Nippon Denko Co., Ltd. (5563) AI Stock Analysis

• Market Cap: ¥50.42B
• Dividend Yield: 3.23%
• Average Volume (3M): 312.88K
• Price to Earnings (P/E): 24.7
• Beta (1Y): 0.66
• Revenue Growth: 5.34%
• EPS Growth: -60.38%
• Country: JP
• Employees: 783
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Steel
• EPS (TTM): -0.17
• Shares Outstanding: 137,386,470
• 10 Day Avg. Volume: 331,920
• 30 Day Avg. Volume: 312,880
• PEG Ratio: -0.46
• Price to Book (P/B): 0.53
• Price to Sales (P/S): 0.50
• P/FCF Ratio: 23.58
• 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: 59 Neutral
• Price Target: ¥408.00 ▲(17.58% Upside)

Nippon Denko Co., Ltd. has a stable financial foundation with strong equity and improving profit margins, but faces challenges with declining net income and free cash flow. The technical analysis indicates bearish momentum, suggesting potential short-term price weakness. The valuation is moderate, with a reasonable dividend yield offering some investor appeal. Overall, the stock is positioned for cautious consideration, with financial stability offset by technical and cash flow concerns.

Positive Factors

Strong balance sheet

A very high equity ratio and low debt-to-equity provide durable financial flexibility, lowering refinancing and solvency risk. This balance sheet strength supports capital allocation to maintenance opex, selective investments, and withstands cyclical downturns in steel demand over months.

Improving operating margins

Sustained improvement in gross, EBIT and EBITDA margins indicates structural gains in cost efficiency or pricing power. Higher underlying margins improve resilience to raw material cost swings and support consistent internal cash generation across steel cycle fluctuations.

Stable revenue growth

Consistent, if modest, top-line growth reflects stable industrial demand and ongoing customer relationships in ferroalloys. Predictable revenue expansion supports capacity utilization planning and reduces execution risk over the medium term versus volatile demand swings.

Negative Factors

Declining net income

A reduction in net income signals potential pressure on after-tax profitability that could persist if cost or pricing challenges remain. Over several months this can constrain retained earnings, limit reinvestment, and pressure dividend or capex flexibility.

Sharp free cash flow decline

A ~58% fall in free cash flow materially weakens the firm's ability to self-fund operations, capex and dividends. Persistent lower FCF relative to net income increases dependence on external financing and reduces the margin for error in capital allocation over the medium term.

Low return on equity

ROE near 4% points to modest profitability on shareholders' capital and suggests limited value creation. Over a multi-month horizon, low ROE may constrain the company's ability to attract equity investment and signals structural limits on profit conversion from equity base.

Nippon Denko Co., Ltd. Business Overview & Revenue Model

Company Description

Nippon Denko Co., Ltd. (5563) is a Japanese company specializing in the manufacturing and supply of a range of industrial products, primarily focusing on materials and components for various sectors, including electronics, automotive, and energy. The company is known for its advanced technologies in the fields of chemical manufacturing and metal processing, and it offers products such as specialty chemicals, alloys, and electronic materials that cater to the demands of modern industries.

How the Company Makes Money

Nippon Denko Co., Ltd. generates revenue through multiple key streams, primarily from the sale of its specialized industrial materials and components. The company supplies products to various sectors, including electronics, where it provides materials for semiconductors and circuit boards, as well as to the automotive industry, where it offers advanced alloys and chemical products. Additionally, Nippon Denko engages in strategic partnerships with major manufacturers, allowing for collaborative development and innovation, which helps to enhance its product offerings and market reach. The company's revenue is also supported by investments in research and development, enabling it to maintain a competitive edge and adapt to evolving market needs.

Nippon Denko Co., Ltd. Financial Statement Overview

Summary

Nippon Denko Co., Ltd. displays solid operational metrics with improving profit margins and a robust balance sheet characterized by a strong equity position and controlled leverage. However, the decreasing net income and significant drop in free cash flow highlight potential areas for improvement. The company is in a stable financial position, but sustaining profitability and improving cash flow management will be crucial for future growth.

Income Statement

Nippon Denko Co., Ltd. shows moderate revenue growth of 2.39% from 2023 to 2024, with a notable improvement in gross profit margin at 17.39% for 2024. The net profit margin stood at 4.02% for 2024, indicating profitability, although it has seen a decrease compared to the previous year. EBIT and EBITDA margins have also improved to 8.76% and 12.91%, respectively, demonstrating enhanced operational efficiency. However, the dip in net income from 2023 suggests some challenges in sustaining net profitability.

Balance Sheet

The company maintains a strong equity base with an equity ratio of 72.07% in 2024, indicating financial stability. The debt-to-equity ratio has improved to 0.23, reflecting effective leverage management. Return on Equity (ROE) for 2024 is at 4.27%, indicating moderate returns on shareholder investments. The balance sheet reflects a healthy financial position with a good balance between assets and liabilities.

Cash Flow

The free cash flow has decreased significantly from 2023 to 2024, showing a decline of 58.39%, which could pose potential liquidity challenges. The operating cash flow to net income ratio is 1.90, suggesting strong cash generation relative to net income. The free cash flow to net income ratio is 0.53, indicating lower free cash flow generation compared to net income. Overall, while cash generation remains positive, the decline in free cash flow is a concern.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	79.84B	78.23B	78.39B	79.34B	65.98B	54.00B
Gross Profit	13.68B	13.61B	11.39B	15.38B	14.36B	10.62B
EBITDA	9.23B	8.59B	6.40B	13.36B	8.75B	4.71B
Net Income	3.08B	3.14B	4.33B	7.95B	7.77B	2.62B
Balance Sheet
Total Assets	96.79B	102.20B	101.02B	104.94B	95.89B	86.17B
Cash, Cash Equivalents and Short-Term Investments	5.91B	5.95B	7.87B	8.91B	9.78B	9.60B
Total Debt	14.01B	17.08B	18.56B	21.47B	18.00B	19.44B
Total Liabilities	23.14B	28.52B	29.32B	35.72B	31.56B	29.74B
Stockholders Equity	73.66B	73.68B	71.70B	69.19B	64.26B	56.37B
Cash Flow
Free Cash Flow	0.00	1.66B	3.98B	1.74B	2.53B	5.72B
Operating Cash Flow	0.00	5.96B	8.78B	6.28B	5.25B	10.35B
Investing Cash Flow	0.00	-4.85B	-4.67B	-4.59B	-2.21B	-8.99B
Financing Cash Flow	0.00	-3.06B	-5.24B	-2.68B	-2.92B	701.00M

Nippon Denko Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 347.00
• 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:5563, the sentiment is Positive. The current price of 347 is below the 20-day moving average (MA) of 348.71, above the 50-day MA of 332.15, and above the 200-day MA of 293.20, indicating a bullish trend. The MACD of 12.62 indicates Negative momentum. The RSI at 78.62 is Negative, neither overbought nor oversold. The STOCH value of 79.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:5563.

Nippon Denko Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5445	72 Outperform	¥56.77B	5.27	―	6.31%	-8.44%	9.50%
5480	71 Outperform	¥72.65B	7.18	―	5.15%	-9.28%	-7.18%
5440	70 Outperform	¥111.65B	10.01	―	3.70%	-3.06%	1.15%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
5410	61 Neutral	¥59.68B	5.36	―	6.27%	-7.45%	-9.12%
5449	61 Neutral	¥86.62B	2,136.85	―	1.24%	-12.05%	-97.36%
5563	59 Neutral	¥50.42B	24.68	2.94%	3.23%	5.34%	-60.38%

Nippon Denko Co., Ltd. Corporate Events

Nippon Denko Completes Treasury Shares Disposal for Employee Incentive Plan

Nippon Denko Co., Ltd. has completed the payment procedures for the disposal of treasury shares as part of its restricted stock incentive plan for employees. The number of shares and total disposal amount were adjusted due to partial forfeiture of rights, reflecting the number of employees who agreed to participate in the plan.

The most recent analyst rating on (JP:5563) stock is a Hold with a Yen318.00 price target. To see the full list of analyst forecasts on Nippon Denko Co., Ltd. stock, see the JP:5563 Stock Forecast page.

Nippon Denko Expands Kashima Plant to Boost Recycling Capacity

Nippon Denko Co., Ltd. has announced plans to expand its Kashima Plant with the addition of an incineration ash melting furnace and related facilities. This expansion is part of the company’s strategy to meet growing demand for recycling incineration ash, as landfill capacity decreases. The new facilities, including the fifth furnace, are expected to enhance the company’s recycling capabilities, with commercial operations slated to begin in December 2027. This move aligns with their medium to long-term business plan and is anticipated to strengthen their market position without impacting the current fiscal year’s financial results.

The most recent analyst rating on (JP:5563) stock is a Hold with a Yen318.00 price target. To see the full list of analyst forecasts on Nippon Denko Co., Ltd. stock, see the JP:5563 Stock Forecast page.

Nippon Denko Reports Mixed Financial Results Amid Profitability Challenges

Nippon Denko Co., Ltd. reported its consolidated financial results for the nine months ending September 30, 2025, showing a slight increase in net sales by 2.5% compared to the previous year. However, the company experienced significant declines in operating profit, ordinary profit, and profit attributable to owners, indicating challenges in maintaining profitability. The company also announced a forecasted increase in annual dividends, with a special commemorative dividend planned for its 100th anniversary, reflecting its commitment to shareholder returns despite financial pressures.

The most recent analyst rating on (JP:5563) stock is a Buy with a Yen383.00 price target. To see the full list of analyst forecasts on Nippon Denko Co., Ltd. stock, see the JP:5563 Stock Forecast page.

Nippon Denko Announces Partial Contract Termination with Sumitomo Metal Mining

Nippon Denko Co., Ltd. announced the partial termination of its contract with Sumitomo Metal Mining Co., Ltd. for the OEM of cathode materials for lithium-ion batteries, effective March 2026, due to a shift in production types by Sumitomo. This termination will lead to a shortened useful life of OEM equipment and a decrease in profits by ¥67 million for the fiscal year ending December 31, 2025, though the overall financial impact is expected to be minimal.

The most recent analyst rating on (JP:5563) stock is a Buy with a Yen383.00 price target. To see the full list of analyst forecasts on Nippon Denko Co., Ltd. stock, see the JP:5563 Stock Forecast page.

Nippon Denko Completes Treasury Share Acquisition

Nippon Denko Co., Ltd. has completed the acquisition of 1,568,100 treasury shares at a cost of 541,246,483 yen through an open market repurchase on the Tokyo Stock Exchange. This acquisition is part of a larger plan approved by the Board of Directors to acquire up to 20,000,000 shares, aiming to enhance shareholder value and optimize capital structure.

The most recent analyst rating on (JP:5563) stock is a Buy with a Yen383.00 price target. To see the full list of analyst forecasts on Nippon Denko Co., Ltd. stock, see the JP:5563 Stock Forecast page.