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Howa Machinery, Ltd. (JP:6203)
:6203
Japanese Market
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Howa Machinery, Ltd. (6203) AI Stock Analysis

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JP:6203

Howa Machinery, Ltd.

(6203)

Rating:57Neutral
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. (6203) vs. iShares MSCI Japan ETF (EWJ)

Howa Machinery, Ltd. Business Overview & Revenue Model

Company DescriptionHowa 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 MoneyHowa 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
72
Positive
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
65
Positive
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
55
Neutral
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.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue24.83B19.79B19.74B19.70B18.77B
Gross Profit4.20B3.49B3.63B3.96B3.48B
EBITDA1.72B-189.00M959.00M1.42B1.01B
Net Income749.00M-873.00M524.00M1.06B968.00M
Balance Sheet
Total Assets34.05B30.29B27.62B27.67B26.46B
Cash, Cash Equivalents and Short-Term Investments2.92B3.90B4.43B5.55B4.62B
Total Debt7.97B6.24B3.52B3.27B4.15B
Total Liabilities15.31B12.96B10.27B10.78B10.35B
Stockholders Equity18.74B17.33B17.35B16.89B16.11B
Cash Flow
Free Cash Flow-2.32B-2.23B-1.14B2.38B-2.02B
Operating Cash Flow55.00M-1.07B-506.00M3.05B-1.27B
Investing Cash Flow-2.55B-871.00M-608.00M-544.00M-635.00M
Financing Cash Flow1.49B2.48B22.00M-1.61B1.88B

Howa Machinery, Ltd. Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price1004.00
Price Trends
50DMA
1017.08
Negative
100DMA
1085.56
Negative
200DMA
1091.46
Negative
Market Momentum
MACD
-7.63
Negative
RSI
49.97
Neutral
STOCH
81.49
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

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
¥13.65B10.73
2.00%2.63%268.28%
80
Outperform
¥17.41B9.93
2.05%20.91%18.64%
77
Outperform
¥19.43B13.92
1.72%22.80%39.62%
71
Outperform
¥13.16B10.42
3.56%-6.96%-1.72%
61
Neutral
C$6.56B7.722.76%2.57%6.48%-23.55%
57
Neutral
¥12.46B16.16
1.99%25.48%
54
Neutral
¥12.86B
5.58%-6.30%34.61%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:6203
Howa Machinery, Ltd.
1,001.00
119.63
13.57%
JP:6210
Toyo Machinery & Metal Co., Ltd.
627.00
-39.86
-5.98%
JP:6224
JRC Co.,Ltd.
1,515.00
571.67
60.60%
JP:6317
Kitagawa Corporation
1,406.00
-58.11
-3.97%
JP:6373
Daido Kogyo Co., Ltd.
1,251.00
342.87
37.76%
JP:6496
Nakakita Seisakusho Co., Ltd.
4,875.00
1,397.06
40.17%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 02, 2025