Megachips (6875) AI Stock Analysis

• Market Cap: ¥128.86B
• Dividend Yield: 0.76%
• Average Volume (3M): 155.09K
• Price to Earnings (P/E): 49.1
• Beta (1Y): 0.72
• Revenue Growth: -16.19%
• EPS Growth: -50.21%
• Country: JP
• Employees: 339
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): N/A
• Shares Outstanding: 19,046,900
• 10 Day Avg. Volume: 200,920
• 30 Day Avg. Volume: 155,093
• PEG Ratio: 0.54
• Price to Book (P/B): 0.65
• Price to Sales (P/S): 1.82
• P/FCF Ratio: -12.76
• 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
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 50 Neutral
• Price Target: ¥8,080.00 ▲(0.62% Upside)

The score is held back primarily by weakened financial performance (sharp TTM revenue decline and negative/volatile cash generation) despite a strong, low-leverage balance sheet. Technicals are mixed-to-neutral with price above key moving averages but subdued momentum signals. Valuation is the main additional risk, with a high P/E and low dividend yield.

Positive Factors

Strong Balance Sheet

A strong balance sheet with low leverage provides financial stability and flexibility, allowing the company to weather economic downturns and invest in growth opportunities.

Product-Based Revenue Model

A product-based revenue model focused on semiconductors aligns with industry growth trends, providing potential for sustained revenue through innovation and customer demand.

Positive Gross Margin

Maintaining a positive gross margin indicates the company's ability to manage production costs effectively, supporting long-term profitability and competitive positioning.

Negative Factors

Revenue Decline

A significant decline in revenue suggests challenges in maintaining market share or demand, which can impact future earnings and strategic positioning.

Negative Cash Flow

Negative cash flow indicates difficulties in converting sales into cash, which can strain financial resources and limit investment in growth initiatives.

Margin Compression

Margin compression reduces profitability and may indicate increased competition or rising costs, challenging the company's ability to sustain earnings.

Megachips Business Overview & Revenue Model

Company Description

MegaChips Corporation designs, develops, manufactures, and sells semiconductor related products in Japan and internationally. It offers application specific integrated circuits that are used in various electronic devices and automobiles, as well as in infrastructure systems, such as wired and wireless communication networks; automotive ethernet PHY; and wired communication networks for urban infrastructure, such as building and factories. The company was founded in 1990 and is headquartered in Osaka, Japan.

How the Company Makes Money

Megachips makes money primarily through the sale of its semiconductor products, including custom SoCs and ASICs. The company generates revenue by designing and manufacturing these chips, which are then sold to various electronics manufacturers across different industries. Key revenue streams include the consumer electronics market, where Megachips' solutions are integrated into products such as smartphones, gaming consoles, and wearable devices. Additionally, the company earns from its involvement in the automotive and industrial sectors, providing chips that enable advanced functionalities in vehicles and industrial equipment. Strategic partnerships with original equipment manufacturers (OEMs) and other technology firms also play a crucial role in expanding its market reach and driving sales.

Megachips Financial Statement Overview

Summary

Megachips presents a mixed financial profile. The balance sheet is robust, with a high equity ratio and low debt, providing financial stability. However, the income statement shows declining revenues and moderate profitability, which could pressure future earnings. The cash flow statement indicates recent liquidity challenges, although past performance was stronger. Management should focus on reversing the revenue decline and addressing cash flow issues to sustain long-term growth.

Income Statement

Megachips shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) data reveals a gross profit margin of 19.95% and a net profit margin of 12.92%, indicating moderate profitability. However, the revenue has been declining, with a significant decrease from the previous year, which is concerning. The EBIT margin stands at 6.68%, and the EBITDA margin at 9.09%, reflecting operational efficiency but leaving room for improvement. Overall, the margins are stable, but the revenue decline is a notable weakness.

Balance Sheet

The balance sheet of Megachips is strong, with a high equity ratio of 74.53% reflecting a solid financial structure. The company has a negligible debt-to-equity ratio due to its low total debt, enhancing its financial stability. Return on equity is substantial at 3.84%, showcasing effective utilization of shareholder funds. The significant stockholders' equity compared to total assets indicates a low risk of insolvency, positioning the company well for future growth.

Cash Flow

Megachips' cash flow statement shows some challenges, primarily due to negative operating cash flow in the TTM period. The free cash flow has also turned negative, indicating potential liquidity issues. However, the company had previously strong cash flows, which might cushion the recent downturn. The operating cash flow to net income ratio is negative, pointing to cash generation issues, while free cash flow to net income is also negative, suggesting inefficiencies in capital usage.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	38.80B	42.33B	57.94B	70.72B	75.26B	83.81B
Gross Profit	6.84B	7.83B	11.44B	12.05B	13.61B	13.31B
EBITDA	5.06B	9.43B	9.51B	11.36B	37.38B	29.69B
Net Income	2.70B	5.37B	4.49B	7.09B	27.54B	20.92B
Balance Sheet
Total Assets	236.77B	149.94B	126.61B	89.02B	89.84B	74.63B
Cash, Cash Equivalents and Short-Term Investments	12.55B	20.83B	28.06B	20.72B	25.77B	21.41B
Total Debt	8.50B	0.00	0.00	0.00	0.00	4.79B
Total Liabilities	67.13B	31.70B	23.94B	14.49B	22.41B	24.58B
Stockholders Equity	168.94B	117.81B	102.41B	74.54B	67.43B	50.04B
Cash Flow
Free Cash Flow	-3.94B	-6.03B	7.05B	295.32M	-1.48B	4.49B
Operating Cash Flow	-1.31B	-3.73B	8.16B	1.24B	-195.28M	5.51B
Investing Cash Flow	-4.70B	3.59B	214.06M	-5.52B	20.02B	17.02B
Financing Cash Flow	-2.16B	-7.51B	-5.39B	-1.74B	-16.53B	-18.81B

Megachips Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 8030.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6875, the sentiment is Positive. The current price of 8030 is above the 20-day moving average (MA) of 7944.00, above the 50-day MA of 8030.00, and above the 200-day MA of 6161.54, indicating a neutral trend. The MACD of -12.66 indicates Positive momentum. The RSI at 48.30 is Neutral, neither overbought nor oversold. The STOCH value of 28.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6875.

Megachips Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6627	79 Outperform	¥58.68B	18.87	―	1.85%	3.60%	-17.45%
6966	75 Outperform	¥137.98B	13.42	―	2.45%	4.60%	-21.64%
6871	67 Neutral	¥297.68B	29.54	―	1.02%	29.60%	24.39%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6875	50 Neutral	¥128.86B	49.13	1.86%	0.76%	-16.19%	-50.21%
6707	46 Neutral	¥130.37B	113.57	―	―	-51.82%	-96.08%
6769	43 Neutral	¥8.65B	1,225.30	―	1.86%	-7.54%	―