SEC Carbon Ltd. (5304) AI Stock Analysis

• Market Cap: ¥54.01B
• Dividend Yield: 4.32%
• Average Volume (3M): 16.72K
• Price to Earnings (P/E): 8.7
• Beta (1Y): 0.92
• Revenue Growth: -31.99%
• EPS Growth: -44.75%
• Country: JP
• Employees: 271
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): 67.39
• Shares Outstanding: 20,694,340
• 10 Day Avg. Volume: 16,070
• 30 Day Avg. Volume: 16,716
• PEG Ratio: -0.36
• Price to Book (P/B): 0.57
• Price to Sales (P/S): 1.35
• P/FCF Ratio: -20.96
• 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: 68 Neutral
• Price Target: ¥2,848.00 ▲(21.76% Upside)
• Action: Reiterated Date: 03/20/26
• Date: Action: Reiterated 03/20/26

The score is driven primarily by mixed financial performance—strong balance-sheet stability but deteriorating cash flow and softer profitability/revenue trends. Valuation is a clear positive with a low P/E and solid dividend yield, while technicals are mildly weak in the near term (below key short-term averages and low RSI).

Positive Factors

Very strong balance sheet / minimal leverage

Extremely low leverage and a 90.6% equity ratio materially reduce solvency risk and interest exposure. Over a multi-month horizon this strengthens financial flexibility to fund capex, survive cyclical downturns, and pursue strategic investments without needing high-cost external debt.

High gross and EBIT margins

Sustained gross and EBIT margins indicate structural cost control and operating efficiency in its specialty chemicals business. These margin levels provide durable earnings resilience versus revenue swings, supporting reinvestment capacity and protecting cash generation during moderate demand softness.

Positive return-generation despite pressures

A mid-single-digit ROE coupled with solid profitability implies the company can convert equity into earnings consistently. While slightly pressured vs prior years, this level supports steady internal capital formation and suggests the business can continue funding operations and modest shareholder returns over several months.

Negative Factors

Sharp revenue decline

Substantial revenue contraction undermines scale economics and raises questions about demand or market share. Over a 2–6 month horizon, lower top-line trends can compress operating leverage, reduce discretionary investment, and make sustaining margins and returns more difficult without a clear revenue recovery plan.

Deteriorating operating cash flow and negative FCF

Falling operating cash flow and negative free cash flow constrain the company's ability to fund capex, pay dividends, or build liquidity organically. Even with low debt, persistent cash shortfalls increase reliance on external financing or asset sales and raise execution risk for strategic initiatives over months.

Declining profitability margins

Declining net and EBIT margins signal either margin pressure from input costs, pricing weakness, or operational inefficiencies. If persistent, margin erosion will lower cash conversion and ROE, reducing resilience to revenue shocks and limiting the firm's ability to invest in growth or absorb cyclical downturns.

SEC Carbon Ltd. Business Overview & Revenue Model

Company Description

Sec Carbon, Limited manufactures and sells graphite electrodes for steel making. It offers SK-B graphitized cathode blocks for aluminum smelting; graphite electrodes that are used in electric arc furnaces for steelmaking; and carbon and graphite specialties and materials for use in the semiconductor, aerospace, chemical, electrochemistry, machine, and metallurgy industries. The company also provides fine powder that is used in various industries, such as paint, sliding materials, metallurgic uses, and batteries. It supplies its products to approximately 40 countries worldwide. The company was formerly known as SEC Corporation and changed its name to Sec Carbon, Limited in October 2006. Sec Carbon, Limited was founded in 1934 and is headquartered in Amagasaki, Japan.

How the Company Makes Money

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SEC Carbon Ltd. Financial Statement Overview

Summary

Solid profitability metrics and a very strong balance sheet are offset by weakening trends: net and EBIT margins declined, revenue growth was volatile with a recent drop, and operating/free cash flow deteriorated (including negative free cash flow).

Income Statement

SEC Carbon Ltd. has shown a mixed performance in its income statement. The gross profit margin for the latest period is approximately 35.6%, reflecting a strong ability to control production costs relative to revenue. However, the net profit margin decreased to 18.4% from the previous year's 19.6%, indicating a decline in profitability. Revenue growth has been volatile, decreasing by 16.4% in the most recent year after a previous increase. The EBIT margin is at 21.8%, a decline from the previous year, suggesting challenges in operational efficiency. Overall, while the company maintains solid margins, the fluctuations in revenue and profitability present concerns.

Balance Sheet

The balance sheet of SEC Carbon Ltd. indicates a robust financial position with a very low debt-to-equity ratio of 0.0001, highlighting minimal leverage and a strong equity base. The return on equity (ROE) stands at 7.8% for the latest year, demonstrating moderate efficiency in generating profits from shareholders' equity. The equity ratio is high at 90.6%, indicating financial stability and a low reliance on debt financing. The company's solid equity position is a key strength, though the decline in ROE compared to previous years suggests some pressure on return generation.

Cash Flow

Cash flow analysis reveals some concerns. Operating cash flow decreased significantly to 4.5 billion JPY from the previous year's 7.8 billion JPY, reflecting potential operational challenges. The free cash flow turned negative, indicating that capital expenditures exceeded the cash generated from operations. The operating cash flow to net income ratio is 0.79, below the ideal level, suggesting cash flow issues relative to accounting profits. The company's ability to generate free cash flow has been inconsistent, raising questions about sustainability in cash generation.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	27.16B	31.18B	37.31B	30.40B	22.92B	21.30B
Gross Profit	8.99B	11.09B	14.72B	10.23B	6.41B	5.64B
EBITDA	6.32B	8.12B	11.59B	7.60B	4.41B	4.52B
Net Income	4.15B	5.75B	7.30B	5.40B	3.04B	2.50B
Balance Sheet
Total Assets	82.64B	81.93B	88.57B	73.00B	63.01B	58.72B
Cash, Cash Equivalents and Short-Term Investments	20.76B	17.42B	22.34B	19.37B	22.44B	16.63B
Total Debt	39.00M	9.00M	1.00M	7.00M	17.00M	30.00M
Total Liabilities	8.25B	8.13B	15.68B	10.58B	6.95B	5.24B
Stockholders Equity	74.37B	73.79B	72.88B	62.40B	56.05B	53.47B
Cash Flow
Free Cash Flow	0.00	-2.00B	4.55B	69.00M	6.81B	1.47B
Operating Cash Flow	0.00	4.55B	7.79B	2.34B	7.62B	3.37B
Investing Cash Flow	0.00	-5.40B	-16.03B	-4.35B	-954.00M	-1.94B
Financing Cash Flow	0.00	-2.99B	-1.39B	-1.03B	-826.00M	-1.03B

SEC Carbon Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2339.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:5304, the sentiment is Negative. The current price of 2339 is below the 20-day moving average (MA) of 2918.10, below the 50-day MA of 2837.72, and above the 200-day MA of 2321.41, indicating a neutral trend. The MACD of 19.48 indicates Positive momentum. The RSI at 36.89 is Neutral, neither overbought nor oversold. The STOCH value of 55.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:5304.

SEC Carbon Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4064	76 Outperform	¥25.52B	6.46	―	3.21%	9.61%	173.72%
5302	75 Outperform	¥50.97B	10.10	9.07%	4.46%	-1.14%	34.15%
4092	72 Outperform	¥26.31B	12.16	―	3.84%	-3.41%	-12.83%
5304	68 Neutral	¥54.01B	8.68	―	4.32%	-31.99%	-44.75%
4027	66 Neutral	¥33.54B	35.78	―	3.24%	1.83%	-8.54%
5301	63 Neutral	¥196.06B	10.31	6.95%	3.06%	-7.36%	-574.56%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%