Shinhokoku Material Corp. (5542) AI Stock Analysis

• Market Cap: ¥5.41B
• Dividend Yield: 2.49%
• Average Volume (3M): 12.32K
• Price to Earnings (P/E): 9.1
• Beta (1Y): 0.40
• Revenue Growth: -6.55%
• EPS Growth: 6.55%
• Country: JP
• Employees: 84
• Sector: Basic Materials
• Sector Strength: 61
• Industry: Steel
• EPS (TTM): 17.13
• Shares Outstanding: 7,020,000
• 10 Day Avg. Volume: 8,600
• 30 Day Avg. Volume: 12,320
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: ¥883.00
• Price Target Upside: 9.96% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 77 Outperform
• Price Target: ¥883.00 ▲(9.96% Upside)

Shinhokoku Material Corp. shows strong financial performance, with stable financial metrics and robust cash flows as key strengths. The stock's attractive valuation further supports its appeal. However, technical indicators suggest caution due to overbought conditions, which could impact short-term price movements. Overall, the company's financial health and valuation provide a solid foundation for its stock performance.

Positive Factors

Cash Flow Management

The significant improvement in free cash flow indicates effective cash management, enhancing the company's ability to invest in growth and weather economic fluctuations.

Balance Sheet Strength

A strong balance sheet with low leverage and a high equity ratio provides financial stability and flexibility, supporting long-term growth and risk management.

Profit Margin Improvement

Improved profit margins reflect better cost management and operational efficiency, contributing to sustainable profitability and competitive positioning.

Negative Factors

Revenue Decline

A decline in revenue growth can signal challenges in market demand or competitive pressures, potentially impacting future earnings and market share.

Revenue Growth Volatility

Volatile revenue growth may indicate market instability or inconsistent demand, which can complicate long-term strategic planning and investment decisions.

Industry Challenges

Operating in a cyclical industry like steel can expose the company to economic downturns and fluctuating demand, affecting long-term financial stability.

Shinhokoku Material Corp. Business Overview & Revenue Model

Company Description

Shinhokoku Material Corp. (5542) is a Japanese company specializing in the manufacturing and sale of non-ferrous metal products. The company focuses on producing precision components and materials essential for various industrial applications. Shinhokoku Material Corp. serves sectors such as electronics, automotive, and industrial machinery, providing high-quality materials that meet diverse customer needs.

How the Company Makes Money

Shinhokoku Material Corp. generates revenue primarily through the sale of its non-ferrous metal products and precision components. The company's key revenue streams include contracts with manufacturers in the electronics, automotive, and industrial machinery sectors. By offering specialized materials that enhance product performance and durability, Shinhokoku Material Corp. maintains strong relationships with its clients. Additionally, the company may engage in strategic partnerships and collaborations to expand its market reach and access new technologies, further contributing to its earnings.

Shinhokoku Material Corp. Financial Statement Overview

Summary

Shinhokoku Material Corp. demonstrates strong financial performance with stable margins, a solid balance sheet, and improving cash flows. The company's low leverage and strong equity base provide a cushion against economic fluctuations. Despite a revenue decline in 2024, profitability and cash flow trends are positive, indicating a well-managed financial position.

Income Statement

The income statement reflects robust financial health, with a consistent gross profit margin around 23.5% over the years. Net profit margin saw an increase from 7.5% in 2020 to 9.3% in 2024, indicating improved cost management. Revenue growth was 55.8% from 2020 to 2021, followed by more modest growth, with a slight decline in 2024 compared to 2023. EBIT and EBITDA margins have remained stable, showcasing operational efficiency. However, the recent revenue dip warrants monitoring.

Balance Sheet

The balance sheet is strong, with a low debt-to-equity ratio of 0.20 in 2024, indicating low financial leverage. The equity ratio improved to 72% in 2024, showing a solid equity base. Return on equity rose to 10.3% in 2024, reflecting effective use of equity to generate profits. The company maintains a healthy cash position, supporting its financial stability. Overall, the balance sheet highlights strong financial fundamentals with low risk.

Cash Flow

Cash flow analysis shows impressive growth, with free cash flow increasing significantly from negative in 2021 to $1.29 billion in 2024, driven by strong operating cash flow. The operating cash flow to net income ratio of 2.45 in 2024 indicates efficient cash generation relative to net income. Historically, cash flow volatility was present, but recent improvements suggest strengthening cash flow management. The focus should remain on maintaining positive cash flow trends.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.21B	6.48B	6.36B	4.66B	3.99B
Gross Profit	1.46B	1.42B	1.42B	1.02B	804.52M
EBITDA	933.38M	792.15M	817.26M	580.65M	445.92M
Net Income	576.42M	476.04M	491.85M	322.74M	191.60M
Balance Sheet
Total Assets	7.80B	7.74B	7.28B	6.97B	6.52B
Cash, Cash Equivalents and Short-Term Investments	3.43B	2.56B	2.37B	2.55B	3.05B
Total Debt	1.11B	1.51B	1.52B	1.52B	1.58B
Total Liabilities	2.19B	2.51B	2.47B	2.50B	2.28B
Stockholders Equity	5.61B	5.24B	4.82B	4.47B	4.24B
Cash Flow
Free Cash Flow	1.29B	301.95M	-31.70M	-341.21M	614.24M
Operating Cash Flow	1.41B	497.28M	169.73M	-243.28M	674.79M
Investing Cash Flow	4.86M	-197.63M	-201.11M	-97.33M	-60.55M
Financing Cash Flow	-554.29M	-104.26M	-151.80M	-160.38M	-193.40M

Shinhokoku Material Corp. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 803.00
• 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:5542, the sentiment is Neutral. The current price of 803 is above the 20-day moving average (MA) of 792.85, above the 50-day MA of 791.32, and above the 200-day MA of 698.21, indicating a neutral trend. The MACD of 0.69 indicates Positive momentum. The RSI at 48.59 is Neutral, neither overbought nor oversold. The STOCH value of 59.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:5542.

Shinhokoku Material Corp. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5542	77 Outperform	¥5.41B	9.08		2.49%	-6.55%	6.55%
5491	72 Outperform	¥5.27B	6.23		―	-2.76%	-44.71%
5446	70 Neutral	¥4.89B	9.67		3.57%	-15.00%	9.27%
5609	69 Neutral	¥4.25B	16.29		3.40%	-8.45%	-42.89%
5986	65 Neutral	¥4.68B	14.46		1.94%	-0.82%	-9.80%
Sector *	61 Neutral	$10.29B	7.21	-0.05%	2.89%	2.87%	-36.73%
5476	45 Neutral	¥6.84B	―		12.44%	4.33%	-234.35%