Howa Machinery, Ltd. (6203) AI Stock Analysis

• Market Cap: ¥12.46B
• Dividend Yield: 1.99%
• Average Volume (3M): 218.36K
• Price to Earnings (P/E): 16.2
• Beta (1Y): 1.09
• Revenue Growth: 25.48%
• EPS Growth: N/A
• Country: JP
• Employees: 755
• Sector: Industrials
• Sector Strength: 95
• Industry: Industrial - Machinery
• EPS (TTM): -8.36
• Shares Outstanding: 12,548,134
• 10 Day Avg. Volume: 170,130
• 30 Day Avg. Volume: 218,363
• PEG Ratio: 0.04
• Price to Book (P/B): 0.63
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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: ¥1,138.00
• Price Target Upside: 13.35% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 57 Neutral
• Price Target: ¥1,053.00 ▲(4.88%Upside)

The overall score is driven by strong financial performance with significant revenue growth and profitability recovery. However, persistent cash flow challenges and bearish technical indicators weigh on the outlook. Valuation is fair but not compelling enough to offset other concerns.

Howa Machinery, Ltd. Business Overview & Revenue Model

Company Description

Howa Machinery, Ltd. (6203) is a Japanese manufacturing company specializing in the production of machinery and equipment. The company operates in various sectors including industrial machinery, automotive components, and defense equipment. Its core products and services include machine tools, automotive parts, and firearms. Howa Machinery is known for its precision engineering and high-quality manufacturing processes, serving both domestic and international markets.

How the Company Makes Money

Howa Machinery, Ltd. generates revenue through the sale of its diverse range of products across different sectors. Key revenue streams include the production and sale of machine tools which are used in various manufacturing processes, the manufacture of automotive components supplied to major automobile manufacturers, and the production of firearms and defense equipment. The company also benefits from partnerships with other industrial firms and government contracts, particularly in the defense sector. These partnerships and contracts contribute significantly to its earnings by ensuring a steady demand for its products.

Howa Machinery, Ltd. Financial Statement Overview

Summary

The company is experiencing strong revenue growth and improved profitability, indicated by a 25.5% increase in revenue and a return to positive net profit margin. However, challenges in cash flow management persist, with negative free cash flow and low cash generation relative to profits.

Income Statement

The company has shown a strong revenue growth rate of 25.5% from 2024 to 2025, indicating robust demand. Gross profit margin for 2025 is 16.9%, reflecting decent cost management. However, the net profit margin improved to 3.0% from a negative position, highlighting recovery from previous losses. The EBIT margin is 5.0%, while the EBITDA margin is 6.9%, both showing improvement but still modest. Overall, the company is recovering well with significant revenue growth and improved profitability metrics.

Balance Sheet

The debt-to-equity ratio stands at 0.43, indicating a moderate leverage level. Return on Equity (ROE) for 2025 is 4.0%, reflecting a modest return for shareholders. The equity ratio is 55.0%, showing a stable equity base compared to total assets. While leverage is manageable, the ROE could be improved to enhance shareholder returns.

Cash Flow

The free cash flow remains negative, but there is a slight improvement in operating cash flow. The operating cash flow to net income ratio is 0.07, indicating low cash generation relative to profits. The free cash flow to net income ratio is negative, signaling challenges in converting net income into free cash flow. Cash flow stability is a concern, with negative free cash flow persisting.

Breakdown	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	24.83B	19.79B	19.74B	19.70B	18.77B
Gross Profit	4.20B	3.49B	3.63B	3.96B	3.48B
EBITDA	1.72B	-189.00M	959.00M	1.42B	1.01B
Net Income	749.00M	-873.00M	524.00M	1.06B	968.00M
Balance Sheet
Total Assets	34.05B	30.29B	27.62B	27.67B	26.46B
Cash, Cash Equivalents and Short-Term Investments	2.92B	3.90B	4.43B	5.55B	4.62B
Total Debt	7.97B	6.24B	3.52B	3.27B	4.15B
Total Liabilities	15.31B	12.96B	10.27B	10.78B	10.35B
Stockholders Equity	18.74B	17.33B	17.35B	16.89B	16.11B
Cash Flow
Free Cash Flow	-2.32B	-2.23B	-1.14B	2.38B	-2.02B
Operating Cash Flow	55.00M	-1.07B	-506.00M	3.05B	-1.27B
Investing Cash Flow	-2.55B	-871.00M	-608.00M	-544.00M	-635.00M
Financing Cash Flow	1.49B	2.48B	22.00M	-1.61B	1.88B

Howa Machinery, Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1004.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6203, the sentiment is Neutral. The current price of 1004 is above the 20-day moving average (MA) of 993.65, below the 50-day MA of 1017.08, and below the 200-day MA of 1091.46, indicating a neutral trend. The MACD of -7.63 indicates Negative momentum. The RSI at 49.97 is Neutral, neither overbought nor oversold. The STOCH value of 81.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:6203.

Howa Machinery, Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6373	82 Outperform	¥13.65B	10.73		2.00%	2.63%	268.28%
6496	80 Outperform	¥17.41B	9.93		2.05%	20.91%	18.64%
6224	77 Outperform	¥19.43B	13.92		1.72%	22.80%	39.62%
6317	71 Outperform	¥13.16B	10.42		3.56%	-6.96%	-1.72%
Sector *	61 Neutral	C$6.56B	7.72	2.76%	2.57%	6.48%	-23.55%
6203	57 Neutral	¥12.46B	16.16		1.99%	25.48%	―
6210	54 Neutral	¥12.86B	―		5.58%	-6.30%	34.61%