KATO WORKS CO., LTD. (6390) AI Stock Analysis

• Market Cap: ¥16.23B
• Dividend Yield: 5.45%
• Average Volume (3M): 62.47K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.21
• Revenue Growth: -2.22%
• EPS Growth: 18.80%
• Country: JP
• Employees: 990
• Sector: Industrials
• Sector Strength: 72
• Industry: Agricultural - Machinery
• EPS (TTM): -93.00
• Shares Outstanding: 11,743,587
• 10 Day Avg. Volume: 66,630
• 30 Day Avg. Volume: 62,470
• PEG Ratio: <0.01
• Price to Book (P/B): 0.33
• Price to Sales (P/S): 0.27
• P/FCF Ratio: -1.03
• 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: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 43 Neutral
• Price Target: ¥1,248.00 ▼(-2.80% Downside)

The overall stock score is primarily impacted by significant financial challenges, including declining revenues, persistent net losses, and liquidity issues. Technical analysis indicates a bearish trend, with the stock trading below key moving averages and approaching oversold conditions. Valuation is mixed, with a negative P/E ratio but a relatively high dividend yield. These factors collectively suggest caution for potential investors.

Positive Factors

Strategic Partnerships

These partnerships help KATO WORKS secure large contracts, providing a steady revenue stream and enhancing its market position in infrastructure projects.

Product Innovation

Continuous investment in R&D allows KATO WORKS to maintain a competitive edge, attract new clients, and adapt to industry changes, supporting long-term growth.

Stable Equity Levels

A stable equity ratio indicates a balanced approach to financing, providing a cushion against financial volatility and supporting long-term financial health.

Negative Factors

Revenue Decline

Declining revenues suggest challenges in market demand or competitive pressures, which could impact the company's ability to sustain operations and growth.

High Debt Levels

A high debt-to-equity ratio indicates leverage risks, potentially limiting financial flexibility and increasing vulnerability to economic downturns.

Cash Flow Challenges

Persistent cash flow issues highlight liquidity concerns, which could hinder the company's ability to invest in growth opportunities and meet financial obligations.

KATO WORKS CO., LTD. Business Overview & Revenue Model

Company Description

Kato Works Co.,Ltd. engages in the manufacture and sale of various machines for lifting and construction industries worldwide. It offers mobile cranes, such as rough terrain, all terrain, city range, truck, and crawler cranes; excavators; crawler carriers; earth boring rigs; vacuum suction cleaners; and street and snow sweepers, as well as spare parts. The company sells its products under the KATO brand. Kato Works Co.,Ltd. was founded in 1895 and is headquartered in Tokyo, Japan.

How the Company Makes Money

KATO WORKS generates revenue through the sale of its machinery and equipment, which are utilized in various sectors including construction, transportation, and infrastructure development. Key revenue streams include direct sales of new equipment, aftermarket services such as parts and maintenance, and long-term rental agreements. The company also benefits from strategic partnerships with construction firms and government agencies, enabling it to secure large contracts for infrastructural projects. Additionally, KATO WORKS invests in research and development to innovate its product offerings, thus maintaining a competitive edge and attracting new clientele.

KATO WORKS CO., LTD. Financial Statement Overview

Summary

KATO WORKS CO., LTD. is facing considerable financial challenges, particularly in terms of profitability and cash flow generation. The company's declining revenues and persistent net losses are impacting its income statement metrics negatively. Its balance sheet reflects a high debt burden, which poses potential risks, though equity levels remain stable. Cash flow metrics depict liquidity issues, with negative operating and free cash flows, underscoring the need for improved operational efficiency and financial restructuring.

Income Statement

The company has experienced declining revenues over the years, with the latest TTM showing an 8% drop in revenues compared to the previous year. Gross profit margin has been relatively stable but low at approximately 16.2%. Net profit margin is concerning, with the latest TTM showing a significant net loss, indicating profitability challenges. EBIT and EBITDA margins also reflect negative values, suggesting operational inefficiencies and a lack of profitability.

Balance Sheet

The company's debt-to-equity ratio is high at approximately 0.98, indicating a relatively leveraged position which could pose financial risks. Return on equity is negative due to net losses, suggesting inefficiencies in generating returns for shareholders. However, the equity ratio is fairly stable at around 43.4%, reflecting a reasonable level of equity financing relative to total assets.

Cash Flow

The company is facing significant cash flow challenges, with negative operating cash flows and declining free cash flow over the years, indicating liquidity concerns. Free cash flow to net income ratio is unfavorable due to consistent net losses, highlighting cash generation issues. Operating cash flow to net income ratio is also negative, further emphasizing cash flow inefficiencies.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	54.54B	52.93B	57.50B	57.53B	63.55B	58.52B
Gross Profit	8.14B	8.60B	10.52B	9.10B	6.64B	5.63B
EBITDA	1.46B	-3.76B	4.88B	4.37B	-6.77B	-138.00M
Net Income	-6.29B	-6.03B	4.24B	2.40B	-9.57B	-5.74B
Balance Sheet
Total Assets	97.26B	102.75B	105.33B	98.80B	102.64B	115.82B
Cash, Cash Equivalents and Short-Term Investments	12.48B	14.76B	22.57B	19.98B	18.67B	14.78B
Total Debt	41.54B	43.81B	35.72B	33.21B	38.98B	46.51B
Total Liabilities	54.21B	58.14B	53.78B	51.90B	58.40B	64.33B
Stockholders Equity	43.03B	44.60B	50.41B	45.69B	43.14B	50.51B
Cash Flow
Free Cash Flow	0.00	-14.13B	-1.55B	6.27B	8.31B	-289.00M
Operating Cash Flow	0.00	-13.32B	-696.00M	6.47B	9.55B	2.71B
Investing Cash Flow	0.00	-930.00M	1.63B	1.37B	496.00M	-3.10B
Financing Cash Flow	0.00	6.64B	1.40B	-6.61B	-6.64B	2.99B

KATO WORKS CO., LTD. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1284.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6390, the sentiment is Neutral. The current price of 1284 is above the 20-day moving average (MA) of 1254.20, below the 50-day MA of 1335.80, and above the 200-day MA of 1282.19, indicating a neutral trend. The MACD of -20.62 indicates Negative momentum. The RSI at 48.86 is Neutral, neither overbought nor oversold. The STOCH value of 49.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:6390.

KATO WORKS CO., LTD. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6345	78 Outperform	¥84.19B	15.06	―	5.04%	1.68%	18.85%
6294	74 Outperform	¥17.11B	10.79	―	3.50%	-1.36%	5.14%
6358	70 Outperform	¥17.82B	20.78	―	5.09%	-13.63%	-74.53%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6395	62 Neutral	€137.17B	23.87	5.59%	2.79%	10.49%	-5.19%
7226	57 Neutral	¥97.35B	4,279.63	―	5.36%	13.71%	-77.02%
6390	43 Neutral	¥16.23B	-2.58	―	5.45%	-2.22%	18.80%

KATO WORKS CO., LTD. Corporate Events

KATO WORKS Finalizes Employee Stock Ownership Plan to Enhance Corporate Value

KATO WORKS CO., LTD. has finalized the details of its Employee Stock Ownership Plan (ESOP) Support Trust, which aims to boost corporate value by enhancing employee welfare and engagement with the company’s share price. The plan involves a trust agreement with Resona Bank to ensure a stable supply of company stock to employees, with the trust period set from December 18, 2025, to December 17, 2030.

KATO WORKS CO., LTD. Announces Treasury Share Disposal to Support Employee Stock Ownership Plan

KATO WORKS CO., LTD. announced the disposal of 420,000 treasury shares through a third-party allotment to support its Employee Stock Ownership Plan (ESOP). This move aims to enhance long-term corporate value by ensuring a stable supply of shares to employees, thereby increasing their motivation and awareness of the company’s share price. The disposal is structured to minimize market impact and is part of a broader strategy to improve employee welfare benefits.

KATO WORKS Completes Strategic Share Repurchase

KATO WORKS CO., LTD. has completed the repurchase of 200,000 of its own shares, valued at 286,800,000 yen, through the Tokyo Stock Exchange’s off-auction trading system. This strategic move is aimed at enabling a flexible capital policy in response to the evolving business environment, potentially impacting the company’s financial structure and market positioning.

KATO WORKS CO., LTD. Announces Share Repurchase Plan

KATO WORKS CO., LTD. has announced a decision by its Board of Directors to repurchase up to 200,000 of its own shares through the Tokyo Stock Exchange’s Off-Auction Own Share Repurchase Trading System. This strategic move is aimed at enabling a flexible capital policy in response to the evolving business environment, with a total acquisition cost capped at 286,800,000 yen. The acquisition reflects the company’s proactive approach to managing its capital structure and adapting to market trends.

KATO WORKS Reports Mixed Financial Results for First Half of 2025

KATO WORKS CO., LTD. reported its consolidated financial results for the six months ended September 30, 2025, showing a slight increase in net sales to ¥26,756 million. However, the company experienced operating and ordinary losses, with a net loss attributable to owners of the parent amounting to ¥1,573 million. The equity-to-asset ratio improved slightly to 44.0%, indicating a stable financial position despite the losses. The company maintained its dividend forecast, with no revisions to the previously announced cash dividend plans, reflecting a commitment to shareholder returns amidst challenging financial performance.