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

• Market Cap: ¥115.27B
• Dividend Yield: 5.07%
• Average Volume (3M): 134.11K
• Price to Earnings (P/E): 13.8
• Beta (1Y): 0.74
• Revenue Growth: 13.71%
• EPS Growth: -77.02%
• Country: JP
• Employees: 3,237
• Sector: Industrials
• Sector Strength: 72
• Industry: Agricultural - Machinery
• EPS (TTM): 56.93
• 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: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 67 Neutral
• Price Target: ¥3,618.00 ▲(15.59% Upside)
• Action: Reiterated Date: 01/16/26
• Date: Action: Reiterated 01/16/26

The score is driven primarily by solid financial stability and good top-line growth, supported by strong technical momentum. These positives are tempered by weak free cash flow and an expensive valuation (very high P/E), despite an attractive dividend yield.

Positive Factors

Strong balance sheet

A high equity ratio and very low leverage give the company durable financial flexibility. This supports funding working capital, absorbing cyclical shocks in vehicle orders, and pursuing strategic investments or maintenance of dividend policy without relying heavily on external financing.

Consistent revenue growth

Sustained top-line expansion points to steady demand for purpose-built vehicle bodies across construction, logistics and municipal segments. Continued revenue growth supports scale economics, better absorption of fixed costs, and potential margin improvement over the medium term.

Recurring after-sales business

A meaningful after-sales and service revenue stream tied to an installed base provides recurring cash flow and customer lock-in. This reduces reliance on new vehicle orders, smooths revenue cyclicality, and strengthens long-term customer relationships and lifetime value.

Negative Factors

Negative free cash flow

Persistent negative free cash flow driven by high capex can weaken cash reserves and force external financing or reduced shareholder returns. Over months, this constrains flexibility to invest in product upgrades, factory capacity or to withstand weaker order periods without raising debt or equity.

Thin profitability margins

Modest operating and net margins limit the company's buffer against cost inflation and cyclical revenue declines. With narrow margins, achieving sustained profit growth requires either higher pricing, better product mix, or structural efficiency gains to protect returns amid competitive pressure.

Modest return on equity

A low ROE suggests the business is not yet generating strong returns on invested capital, potentially signaling underutilized assets or weak pricing power. Over the medium term this can limit the firm's ability to convert equity into compelling shareholder returns without operational improvements.

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

Company Description

Kyokuto Kaihatsu Kogyo Co.,Ltd. manufactures and sells special purpose vehicles, environmental equipment and systems, and car parking systems in Japan. It operates through Specialty Truck, Environmental Equipment and Systems, and Real Estate Rental segments. The company offers piston, squeeze, high pressure and large capacity piston, and stationary squeeze concrete pumps; minicrete; and dump, sprinkler, and mixer trucks for the construction sector. It also provides tailgate lifters, pneumatic bulk and single car carriers, and steel cargo bodies, as well as tank, refuse, and detachable body trucks for the logistics and environmental sectors. In addition, it offers environmental equipment and systems, such as pulverizers for crushing of various domestic and industrial waste; and reuse, derived, and fuel system that is used as heat energy for hot-water supply, heating and cooling, and power generation applications. Further, the company provides multistory parking systems, such as loading and unloading pit type, loading and unloading transverse pit type, and loading and unloading transverse ground type parking systems; and real estate rental services. The company was formerly known as Kyokuto Kaihatsu Kikai Kogyo Co., Ltd. and changed its name to Kyokuto Kaihatsu Kogyo Co.,Ltd. in April 1971. Kyokuto Kaihatsu Kogyo Co.,Ltd. was founded in 1955 and is headquartered in Nishinomiya, Japan.

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

Strong revenue growth (9.7%) and a very solid balance sheet (61.8% equity ratio, low 0.25 debt-to-equity) support the score. Profitability is only moderate (4.1% net margin; 4.7% EBIT margin) and cash flow is a key weakness due to negative free cash flow and only average cash conversion (operating cash flow to net income of 0.9).

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	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
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: Negative
• Last Price: 3130.00
• 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:7226, the sentiment is Negative. The current price of 3130 is below the 20-day moving average (MA) of 3320.50, below the 50-day MA of 3319.70, and above the 200-day MA of 2835.72, indicating a neutral trend. The MACD of -62.57 indicates Positive momentum. The RSI at 38.13 is Neutral, neither overbought nor oversold. The STOCH value of 30.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
6432	73 Outperform	¥311.87B	12.67	―	2.99%	0.31%	-11.04%
6395	70 Outperform	¥162.40B	7.33	9.45%	2.86%	10.49%	-5.19%
6345	70 Outperform	¥88.12B	15.03	―	4.79%	1.68%	18.85%
7226	67 Neutral	¥115.27B	13.75	―	5.07%	13.71%	-77.02%
6305	67 Neutral	¥1.26T	13.34	9.16%	3.98%	-2.72%	29.43%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6390	51 Neutral	¥18.10B	0.51	―	5.40%	-2.22%	18.80%

Kyokuto Kaihatsu Kogyo Co., Ltd. Corporate Events

Kyokuto Kaihatsu Kogyo to Adopt Audit and Supervisory Committee Structure for Faster, More Transparent Governance

Kyokuto Kaihatsu Kogyo has resolved to change its governance structure from a company with a board of corporate auditors to a company with an audit and supervisory committee, pending shareholder approval at its June 2026 ordinary general meeting. The new committee will be composed mainly of outside directors, tasked with auditing and supervising the legality and appropriateness of business execution to enhance management transparency and better meet stakeholder expectations in Japan and abroad.

By delegating more decision-making authority from the Board of Directors to individual directors, the company aims to accelerate management decisions and execution while maintaining oversight under the restructured board framework. Kyokuto Kaihatsu Kogyo plans to revise its Articles of Incorporation in line with the transition and will announce detailed changes and officer appointments once finalized, signaling a broader shift toward more agile and globally aligned corporate governance.

The most recent analyst rating on (JP:7226) stock is a Hold with a Yen3664.00 price target. To see the full list of analyst forecasts on Kyokuto Kaihatsu Kogyo Co., Ltd. stock, see the JP:7226 Stock Forecast page.

Kyokuto Kaihatsu Kogyo Lifts Sales and Operating Profit but Bottom Line Slumps

Kyokuto Kaihatsu Kogyo reported consolidated net sales of ¥112.68 billion for the nine months ended December 31, 2025, up 16.6% year on year, with operating profit rising 48.4% to ¥5.63 billion and ordinary profit climbing 48.0% to ¥6.18 billion. Despite this strong top-line and operating performance, profit attributable to owners of parent plunged 81.9% to ¥702 million, and equity decreased, pushing the equity-to-asset ratio down to 56.1% from 61.8% at the prior fiscal year-end.

The company maintained its dividend stance, having already paid a ¥70 per-share interim dividend for the fiscal year ending March 31, 2026, and forecasting a full-year payout of ¥140 per share, slightly below the previous year’s ¥158. For the full fiscal year, Kyokuto projects net sales of ¥168 billion and operating profit of ¥9.6 billion, yet expects profit attributable to owners of parent to fall 54.6% to ¥2.65 billion, signaling that non-operating or extraordinary factors may continue to weigh on bottom-line earnings even as core operations expand.

The most recent analyst rating on (JP:7226) stock is a Hold with a Yen3540.00 price target. To see the full list of analyst forecasts on Kyokuto Kaihatsu Kogyo Co., Ltd. stock, see the JP:7226 Stock Forecast page.

Kyokuto Kaihatsu Kogyo Adjusts Treasury Share Disposal for Employee Stock Plan After Partial Forfeiture

Kyokuto Kaihatsu Kogyo has completed the payment procedures for a disposal of treasury shares under a restricted stock incentive plan for its employee shareholding association, originally approved by the board in November 2025. Due to partial forfeiture of rights by some participants, the company reduced the number of shares to be allotted from 68,200 to 64,430 and lowered the total disposal value from ¥181,071,000 to ¥171,061,650, while maintaining the disposal price per share. The adjustment reflects the final count of employees who agreed to participate in the restricted stock plan and fine-tunes the scale of equity incentives without altering the basic terms of the program, indicating a targeted approach to employee ownership and capital management.

The most recent analyst rating on (JP:7226) stock is a Hold with a Yen3503.00 price target. To see the full list of analyst forecasts on Kyokuto Kaihatsu Kogyo Co., Ltd. stock, see the JP:7226 Stock Forecast page.

Kyokuto Kaihatsu Kogyo Challenges JFTC Surcharge Order Over Truck Body Sales

Kyokuto Kaihatsu Kogyo Co., Ltd. and its subsidiary Nippon Trex Co., Ltd. have decided to file a lawsuit seeking cancellation and reduction of a surcharge payment order issued by the Japan Fair Trade Commission in connection with alleged violations of the Antimonopoly Act over the sale of truck “upper bodies.” While the group has expressed deep remorse, apologized to stakeholders, and pledged to reinforce compliance and internal controls to prevent recurrence, it disputes aspects of the fact-finding and legal interpretation behind the surcharge, which totals approximately ¥5.93 billion after a 30% reduction and is due by April 27, 2026, and will now pursue a fair judicial ruling that could affect its financial burden and its standing in Japan’s heavily regulated commercial vehicle components market.

The most recent analyst rating on (JP:7226) stock is a Hold with a Yen2713.00 price target. To see the full list of analyst forecasts on Kyokuto Kaihatsu Kogyo Co., Ltd. stock, see the JP:7226 Stock Forecast page.