Hatsuho Shouji Co., Ltd. (7425) AI Stock Analysis

• Market Cap: ¥8.42B
• Dividend Yield: 2.89%
• Average Volume (3M): 1.65K
• Price to Earnings (P/E): 8.4
• Beta (1Y): 0.48
• Revenue Growth: 1.59%
• EPS Growth: -5.99%
• Country: JP
• Employees: 471
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Steel
• EPS (TTM): 65.86
• Shares Outstanding: 3,480,660
• 10 Day Avg. Volume: 1,080
• 30 Day Avg. Volume: 1,653
• PEG Ratio: -0.56
• Price to Book (P/B): 0.69
• Price to Sales (P/S): 0.20
• P/FCF Ratio: 3.47
• 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: 77 Outperform
• Price Target: ¥2,612.00 ▲(29.76% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by solid financial strength (low leverage, healthy ROE, rising revenue) and attractive valuation (low P/E and a ~3.35% dividend). This is tempered by signs of margin pressure in 2025 and historically uneven cash-flow consistency, while technicals remain moderately positive rather than strongly bullish.

Positive Factors

Conservative balance sheet

Low leverage and steadily building equity (debt/equity ~0.13x in 2024) provide durable financial flexibility for a cyclical steel business. Healthy ROE (~10–11%) supports quality earnings, limits refinancing risk, and enables steadier capital allocation over months ahead.

Sustained revenue growth

A multi-year upward revenue trend with clear acceleration in 2025 suggests improving demand or market share gains. Persistent top-line growth helps absorb fixed costs, supports continued reinvestment, and underpins longer-term margin recovery if cost trends normalize.

Improved cash generation in 2025

A pronounced step-up in operating and free cash flow in 2025 materially strengthens liquidity and optionality. If sustained, higher cash conversion enables capex, working-capital resilience, and consistent shareholder distributions, reducing reliance on external financing.

Negative Factors

Margin pressure

Net income fell in 2025 despite higher sales, signaling margin compression from rising costs or adverse mix. Persistent margin pressure can erode returns and limit reinvestment capacity, making profitability recovery dependent on sustained pricing power or cost control.

Volatile cash flow history

Historic swings in free cash flow (notably a sharp 2023 drop) reduce predictability for capital allocation. Even with a 2025 rebound, volatility complicates budgeting for capex and dividends and increases execution risk if working-capital or investment demands re-emerge.

Flat assets and softened profitability

Stagnant or declining assets alongside weakened profitability may reflect underinvestment or efficiency headwinds. That limits capacity to scale and capture growth, potentially constraining margin expansion and operational leverage over the medium term if not addressed.

Hatsuho Shouji Co., Ltd. Business Overview & Revenue Model

Company Description

Hatsuho Shouji Co., Ltd. (7425) is a Japanese trading company that primarily operates in the textile and apparel sector. The company engages in the import and export of various textile products, including fabrics, garments, and related materials. Hatsuho Shouji also provides services related to product development and supply chain management, catering to both domestic and international markets.

How the Company Makes Money

Hatsuho Shouji generates revenue through multiple streams, primarily by acting as an intermediary in the textile trade. The company earns money by importing textiles from international suppliers and selling them to domestic manufacturers and retailers, often marking up the price for profit. Additionally, Hatsuho Shouji offers consultancy and product development services, which create supplementary income. The company may also establish partnerships with manufacturers to secure exclusive distribution rights, enhancing its revenue potential. Furthermore, by maintaining a robust supply chain and logistics network, Hatsuho Shouji optimizes operational efficiency, contributing positively to its overall earnings.

Hatsuho Shouji Co., Ltd. Financial Statement Overview

Summary

Financials are solid overall: revenues have trended upward with a strong acceleration in 2025 and leverage is low with steadily building equity and healthy ROE (~10–11% in 2022–2024). Offsetting factors are margin pressure (2025 net income down vs. 2024 despite higher sales) and historically volatile cash flow (notably weak FCF in 2023, though 2025 rebounded strongly).

Income Statement

Revenue has trended up over time, with modest growth in 2024 and a very strong acceleration in 2025. Profitability is solid for the industry, with gross margin around the high-teens and net margin around ~3% in 2022–2024, indicating stable pricing/expense control. However, operating profitability eased from 2023 to 2024–2025 (lower EBIT/EBITDA vs. 2023 despite higher sales), and net income declined in 2025 versus 2024, signaling some margin pressure or higher costs.

Balance Sheet

The balance sheet looks conservatively positioned: debt is low relative to equity (about 0.13x in 2024, down from ~0.20x in 2023), and equity has steadily built over the period. Returns on equity have been consistently healthy (roughly ~10–11% in 2022–2024), supporting the quality of earnings. The main watch item is that total assets were roughly flat to down in 2024 vs. 2023 while profitability softened in 2025, which could limit near-term efficiency gains if the trend persists.

Cash Flow

Cash generation is uneven year-to-year: 2020 showed negative operating and free cash flow, followed by a recovery and strong conversion in 2021–2022. 2023 saw a sharp drop in free cash flow despite positive operating cash flow, suggesting heavier investment or working-capital drag. 2024 free cash flow improved but remained modest, while 2025 showed a large step-up in both operating and free cash flow, which is a clear positive—though the volatility reduces confidence versus consistently stable cash generation.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	35.18B	35.44B	34.83B	34.42B	31.79B	29.91B
Gross Profit	6.26B	6.08B	6.04B	6.06B	5.68B	4.84B
EBITDA	1.45B	1.37B	1.45B	1.57B	1.44B	916.90M
Net Income	906.16M	831.66M	974.14M	975.77M	854.61M	501.36M
Balance Sheet
Total Assets	20.94B	22.38B	21.87B	22.73B	21.11B	18.97B
Cash, Cash Equivalents and Short-Term Investments	7.01B	7.60B	6.16B	6.50B	5.95B	5.42B
Total Debt	1.06B	857.57M	1.27B	1.72B	1.01B	1.40B
Total Liabilities	10.13B	11.09B	11.28B	13.04B	12.34B	11.01B
Stockholders Equity	9.65B	10.10B	9.46B	8.64B	7.78B	7.04B
Cash Flow
Free Cash Flow	0.00	2.01B	239.25M	44.28M	1.02B	1.19B
Operating Cash Flow	0.00	2.17B	628.24M	692.93M	1.30B	1.22B
Investing Cash Flow	0.00	-1.10B	-313.20M	-679.25M	-220.90M	201.02M
Financing Cash Flow	0.00	-676.83M	-657.51M	543.11M	-549.08M	-627.78M

Hatsuho Shouji Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2013.00
• 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:7425, the sentiment is Positive. The current price of 2013 is below the 20-day moving average (MA) of 2365.80, below the 50-day MA of 2320.68, and below the 200-day MA of 2043.55, indicating a bullish trend. The MACD of 53.47 indicates Negative momentum. The RSI at 64.34 is Neutral, neither overbought nor oversold. The STOCH value of 74.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7425.

Hatsuho Shouji Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
8075	80 Outperform	¥62.98B	7.59	―	4.12%	-2.50%	-19.09%
8076	79 Outperform	¥19.54B	8.47	―	5.36%	-3.55%	5.47%
7425	77 Outperform	¥8.42B	8.36	―	2.89%	1.59%	-5.99%
8065	77 Outperform	¥52.13B	7.80	―	3.53%	3.19%	-5.79%
7305	69 Neutral	¥20.98B	11.22	―	6.00%	-5.76%	56.13%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
5449	60 Neutral	¥78.84B	53.99	―	1.24%	-12.05%	-97.36%