Moresco Corporation (5018) AI Stock Analysis

• Market Cap: ¥17.75B
• Dividend Yield: 3.03%
• Average Volume (3M): 8.04K
• Price to Earnings (P/E): 12.7
• Beta (1Y): 0.59
• Revenue Growth: 1.59%
• EPS Growth: -26.64%
• Country: JP
• Employees: 821
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 72.90
• Shares Outstanding: 9,696,500
• 10 Day Avg. Volume: 6,310
• 30 Day Avg. Volume: 8,036
• PEG Ratio: -0.53
• Price to Book (P/B): 0.50
• Price to Sales (P/S): 0.32
• P/FCF Ratio: 6.13
• 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: 79 Outperform
• Price Target: ¥2,210.00 ▲(66.17% Upside)

The score is driven primarily by strong financial performance (growth, low leverage, and solid cash generation) and attractive valuation (low P/E plus a ~3% dividend). Technicals are supportive but tempered by an overbought RSI, which raises near-term reversal risk.

Positive Factors

Conservative leverage / strong equity base

Low financial leverage and a >50% equity ratio provide durable financial flexibility. This conservatism reduces refinancing and liquidity risk, supports sustained R&D, capex and dividends, and enhances resilience through industry cycles over the next several months.

Consistent cash generation and improving FCF

Strong operating cash flow and a meaningful rise in free cash flow indicate reliable cash conversion. This supports investment in product development, working capital needs, and shareholder returns while reducing dependence on external funding across 2–6 months.

Diversified end markets and long-term contracts

Serving multiple sectors (automotive, electronics, metalworking) with long-term contracts and active R&D strengthens revenue predictability and product stickiness. Diversification and contract-backed demand reduce single-market dependency and support steadier demand profiles.

Negative Factors

Profitability compression (net margin and ROE)

Declining net margin and lower ROE signal weaker bottom-line conversion despite decent top-line and gross margin. If sustained, this compresses retained earnings and limits reinvestment capacity, constraining long-term returns and strategic optionality over multiple quarters.

Suboptimal cash profitability vs. accounting net income

Although FCF improved, a FCF-to-net-income ratio below best-in-class peers suggests net income is not fully translating into enduring cash. This may reflect working capital or nonrecurring items, limiting the firm's ability to sustainably fund growth or payouts without efficiency gains.

Exposure to cyclical end markets

Heavy exposure to cyclical sectors like automotive and metalworking creates demand volatility risk tied to macro cycles. Even with contracts, downturns in these industries can materially reduce volumes and margin leverage across a multi-quarter horizon, pressuring revenue stability.

Moresco Corporation Business Overview & Revenue Model

Company Description

Moresco Corporation (5018) is a prominent Japanese company primarily engaged in the manufacturing and supply of high-performance lubricants and specialty chemicals. Operating within the chemical sector, Moresco focuses on providing innovative solutions for various industries, including automotive, electronics, and metalworking. The company's core products encompass cutting oils, processing fluids, and cleaning agents, which are designed to enhance operational efficiency and product quality for its clients.

How the Company Makes Money

Moresco Corporation generates revenue through the sale of its specialized lubricants and chemicals across multiple sectors. The company's revenue model is largely based on product sales, with key revenue streams coming from the automotive and industrial markets, where they supply essential lubricants and processing fluids. Additionally, Moresco benefits from long-term contracts and partnerships with manufacturers in the automotive and electronics industries, which provide a steady demand for their products. The company also invests in research and development to innovate new products, which helps to capture additional market share and increase sales. Furthermore, Moresco's global distribution network enhances its ability to reach customers effectively, contributing positively to its revenue generation.

Moresco Corporation Financial Statement Overview

Summary

Strong overall fundamentals: revenue grew 7.80% (2024→2025), gross margin is robust at 28.97%, leverage is conservative (debt-to-equity 0.24) with a solid equity ratio (56.63%), and operating cash flow is strong (¥2.75B) with improved free cash flow (¥1.78B). The main drawback is profitability compression, with net margin down to 2.95% and ROE down to 4.67%.

Income Statement

Moresco Corporation shows strong revenue growth with a 7.80% increase from 2024 to 2025. The gross profit margin remains robust at 28.97% for 2025, indicating efficient cost management. However, the net profit margin decreased slightly to 2.95% from 4.02% in the previous year, suggesting challenges in converting sales into profit. EBIT and EBITDA margins are stable, reflecting healthy operational performance despite the minor dip in net income.

Balance Sheet

The company maintains a strong balance sheet with a consistent equity ratio of 56.63% in 2025. The debt-to-equity ratio is low at 0.24, reflecting prudent financial leverage. Return on equity slightly declined to 4.67% from 6.37% in the previous year, but remains satisfactory given the industry context. Overall, the balance sheet indicates financial stability and strong equity backing.

Cash Flow

Operating cash flow remains strong at ¥2.75 billion in 2025, with a high operating cash flow to net income ratio of 2.72. Free cash flow improved significantly to ¥1.78 billion, reflecting effective capital expenditure management. However, free cash flow to net income ratio is at 1.76, suggesting room for improvement in cash profitability. The company shows consistent cash flow generation, supporting ongoing operational needs.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	34.14B	34.37B	31.89B	30.33B	27.30B	24.48B
Gross Profit	10.18B	9.96B	8.98B	8.13B	8.72B	7.84B
EBITDA	3.07B	2.95B	3.34B	2.42B	4.19B	2.38B
Net Income	943.00M	1.01B	1.28B	615.00M	1.81B	518.00M
Balance Sheet
Total Assets	36.57B	38.30B	37.05B	32.02B	29.01B	27.71B
Cash, Cash Equivalents and Short-Term Investments	5.07B	5.51B	5.64B	4.26B	4.00B	4.11B
Total Debt	4.48B	5.12B	6.11B	2.85B	968.00M	3.36B
Total Liabilities	12.24B	13.29B	13.93B	10.78B	8.46B	9.54B
Stockholders Equity	21.14B	21.68B	20.13B	18.53B	17.96B	15.90B
Cash Flow
Free Cash Flow	0.00	1.78B	217.00M	-828.00M	1.37B	1.60B
Operating Cash Flow	0.00	2.75B	2.93B	515.00M	2.33B	2.09B
Investing Cash Flow	0.00	-1.21B	-4.25B	-1.17B	603.00M	-660.00M
Financing Cash Flow	0.00	-1.68B	2.82B	1.23B	-2.94B	-1.02B

Moresco Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1330.00
• 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:5018, the sentiment is Positive. The current price of 1330 is below the 20-day moving average (MA) of 1750.00, below the 50-day MA of 1554.24, and below the 200-day MA of 1338.80, indicating a bullish trend. The MACD of 110.58 indicates Negative momentum. The RSI at 65.69 is Neutral, neither overbought nor oversold. The STOCH value of 49.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:5018.

Moresco Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5018	79 Outperform	¥17.75B	12.68	―	3.03%	1.59%	-26.64%
4957	74 Outperform	¥14.06B	8.73	―	0.88%	5.90%	135.08%
4635	69 Neutral	¥19.96B	11.55	―	3.61%	8.85%	110.05%
4620	64 Neutral	¥22.29B	33.66	―	2.86%	-3.46%	-52.24%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4406	61 Neutral	¥8.65B	18.48	―	1.35%	-2.76%	-25.24%
4228	55 Neutral	¥19.07B	-2.20	―	3.23%	-0.45%	-3792.87%