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THK Co Ltd (JP:6481)
:6481

THK Co (6481) AI Stock Analysis

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THK Co

(OTC:6481)

Rating:68Neutral
Price Target:
¥4,283.00
▲(7.24%Upside)
THK Co's overall stock score is mainly driven by a stable financial foundation and strong technical indicators. The company's solid balance sheet and positive market momentum are significant strengths. However, high valuation ratios and declining profitability margins are notable risks that need addressing for improved long-term investor confidence.

THK Co (6481) vs. iShares MSCI Japan ETF (EWJ)

THK Co Business Overview & Revenue Model

Company DescriptionTHK Co., Ltd. manufactures and supplies machine components in Japan, the Americas, Europe, China, and internationally. The company provides linear motion (LM) guides, ball screws, ball splines, LM guide actuators, cross roller rings and tables, electric actuators and linear motor actuators, cam followers, roller followers, linear bushes, slide packs, slide rails, cross roller guides, linear ball slides, LM and flat rollers, spline nuts, LM strokes, screw nuts, change nuts, precision linear packs, link balls, rod ends, spherical plain bearings, lubrication accessories, and seismic isolation products. Its products are used in various applications, including machine tools, general industrial machinery, precision instruments, semiconductor and LCD manufacturing equipment, industrial robots, electronic devices, and transport systems, as well as in construction, aerospace, medical and assistive, and other manufacturing industries. The company was incorporated in 1946 and is headquartered in Tokyo, Japan.
How the Company Makes MoneyTHK Co. generates revenue primarily through the sale of its linear motion systems and components. These products are essential for enhancing the precision and efficiency of machinery used in various sectors such as automotive, aerospace, and electronics manufacturing. The company earns by providing these components to manufacturers who require high precision and reliability in their production processes. Additionally, THK collaborates with a network of distributors and partners worldwide to extend its market reach and secure long-term contracts, further contributing to its revenue. The company also invests in research and development to enhance its technology offerings, maintaining its competitive edge in the industry.

THK Co Earnings Call Summary

Earnings Call Date:May 09, 2025
(Q2-2024)
|
% Change Since: 15.67%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call presents a mixed outlook for THK. While there are notable achievements in areas like the Automotive and Transportation business's profitability and promising growth in the Industrial Machinery sector, as well as sustainability initiatives, the significant declines in sales revenue and operating income, combined with challenges in multiple regions, highlight the company's ongoing struggles.
Q2-2024 Updates
Positive Updates
Automotive and Transportation Business Profitability
The Automotive and Transportation business posted an increase in operating income due to efforts aimed at improving profitability, with positive contributions including a volume effect of JPY 0.2 billion, a variable cost ratio effect of JPY 1.2 billion, and an FX impact of JPY 0.5 billion.
Increased Sales in the Americas
Sales in the Americas increased due to the impact of the weaker yen and other factors.
Record Growth in Mobile Robots
SIGNAS, a next-generation transport robot, has been highly acclaimed and won the 2023 JSME Excellent Product Award.
Sustainability and ESG Initiatives
Efforts to become carbon neutral include the installation of new solar power generation equipment, switching to LED lighting, and introducing green electricity at production sites.
Promising Future Growth in Industrial Machinery
Anticipated progress on automation and robotization, and growth for semiconductor and EV-related CapEx are expected to drive future demand in the Industrial Machinery business.
Negative Updates
Decline in Consolidated Sales Revenue
Consolidated sales revenue declined 3.1% year-on-year to JPY 179.8 billion.
Decline in Consolidated Operating Income
Consolidated operating income was down 49% year-on-year to JPY 8.3 billion, affected by the decline in sales revenue and investments for future growth.
Decline in Sales Across Multiple Regions
Sales in Japan, Europe, China, and other Asian regions decreased year-on-year.
Increase in Fixed Costs
In the Industrial Machinery business, a drop in operating income was due to an increase of JPY 0.3 billion in fixed costs, while the Automotive and Transportation business faced an increase in fixed costs of JPY 0.8 billion.
Company Guidance
During the Q2 2024 earnings call, Takashi Teramachi, President and COO of THK, provided an overview of the company's financial performance for the first half of the fiscal year ending December 2024. Consolidated sales revenue declined by 3.1% year-on-year to JPY 179.8 billion, with operating income decreasing by 49% to JPY 8.3 billion. Despite these declines, both metrics exceeded initial targets due to a gradual demand recovery in the Industrial Machinery business and favorable foreign exchange effects. The Automotive and Transportation business saw an improvement in operating income, driven by profitability enhancement efforts, although it faced a JPY 0.8 billion increase in fixed costs and a JPY 0.6 billion decline from the absence of a previous onetime subsidy. Total assets increased by JPY 30.4 billion to JPY 586.7 billion. The company maintained its growth strategy pillars and outlined key initiatives, including a focus on raising ROE and ROIC, expanding the business domain, and reinforcing sustainability and ESG initiatives. THK plans to allocate capital for future growth investments, maintaining a dividend payout ratio of 30%, with potential share buybacks considered when capital is excess.

THK Co Financial Statement Overview

Summary
THK Co exhibits stable revenue growth and a solid equity base, which are positive indicators of financial health. However, declining net income and free cash flow are areas of concern that need addressing to ensure long-term sustainability. The company's ability to manage its capital expenditures and leverage efficiently will be crucial in the coming years.
Income Statement
65
Positive
The company has shown stable revenue with a slight year-over-year increase from 2023 to 2024. However, there is a notable decline in net income, leading to a reduced net profit margin. Gross profit margin remains healthy, indicating efficient production costs. The EBIT margin has decreased, affecting overall profitability.
Balance Sheet
72
Positive
The company maintains a strong equity position with a high equity ratio, indicating financial stability. The debt-to-equity ratio is manageable, showing a good balance between debt and equity financing. However, total liabilities have increased slightly over the years, which could pose potential risks if not monitored.
Cash Flow
58
Neutral
The cash flow statement reveals a decline in free cash flow, primarily due to higher capital expenditures. The operating cash flow to net income ratio indicates efficient cash generation relative to net income, but the negative free cash flow is a concern, suggesting potential liquidity challenges.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
352.58B352.76B351.94B393.69B318.19B219.00B
Gross Profit
82.10B81.78B77.98B105.29B79.75B46.43B
EBIT
16.54B17.35B22.67B34.46B30.27B-7.74B
EBITDA
43.97B41.27B47.82B67.98B48.13B9.16B
Net Income Common Stockholders
8.80B10.44B18.40B21.20B23.01B-11.86B
Balance SheetCash, Cash Equivalents and Short-Term Investments
96.23B140.29B156.49B165.34B151.43B158.85B
Total Assets
514.02B567.42B556.35B560.30B516.09B460.17B
Total Debt
108.00B96.51B121.61B120.88B101.76B102.57B
Net Debt
11.77B-41.78B-34.88B-42.96B-49.67B-56.27B
Total Liabilities
186.87B177.62B193.45B223.02B201.80B185.03B
Stockholders Equity
321.11B383.64B357.26B331.89B304.56B266.49B
Cash FlowFree Cash Flow
6.00M-1.15B12.29B8.15B-3.60B7.39B
Operating Cash Flow
26.95B28.41B39.33B37.56B15.64B25.40B
Investing Cash Flow
-31.66B-34.22B-27.09B-30.08B-19.13B-18.41B
Financing Cash Flow
-47.74B-22.65B-24.27B-3.65B-12.72B3.98B

THK Co Technical Analysis

Technical Analysis Sentiment
Positive
Last Price3994.00
Price Trends
50DMA
3612.62
Positive
100DMA
3686.35
Positive
200DMA
3301.64
Positive
Market Momentum
MACD
119.42
Negative
RSI
62.95
Neutral
STOCH
73.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6481, the sentiment is Positive. The current price of 3994 is above the 20-day moving average (MA) of 3853.65, above the 50-day MA of 3612.62, and above the 200-day MA of 3301.64, indicating a bullish trend. The MACD of 119.42 indicates Negative momentum. The RSI at 62.95 is Neutral, neither overbought nor oversold. The STOCH value of 73.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6481.

THK Co Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
68
Neutral
$489.53B55.542.48%3.46%2.63%-34.53%
66
Neutral
$4.51B12.295.40%248.53%4.14%-12.41%
$1.97B94.834.32%0.58%
DEJ9R
€3.28B29.649.67%1.20%
$1.93B26.894.03%3.28%
$2.54B1,020.980.06%3.88%
67
Neutral
¥425.12B30.11
2.94%5.17%-18.62%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:6481
THK Co
3,994.00
1,028.66
34.69%
HSYDF
Harmonic Drive Systems
22.75
-3.39
-12.97%
DE:J9R
Japan Steel Works
44.20
17.83
67.61%
NCTKF
Nabtesco
15.80
-0.34
-2.11%
SOHVF
Sumitomo Heavy Industries
20.93
-5.06
-19.47%
JP:6406
Fujitec Co., Ltd.
5,601.00
1,617.64
40.61%

THK Co Corporate Events

THK Co. Revises Dividend Projection to Enhance Shareholder Returns
May 9, 2025

THK Co., Ltd. has revised its dividend projection for the year ending December 31, 2025, to ¥246.00 per share, split evenly between interim and year-end dividends. This decision aligns with their management policy aimed at achieving an ROE of over 10% and reflects their commitment to improving capital efficiency and returning profits to shareholders.

THK Co., Ltd. Reports First Quarter 2025 Financial Results and Updates Dividend Projection
May 9, 2025

THK Co., Ltd. reported a slight decrease in revenue for the first quarter of 2025, with significant declines in operating income and profits compared to the previous year. The company’s financial position showed a reduction in total assets and equity, and it announced a revised dividend projection for the year.

THK Co. Completes Treasury Stock Disposal with Adjustments
Apr 15, 2025

THK Co., Ltd. announced the completion of its treasury stock disposal through an employee shareholding association, with changes in the number of shares and total disposal value due to partial forfeiture. The adjustment in shares reflects the finalized membership of the Employee Shareholding Association, and the impact on the company’s 2025 financial results is expected to be minimal.

THK Co. Completes Treasury Stock Disposal with Minor Adjustments
Apr 14, 2025

THK Co., Ltd. has completed the disposal of its treasury stock as restricted stock compensation, initially resolved at a board meeting on March 15, 2025. The disposal involved a change in the number of shares and total disposal value due to the forfeiture of rights by one allottee. This adjustment is expected to have an immaterial impact on the company’s operating results for the year ending December 31, 2025.

THK Co., Ltd. Announces Key Personnel Changes
Mar 18, 2025

THK Co., Ltd. has announced a series of personnel changes effective March 15, 2025, including the appointment of Naoki Kinoshita as Director and Senior Managing Executive Officer and Hiroko Kawasaki as an Outside Director. These changes aim to strengthen the company’s leadership and strategic direction, potentially impacting its operations and market positioning.

THK Co. Announces Treasury Stock Disposal for Executive Compensation
Mar 17, 2025

THK Co., Ltd. has announced a decision by its Board of Directors to dispose of treasury stock as part of a restricted stock compensation plan aimed at incentivizing its executives. This move is designed to align the interests of the executives with those of the shareholders by providing shares as compensation, thereby encouraging continuous improvement in corporate value. The disposal involves 73,979 shares of THK common stock and is valued at approximately ¥280 million, reflecting the company’s commitment to enhancing executive motivation and shared value with stakeholders.

THK Co., Ltd. Announces New CEO Appointment
Mar 17, 2025

THK Co., Ltd. has announced a change in its executive leadership, with Takashi Teramachi being appointed as the new President and CEO, effective March 15, 2025. This leadership change is part of THK’s strategy to strengthen its management structure and achieve its management policy goal of realizing a return on equity of over 10%, indicating a focus on improving financial performance and operational efficiency.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.