Hokko Chemical Industry Co., Ltd. (4992) AI Stock Analysis

• Market Cap: ¥42.97B
• Dividend Yield: 2.86%
• Average Volume (3M): 41.40K
• Price to Earnings (P/E): 10.3
• Beta (1Y): 0.92
• Revenue Growth: 4.66%
• EPS Growth: 19.39%
• Country: JP
• Employees: 747
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Agricultural Inputs
• EPS (TTM): 13.09
• Shares Outstanding: 27,485,530
• 10 Day Avg. Volume: 39,210
• 30 Day Avg. Volume: 41,403
• PEG Ratio: 0.64
• Price to Book (P/B): 0.81
• Price to Sales (P/S): 0.87
• P/FCF Ratio: 8.42
• 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: 82 Outperform
• Price Target: ¥2,017.00 ▲(22.54% Upside)

The score is driven primarily by strong financial quality (notably a very conservative balance sheet and solid profitability) and an attractive valuation (low P/E with a meaningful dividend). Technicals are supportive due to a clear uptrend and positive MACD, but the stock is nearing overbought levels and cash conversion has been uneven, which keeps the overall score from moving higher.

Positive Factors

Conservative Balance Sheet

Very low leverage materially reduces refinancing and interest-rate risk and provides durable financial flexibility. This balance-sheet strength supports capital allocation choices (capex, dividends, M&A) through cycles and enhances resilience in a cyclical chemicals end‑market.

Stable Profitability and ROE

Consistent mid-single-digit to low-double-digit ROE demonstrates the business reliably converts invested capital into profits. For a specialty chemical manufacturer, steady returns signal durable manufacturing competence, pricing power with customers, and predictable shareholder cash generation.

Positive Free Cash Flow

Material free cash flow provides a lasting source for dividends, reinvestment and balance‑sheet optionality. Sustained FCF generation supports funding working-capital needs and strategic investments without adding leverage, improving long‑term financial stability.

Negative Factors

Uneven Cash Conversion

Operating cash conversion lagging accrual earnings indicates working‑capital swings or timing effects. That reduces predictability of cash available for capex or shareholder returns, increasing the risk that earnings growth won't consistently translate into free cash flow.

Margin Stagnation Despite Revenue Surge

A large revenue step-up without margin expansion suggests adverse mix, pricing pressure, or cost increases. If structural, this constrains sustainable profitability and limits the long‑term earnings leverage of future revenue growth absent operational improvement.

Returns Good but Not Exceptional

Moderate returns on capital imply limited capital‑efficiency upside relative to peers. Over the medium term, this can cap return on new investments and slow value creation unless management improves margins, asset turnover, or shifts to higher‑return products.

Hokko Chemical Industry Co., Ltd. Business Overview & Revenue Model

Company Description

Hokko Chemical Industry Co., Ltd. (4992) is a Japanese company specializing in the manufacture and sale of chemical products, primarily focusing on the production of synthetic resins, adhesives, and various specialty chemicals. The company operates in multiple sectors, including automotive, electronics, and construction, providing innovative solutions that cater to the diverse needs of its clients. Hokko Chemical aims to enhance product performance and sustainability through its advanced chemical technologies and extensive research and development efforts.

How the Company Makes Money

Hokko Chemical Industry Co., Ltd. generates revenue primarily through the sale of its chemical products, including synthetic resins and adhesives, to various industries such as automotive, electronics, and construction. The company's revenue model is based on direct sales to manufacturers and distributors, which allows it to maintain a steady flow of income. Key revenue streams include bulk sales to large corporations, long-term contracts with industrial clients, and specialized product lines tailored to specific market demands. Additionally, Hokko Chemical benefits from strategic partnerships with other companies in related sectors, enhancing its market presence and allowing for collaborative product development, which can lead to increased sales and revenue growth.

Hokko Chemical Industry Co., Ltd. Financial Statement Overview

Summary

Strong overall fundamentals supported by very low leverage and healthy, stable profitability. Revenue surged sharply in the latest year, but margin expansion did not keep pace, and cash conversion is uneven (operating cash flow consistently below net income), which tempers the score despite positive free cash flow.

Income Statement

Revenue has expanded steadily over the last several years, culminating in a strong step-up in the latest annual period (growth of 126.4% vs. the prior year). Profitability is solid and consistent for the industry, with gross margin holding in the mid‑20% range and net margin improving to ~9.1% most recently (vs. ~6.1% in 2020). A key watch-out is that margins have not expanded meaningfully in the most recent year despite the sharp revenue increase (gross margin slightly down vs. 2024), suggesting mix or cost pressure could limit incremental profitability.

Balance Sheet

The balance sheet is conservatively positioned with very low leverage (debt-to-equity ~1.9% most recently, down from ~6.9% in 2020) and a growing equity base. Returns on equity are healthy and stable (generally ~8%–11% across the period), indicating the company is generating reasonable profits without relying on heavy debt. The main limitation is that returns are good but not exceptional, implying there may be room to improve capital efficiency.

Cash Flow

Cash generation has strengthened materially: operating cash flow rose to ¥7.6B and free cash flow to ¥5.1B most recently, with free cash flow now covering about two-thirds of net income. However, cash conversion is somewhat uneven—operating cash flow is less than net income in each year shown (most recently ~44% of net income), which can signal working-capital swings or timing effects that make cash flow less predictable despite positive free cash flow.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	48.51B	49.13B	46.20B	45.23B	44.86B	40.12B
Gross Profit	12.58B	12.71B	12.07B	11.56B	12.01B	10.34B
EBITDA	6.96B	8.04B	7.44B	7.37B	7.25B	5.36B
Net Income	4.42B	4.45B	4.01B	3.72B	4.21B	2.93B
Balance Sheet
Total Assets	77.20B	77.60B	65.32B	67.48B	57.57B	51.99B
Cash, Cash Equivalents and Short-Term Investments	9.74B	13.22B	9.71B	6.63B	4.81B	4.32B
Total Debt	1.00B	1.00B	1.00B	1.00B	1.50B	1.63B
Total Liabilities	24.49B	24.70B	19.13B	20.71B	19.33B	17.77B
Stockholders Equity	52.71B	52.90B	46.20B	46.77B	38.24B	34.22B
Cash Flow
Free Cash Flow	0.00	5.06B	4.66B	2.81B	1.11B	997.00M
Operating Cash Flow	0.00	7.61B	6.07B	4.83B	3.87B	2.94B
Investing Cash Flow	0.00	-2.40B	-1.31B	-1.98B	-2.81B	-1.69B
Financing Cash Flow	0.00	-1.78B	-1.77B	-1.12B	-691.00M	-965.00M

Hokko Chemical Industry Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1646.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4992, the sentiment is Positive. The current price of 1646 is below the 20-day moving average (MA) of 1690.20, above the 50-day MA of 1640.13, and above the 200-day MA of 1492.87, indicating a bullish trend. The MACD of 32.31 indicates Negative momentum. The RSI at 62.89 is Neutral, neither overbought nor oversold. The STOCH value of 64.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4992.

Hokko Chemical Industry Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4992	82 Outperform	¥42.97B	10.29	―	2.86%	4.66%	19.39%
4462	78 Outperform	¥33.57B	12.50	―	1.90%	2.15%	16.14%
4040	77 Outperform	¥7.32B	6.31	―	1.96%	8.43%	2.99%
4979	75 Outperform	¥23.09B	9.28	―	3.82%	8.02%	42.17%
4997	69 Neutral	¥79.75B	15.55	―	2.35%	6.95%	8.85%
4996	64 Neutral	¥87.95B	19.32	―	3.41%	5.84%	-67.78%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%