Chugokukogyo Co., Ltd. (5974) AI Stock Analysis

• Market Cap: ¥2.63B
• Dividend Yield: 2.71%
• Average Volume (3M): 6.99K
• Price to Earnings (P/E): 6.1
• Beta (1Y): 0.43
• Revenue Growth: -2.12%
• EPS Growth: 70.54%
• Country: JP
• Employees: 379
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Gas
• EPS (TTM): 16.10
• Shares Outstanding: 3,420,000
• 10 Day Avg. Volume: 7,660
• 30 Day Avg. Volume: 6,993
• PEG Ratio: 0.05
• Price to Book (P/B): 0.31
• Price to Sales (P/S): 0.12
• P/FCF Ratio: 2.15
• 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: 81 Outperform
• Price Target: ¥1,011.00 ▲(33.91% Upside)

The score is driven primarily by strong financial performance—especially robust and improving cash flows—along with a strong technical uptrend. Valuation also supports the score due to a low P/E and a moderate dividend yield, while profitability (low EBIT margin and ROE) is the main constraint.

Positive Factors

Cash Flow Strength

A >100% rise in free cash flow and a 2.7 operating-cash-flow-to-net-income ratio signal durable internal funding. This improves the company’s ability to fund capex, support working capital, reduce leverage or pay distributions without relying on external financing, strengthening long-term resilience.

Balance Sheet Resilience

A robust equity ratio and low debt-to-equity indicate manageable leverage and financial flexibility. This balance-sheet strength enables the company to bid on large public works, absorb project timing variability, and pursue selective investment without materially increasing financial risk over the medium term.

Specialized Product Portfolio

A focus on precast concrete, steel frames and civil-engineering products aligns the firm with infrastructure and urban construction demand. Specialized offerings and emphasis on quality and innovation support longer-term customer relationships, repeat project work, and barriers to entry versus generic suppliers.

Negative Factors

Low EBIT Margin

A 3.0% EBIT margin reflects limited operating leverage and weak conversion of revenue to operating profit. Persistently low margins constrain reinvestment, weaken the buffer against input-cost inflation, and require either price recovery or efficiency gains to improve sustainable profitability.

Modest Return on Equity

A 7% ROE signals modest capital efficiency, limiting long-term shareholder return potential and internal capital generation for growth. Without meaningful margin expansion or higher asset turnover, the company may struggle to raise ROE toward peer levels and justify incremental investment.

Recent Revenue Trajectory

A negative recent revenue growth reading suggests potential demand timing issues or project delays. Continued top-line weakness would impair fixed-cost absorption, hinder margin improvement and reduce free-cash-flow sustainability, making stable recovery in project wins essential for medium-term stability.

Chugokukogyo Co., Ltd. Business Overview & Revenue Model

Company Description

Chugokukogyo Co.,Ltd. manufactures and sells high voltage, steel structure, and facility equipment. The company manufactures and sells LP gas containers, LP gas storage tanks, gas cylinders, and LP gas bulk storage tank; and designs, constructs, and inspects LP gas plants. It also offers inner cover for annealing furnaces and various other steel structure products; FRP feed tank and silage silos; FRP pharmaceutical tanks and covers; FRP automotive parts, vehicle wash basins, etc.; livestock products, such as wet feeders and pipe barns; BM deodorizers; and livestock wastewater treatment equipment. The company was incorporated in 1950 and is headquartered in Kure, Japan.

How the Company Makes Money

Chugokukogyo Co., Ltd. generates revenue through the production and sale of its construction materials and civil engineering products. The primary revenue streams include direct sales of precast concrete and steel products to construction firms and contractors engaged in various infrastructure projects. The company may also benefit from long-term contracts with government and private sector clients for large-scale construction initiatives. Additionally, any significant partnerships with construction companies, engineering firms, or participation in public works projects could further enhance its earnings potential. The company's focus on quality, innovation in product development, and efficient production processes are critical factors that contribute to its profitability.

Chugokukogyo Co., Ltd. Financial Statement Overview

Summary

Strong cash flow quality and improvement (free cash flow +103.2%, operating cash flow to net income 2.7) support financial strength. Revenue growth (+3.8%) and improving margins are positives, but profitability remains constrained by low EBIT margin (3.0%) and modest ROE (7.0%).

Income Statement

Chugokukogyo Co., Ltd. demonstrates strong revenue growth with a 3.8% increase in the last year, alongside an improving gross profit margin of 20.3%. The net profit margin also shows a positive trend at 2.7%, up from previous years, indicating effective cost management. However, the EBIT margin remains relatively low at 3.0%, suggesting room for improvement in operational efficiency.

Balance Sheet

The company maintains a solid equity position with an equity ratio of 43.2%, reflecting financial stability. The debt-to-equity ratio is moderate at 0.28, indicating manageable leverage levels. However, return on equity (ROE) is relatively low at 7.0%, which could be improved by enhancing profitability.

Cash Flow

Chugokukogyo Co., Ltd. shows impressive cash flow management with a significant improvement in free cash flow, growing by 103.2%. The operating cash flow to net income ratio is strong at 2.7, indicating robust cash generation relative to profits. The free cash flow to net income ratio also improved significantly, highlighting efficient capital allocation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	13.49B	13.84B	13.33B	13.39B	12.87B	12.88B
Gross Profit	2.70B	2.81B	2.60B	2.64B	2.56B	2.60B
EBITDA	819.00M	913.00M	540.00M	695.00M	545.00M	415.00M
Net Income	300.00M	376.00M	206.00M	199.00M	132.00M	124.00M
Balance Sheet
Total Assets	12.02B	12.45B	13.36B	12.09B	11.76B	11.48B
Cash, Cash Equivalents and Short-Term Investments	666.00M	512.00M	534.00M	504.00M	576.00M	550.00M
Total Debt	1.60B	1.53B	2.24B	2.22B	1.88B	1.95B
Total Liabilities	6.23B	6.58B	7.81B	7.13B	7.03B	6.72B
Stockholders Equity	5.31B	5.38B	5.08B	4.52B	4.30B	4.35B
Cash Flow
Free Cash Flow	0.00	772.00M	38.00M	-408.00M	122.00M	87.00M
Operating Cash Flow	0.00	1.02B	289.00M	-81.00M	309.00M	489.00M
Investing Cash Flow	0.00	-205.00M	-192.00M	-254.00M	-145.00M	-336.00M
Financing Cash Flow	0.00	-833.00M	-66.00M	263.00M	-138.00M	-309.00M

Chugokukogyo Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 755.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:5974, the sentiment is Positive. The current price of 755 is below the 20-day moving average (MA) of 858.90, below the 50-day MA of 762.46, and above the 200-day MA of 607.93, indicating a neutral trend. The MACD of 13.04 indicates Positive momentum. The RSI at 48.20 is Neutral, neither overbought nor oversold. The STOCH value of 14.83 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:5974.

Chugokukogyo Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5974	81 Outperform	¥2.63B	6.15	―	2.71%	-2.12%	70.54%
9536	76 Outperform	¥88.42B	8.78	9.07%	3.61%	9.39%	77.24%
9534	74 Outperform	¥76.96B	6.08	―	2.88%	2.77%	10.64%
9543	70 Outperform	¥93.74B	9.38	8.29%	3.89%	1.08%	37.11%
9537	69 Neutral	¥18.46B	6.19	―	2.18%	6.66%	―
9539	68 Neutral	¥38.43B	11.76	―	1.81%	0.93%	1212.45%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%