36%
3405	60 Neutral	¥566.51B	78.15	1.08%	3.37%	-1.94%	-84.08%