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

• Market Cap: ¥14.78B
• Dividend Yield: 5.55%
• Average Volume (3M): 66.42K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.30
• Revenue Growth: -7.94%
• EPS Growth: -242.37%
• Country: JP
• Employees: 990
• Sector: Industrials
• Sector Strength: 84
• Industry: Agricultural - Machinery
• EPS (TTM): -102.40
• Shares Outstanding: 11,743,587
• 10 Day Avg. Volume: 43,010
• 30 Day Avg. Volume: 66,416
• PEG Ratio: 299.45
• Price to Book (P/B): 0.55
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -6.60
• 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

• Rating: 51 Neutral
• Price Target: ¥1,279.00 ▲(1.11%Upside)

The overall stock score is heavily influenced by the company's weak financial performance, characterized by significant profitability and cash flow challenges. Technical analysis offers some positivity with bullish indicators, but the negative P/E ratio and valuation concerns limit the overall attractiveness. The high dividend yield provides some compensation for investors, but substantial financial restructuring is needed to improve long-term prospects.

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

Company Description

KATO WORKS CO., LTD. is a Japanese company specializing in the manufacturing and sale of construction machinery and industrial equipment. Founded in 1895, the company operates primarily in the construction and engineering sectors, offering a wide range of products including mobile cranes, hydraulic excavators, and other specialized machinery designed to meet the needs of construction and industrial projects.

How the Company Makes Money

KATO WORKS CO., LTD. generates revenue through the design, manufacturing, and sale of its construction machinery and equipment portfolio. The company sells its products directly to construction companies, engineering firms, and industrial clients, both domestically in Japan and internationally. Key revenue streams include the sale of mobile cranes and excavators, which are essential in construction and infrastructure projects. Additionally, KATO WORKS may engage in after-sales services, including maintenance and parts replacement, thereby creating a recurring revenue stream. Strategic partnerships with distributors and service providers also play a significant role in expanding its market reach and contributing to its earnings.

KATO WORKS CO., LTD. Financial Statement Overview

Summary

KATO WORKS CO., LTD. is facing significant financial challenges, particularly in profitability and cash flow generation. Declining revenues and continuous net losses negatively impact income statement metrics. A high debt burden poses potential risks, although equity levels remain stable. Cash flow metrics depict liquidity issues, necessitating 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	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
53.95B	52.93B	57.50B	57.53B	63.55B	58.52B
	Gross Profit
9.71B	8.60B	10.52B	9.10B	6.64B	5.63B
	EBIT
1.88B	1.08B	1.65B	1.26B	-7.22B	-2.81B
	EBITDA
2.62B	-3.76B	4.88B	4.37B	-6.77B	-141.00M
	Net Income Common Stockholders
-3.48B	-6.03B	4.24B	2.40B	-9.57B	-5.74B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.71B	14.76B	22.57B	19.98B	18.67B	14.78B
	Total Assets
97.55B	102.75B	105.33B	98.80B	102.64B	115.82B
	Total Debt
34.49B	43.81B	35.72B	33.21B	38.98B	46.51B
	Net Debt
24.79B	29.05B	13.15B	13.23B	20.31B	31.73B
	Total Liabilities
51.56B	58.14B	53.78B	51.90B	58.40B	64.33B
	Stockholders Equity
46.00B	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: 1265.00
• 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:6390, the sentiment is Neutral. The current price of 1265 is below the 20-day moving average (MA) of 1295.20, above the 50-day MA of 1220.96, and above the 200-day MA of 1246.99, indicating a neutral trend. The MACD of 6.57 indicates Positive momentum. The RSI at 45.63 is Neutral, neither overbought nor oversold. The STOCH value of 7.36 is Positive, 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	82 Outperform	¥99.95B	16.17		5.09%	11.63%	20.80%
7226	76 Outperform	¥99.96B	17.69		6.18%	9.70%	66.02%
6358	72 Outperform	¥17.03B	11.63		6.17%	-15.65%	-41.34%
6294	70 Outperform	¥14.98B	10.19		3.96%	-1.89%	-21.95%
6395	66 Neutral	€123.91B	14.89	4.46%	2.69%	11.41%	-6.80%
Sector *	66 Neutral	$4.44B	12.08	5.34%	5.82%	4.17%	-11.81%
6390	51 Neutral	¥14.78B	―		5.55%	-7.94%	-242.37%

KATO WORKS CO., LTD. Corporate Events

KATO WORKS Waives Claims Amid Subsidiary Liquidation in China

KATO WORKS CO., LTD. has decided to waive a portion of the claims held by its subsidiary, KATO WORKS (CHINA) LTD., against Chinese domestic business partners. This decision comes as part of the company’s strategic move to dissolve and liquidate the subsidiary, following an agreement to transfer equity interest to a private Chinese company. Despite the economic downturn in China affecting the collectability of receivables, KATO WORKS has determined that this action will not impact its financial performance for the fiscal year ending March 31, 2026, as provisions for doubtful accounts had already been made.

KATO WORKS Transfers Equity in Chinese Subsidiary

KATO WORKS CO., LTD. has decided to transfer its entire equity interest in its subsidiary, KATO WORKS (CHINA) LTD., to a domestic Chinese company. This decision comes after initially planning to dissolve and liquidate the subsidiary, but a new agreement with a Chinese company has been reached. The transfer is expected to be completed between August and September 2025, and the financial implications will be disclosed if they necessitate a revision of the company’s earnings forecast. The company has also established new liaison offices in China to continue supporting local customers and suppliers.

KATO WORKS Boosts Investment in Italian Subsidiary to Enhance European Market Presence

KATO WORKS CO., LTD. has announced an additional investment of 3.4 million euros in its Italian subsidiary, KATO IMER S.p.A., increasing its stake to 94.2%. This move aims to strengthen the company’s financial position and management structure, enhancing competitiveness in the European market. The initiative is part of KATO WORKS’ mid-term management plan to expand its market share in Europe, driven by the growing demand for sustainable construction machinery. The company plans to streamline decision-making and align its development, sales, and service strategies to meet local needs.