Kyokuto Kaihatsu Kogyo Co., Ltd. (7226) AI Stock Analysis

• Market Cap: ¥106.29B
• Dividend Yield: 5.31%
• Average Volume (3M): 134.11K
• Price to Earnings (P/E): 86.5
• Beta (1Y): 0.70
• Revenue Growth: 13.71%
• EPS Growth: -77.02%
• Country: JP
• Employees: 3,237
• Sector: Industrials
• Sector Strength: 72
• Industry: Agricultural - Machinery
• EPS (TTM): 91.09
• Shares Outstanding: 40,150,000
• 10 Day Avg. Volume: 110,030
• 30 Day Avg. Volume: 134,110
• PEG Ratio: 0.24
• Price to Book (P/B): 0.78
• Price to Sales (P/S): 0.65
• P/FCF Ratio: -34.32
• 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: 57 Neutral
• Price Target: ¥2,713.00 ▼(-5.83% Downside)

Kyokuto Kaihatsu Kogyo Co., Ltd. shows strong financial stability and revenue growth, but faces challenges in profitability and cash flow management. The technical indicators suggest a neutral to slightly bearish trend, and the extremely high P/E ratio raises concerns about overvaluation despite a high dividend yield. These factors result in a moderate overall stock score.

Positive Factors

Revenue Growth

Strong revenue growth indicates robust sales performance and market demand, supporting long-term business expansion and stability.

Financial Stability

A strong equity position and conservative leverage provide financial resilience, enabling the company to withstand economic fluctuations.

Market Position

Serving major automotive manufacturers globally enhances market presence and secures steady revenue streams through diversified client relationships.

Negative Factors

Cash Flow Management

Negative free cash flow due to high capital expenditures can strain liquidity, limiting the company's ability to invest in growth opportunities.

Profitability Challenges

Low operating margins indicate potential inefficiencies, which could hinder profitability and reduce competitive edge in the long term.

Earnings Volatility

Volatile earnings growth can undermine investor confidence and affect the company's ability to plan and execute long-term strategies effectively.

Kyokuto Kaihatsu Kogyo Co., Ltd. Business Overview & Revenue Model

Company Description

Kyokuto Kaihatsu Kogyo Co., Ltd. (7226) is a Japanese company primarily engaged in the manufacturing and development of automotive parts and systems. The company operates in the automotive sector, focusing on the production of high-quality components such as brakes, steering systems, and suspension parts. With a commitment to innovation and quality, Kyokuto Kaihatsu Kogyo serves a diverse range of clients, including major automotive manufacturers both domestically and internationally.

How the Company Makes Money

Kyokuto Kaihatsu Kogyo Co., Ltd. generates revenue primarily through the sale of automotive parts and systems to various automotive manufacturers. The company's revenue model is based on direct sales of its products, which are often customized to meet the specific needs of their clients. Key revenue streams include the sale of braking systems, steering mechanisms, and suspension components, which are critical for vehicle safety and performance. Additionally, the company may engage in long-term supply contracts with automotive manufacturers, ensuring a steady income stream. Strategic partnerships with leading automotive firms also enhance the company's market presence and contribute to its earnings by expanding its customer base and enabling collaborative innovation in product development.

Kyokuto Kaihatsu Kogyo Co., Ltd. Financial Statement Overview

Summary

Kyokuto Kaihatsu Kogyo Co., Ltd. demonstrates strong revenue growth and healthy balance sheet metrics, though profitability and cash flow management could be enhanced. The company's stability is underscored by its equity strength, but operational efficiency improvements could further bolster profitability.

Income Statement

Kyokuto Kaihatsu Kogyo Co., Ltd. has shown a commendable revenue growth rate of 9.7% in the recent fiscal year, indicative of strong sales performance in the agricultural machinery sector. Gross profit margin stands at 17.6%, while net profit margin has improved to 4.1%, reflecting enhanced operational efficiency. However, the EBIT margin of 4.7% and EBITDA margin of 9.4% suggest room for improvement in managing operating expenses.

Balance Sheet

The company maintains a robust equity position with an equity ratio of 61.8%, showcasing strong financial stability. The debt-to-equity ratio is manageable at 0.25, indicating conservative leverage usage. Return on equity at 5.0% is modest, suggesting potential for better utilization of equity to generate profits.

Cash Flow

Kyokuto Kaihatsu Kogyo Co., Ltd. experienced a negative free cash flow in the most recent period, primarily due to significant capital expenditures. The operating cash flow to net income ratio is 0.9, highlighting a need for improved cash generation from core operations. Despite challenges, the company has managed to maintain positive operating cash flow, which is crucial for sustaining business operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	145.28B	140.45B	128.03B	113.09B	116.91B	117.17B
Gross Profit	25.63B	24.75B	20.70B	16.01B	21.17B	23.16B
EBITDA	5.77B	13.22B	8.56B	8.27B	23.71B	12.02B
Net Income	17.00M	5.82B	3.50B	3.58B	14.27B	6.77B
Balance Sheet
Total Assets	180.43B	187.75B	170.40B	158.16B	154.35B	142.74B
Cash, Cash Equivalents and Short-Term Investments	16.89B	20.29B	19.44B	33.63B	37.31B	21.90B
Total Debt	29.88B	29.55B	11.83B	11.07B	1.23B	1.04B
Total Liabilities	72.10B	70.47B	52.75B	46.19B	41.34B	42.16B
Stockholders Equity	107.24B	116.11B	117.00B	111.54B	112.69B	100.28B
Cash Flow
Free Cash Flow	0.00	-2.65B	-12.66B	-14.84B	1.23B	4.91B
Operating Cash Flow	0.00	5.22B	-1.84B	-3.42B	6.87B	8.26B
Investing Cash Flow	0.00	-15.47B	-9.48B	-6.82B	10.66B	-4.30B
Financing Cash Flow	0.00	11.20B	-1.50B	5.12B	-1.55B	-2.77B

Kyokuto Kaihatsu Kogyo Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2881.00
• 50DMA: Positive
• 100DMA: Positive
• 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:7226, the sentiment is Positive. The current price of 2881 is above the 20-day moving average (MA) of 2767.65, above the 50-day MA of 2702.10, and above the 200-day MA of 2542.20, indicating a bullish trend. The MACD of 38.36 indicates Negative momentum. The RSI at 64.27 is Neutral, neither overbought nor oversold. The STOCH value of 64.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7226.

Kyokuto Kaihatsu Kogyo Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6345	78 Outperform	¥85.15B	15.23	―	4.93%	1.68%	18.85%
6306	74 Outperform	¥29.13B	16.10	―	4.35%	-4.23%	-1.63%
6358	70 Outperform	¥18.12B	31.37	―	5.10%	-13.63%	-74.53%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6395	62 Neutral	¥140.97B	12.82	5.59%	2.81%	10.49%	-5.19%
7226	57 Neutral	¥106.29B	86.48	―	5.31%	13.71%	-77.02%
6390	43 Neutral	¥15.04B	-5.66	―	5.46%	-2.22%	18.80%

Kyokuto Kaihatsu Kogyo Co., Ltd. Corporate Events

Kyokuto Kaihatsu Kogyo Co., Ltd. Announces Strategic Merger with Subsidiary

Kyokuto Kaihatsu Kogyo Co., Ltd. announced a merger with its wholly-owned subsidiary, Kyokuto Kaihatsu Parking Co., Ltd., to enhance competitiveness and efficiency in the parking equipment and coin-operated parking business. This strategic move, executed as a simplified absorption-type merger, aims to consolidate management resources and streamline operations, potentially strengthening the company’s market position and operational effectiveness.

Kyokuto Kaihatsu Kogyo Co., Ltd. Announces Employee Share Incentive Plan

Kyokuto Kaihatsu Kogyo Co., Ltd. has announced a decision to implement a transfer-restricted share incentive plan for its employee shareholding association, aiming to dispose of 68,200 treasury shares through a third-party allotment. This initiative is designed to promote employee welfare and align their interests with shareholders by providing them with incentives to improve corporate value and share in the company’s success.

Kyokuto Kaihatsu Kogyo Reports Strong Sales Growth Amidst Profit Challenges

Kyokuto Kaihatsu Kogyo Co., Ltd. reported a significant increase in net sales and operating profit for the six months ended September 30, 2025, despite a loss attributable to owners of the parent. The company anticipates continued growth in net sales and profits for the fiscal year ending March 31, 2026, reflecting a positive outlook for its operations and market positioning.

Kyokuto Kaihatsu Kogyo Announces Merger with Subsidiary to Boost Efficiency

Kyokuto Kaihatsu Kogyo Co., Ltd. has announced its decision to conduct an absorption-type merger with its wholly-owned subsidiary, Kyokuto Kaihatsu Parking Co., Ltd., effective April 1, 2026. This strategic move aims to enhance business value by concentrating management resources and improving efficiency, with no new shares being issued due to the subsidiary’s full ownership.

Kyokuto Kaihatsu Kogyo Faces Cartel Penalty, Pledges Compliance Reforms

Kyokuto Kaihatsu Kogyo Co., Ltd. and its subsidiary Nippon Trex Co., Ltd. have been issued a cease and desist order and a surcharge payment order by the Japan Fair Trade Commission for forming a cartel related to the sale of their products. The company has expressed regret over the situation and committed to reinforcing compliance measures and internal management structures to prevent future violations. They also plan to voluntarily return a portion of director and officer remuneration to regain trust from stakeholders.