Asaka Riken Co., Ltd. (5724) AI Stock Analysis

• Market Cap: ¥19.73B
• Dividend Yield: 0.56%
• Average Volume (3M): 231.64K
• Price to Earnings (P/E): 47.9
• Beta (1Y): 0.82
• Revenue Growth: 9.01%
• EPS Growth: -19.40%
• Country: JP
• Employees: 175
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Industrial Materials
• EPS (TTM): 41.91
• Shares Outstanding: 5,144,600
• 10 Day Avg. Volume: 586,550
• 30 Day Avg. Volume: 231,643
• PEG Ratio: -1.10
• Price to Book (P/B): 1.30
• Price to Sales (P/S): 0.74
• P/FCF Ratio: -5.64
• 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: 58 Neutral
• Price Target: ¥3,812.00 ▲(47.18% Upside)
• Action: Reiterated Date: 01/20/26
• Date: Action: Reiterated 01/20/26

The score is held back most by expensive valuation (very high P/E with a low dividend yield) and mixed fundamentals (declining net margin, higher leverage, and negative free cash flow). Technicals remain supportive with strong trend and momentum, but overbought signals raise near-term downside risk.

Positive Factors

Recycling & materials processing business

Asaka Riken's core business of recovering and refining precious metals and supplying industrial materials serves durable manufacturing supply chains. This specialist processing role creates recurring B2B demand, entrenched customer relationships, and defensible operational know-how that support steady mid-term revenue.

Healthy gross profit margin

A gross margin above 30% indicates efficient production and pricing power in core recycling and materials operations. Sustained gross profitability gives the company room to absorb raw-material swings and invest in processing capability, underpinning medium-term margin resilience despite pressure lower in the P&L.

Strong operating cash vs net income

Operating cash generation exceeding reported net income shows quality earnings and effective working-capital conversion. That cash conversion can support operations, fund necessary maintenance capex, and provide flexibility to manage debt servicing even while free cash flow is currently negative.

Negative Factors

Negative free cash flow

Persistent negative free cash flow reduces the firm's ability to self-fund growth, pay down debt, or build cash cushions. Over months this forces reliance on external financing or asset sales, raising financing cost and constraining capital allocation choices that could impair long-term resilience.

Rising leverage and weaker ROE

Higher leverage and a falling ROE signal increased balance-sheet risk and reduced shareholder profitability. If leverage continues, interest obligations will pressure net margins and limit strategic optionality, making the business more sensitive to demand shocks or input-cost volatility over the medium term.

Declining net profit margin

A thin and declining net margin makes earnings vulnerable to small revenue or cost moves, limiting retained earnings and reinvestment. Over several months this compresses financial flexibility, weakens ability to build reserves, and heightens the impact of any further cost inflation or competitive pricing pressure.

Asaka Riken Co., Ltd. Business Overview & Revenue Model

Company Description

Asaka Riken Co.,Ltd. engages in the precious metal, environmental, and other businesses in Japan. It collects precious metals, such as gold, silver, platinum, palladium, etc. from substrate scraps, defective products, and disposed products; provides precision cleaning services for shield plates and masks; regenerates and recycles components from defective products in the production process; and collects and evaluates valuable metals from dental scraps. The company also collects and recycles waste solutions of ferric chloride and cupric chloride, as well as offers coagulant for drainage treatment in the sewer system and coagulation/precipitation agent for treatment of various types of factory effluent and animal manure. In addition, it offers filter materials for purified water, as well as designs/constructs filter systems; and develops, manufactures, and sells photocatalyst materials for environmental purification. Further, the company develops and sells various data measurement processing systems and automatic measuring systems; and develops other network systems, such as Intranet/Internet application systems. The company was incorporated in 1969 and is headquartered in Koriyama, Japan.

How the Company Makes Money

Asaka Riken generates revenue through the sale of its core products, including semiconductor materials and automotive components, which are essential for the production of electronic devices and vehicles. The company has established strategic partnerships with major automotive and electronics manufacturers, allowing it to secure long-term contracts and steady demand for its products. Revenue is also bolstered by its investment in research and development, leading to the creation of new materials and technologies that attract additional clients and markets. Additionally, Asaka Riken benefits from economies of scale in manufacturing, which helps to reduce costs and improve profit margins.

Asaka Riken Co., Ltd. Financial Statement Overview

Summary

Revenue growth and a healthy gross margin support the business, but the net margin has declined, leverage has increased (higher risk), and free cash flow is negative—together limiting overall financial strength.

Income Statement

Asaka Riken Co., Ltd. shows a stable revenue growth rate of 3.67% in the latest year, recovering from a previous decline. The gross profit margin is healthy at 31.29%, indicating efficient production. However, the net profit margin has decreased to 3.46%, suggesting increased costs or expenses. The EBIT and EBITDA margins are moderate, reflecting operational efficiency but also room for improvement.

Balance Sheet

The company's debt-to-equity ratio has increased significantly, indicating higher leverage, which could pose a risk if not managed properly. The return on equity has decreased to 6.10%, showing reduced profitability for shareholders. The equity ratio stands at 35.68%, suggesting a balanced but slightly leveraged capital structure.

Cash Flow

The free cash flow is negative, indicating potential liquidity issues. The operating cash flow to net income ratio is 1.37, showing strong cash generation relative to net income. However, the negative free cash flow growth rate is concerning and suggests challenges in maintaining cash reserves.

Breakdown	Sep 2025	Sep 2024	Sep 2023	Sep 2022	Sep 2021
Income Statement
Total Revenue	8.69B	7.97B	8.29B	8.59B	8.07B
Gross Profit	2.72B	2.33B	2.25B	2.66B	1.90B
EBITDA	832.78M	850.37M	674.09M	1.06B	675.00M
Net Income	300.24M	371.67M	307.33M	622.15M	377.36M
Balance Sheet
Total Assets	13.81B	8.54B	8.35B	7.89B	7.12B
Cash, Cash Equivalents and Short-Term Investments	4.15B	1.52B	1.77B	1.97B	1.68B
Total Debt	7.52B	1.82B	2.53B	2.09B	2.20B
Total Liabilities	8.88B	3.89B	4.09B	3.77B	3.59B
Stockholders Equity	4.93B	4.65B	4.25B	4.11B	3.53B
Cash Flow
Free Cash Flow	-1.13B	311.16M	-405.18M	237.22M	129.90M
Operating Cash Flow	409.99M	799.94M	697.50M	838.03M	399.31M
Investing Cash Flow	-801.17M	-254.56M	-1.11B	-369.97M	-279.88M
Financing Cash Flow	3.55B	-785.43M	202.96M	-179.19M	-274.76M

Asaka Riken Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2590.00
• 50DMA: Positive
• 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:5724, the sentiment is Positive. The current price of 2590 is below the 20-day moving average (MA) of 3856.25, below the 50-day MA of 3561.72, and above the 200-day MA of 1984.07, indicating a bullish trend. The MACD of 9.11 indicates Positive momentum. The RSI at 55.22 is Neutral, neither overbought nor oversold. The STOCH value of 53.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:5724.

Asaka Riken Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5715	76 Outperform	¥193.49B	13.60	11.58%	1.62%	9.81%	30.20%
5726	71 Outperform	¥124.20B	22.86	―	1.38%	-3.56%	-30.17%
5727	67 Neutral	¥216.37B	78.62	5.78%	1.49%	0.82%	-1.72%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
5724	58 Neutral	¥19.73B	47.88	―	0.56%	9.01%	-19.40%
5707	53 Neutral	¥23.91B	12.65	-111.61%	―	-11.92%	61.16%
5541	50 Neutral	¥66.34B	69.31	―	9.18%	-35.81%	-138.00%