SK Japan Co., Ltd. (7608) AI Stock Analysis

• Market Cap: ¥14.01B
• Dividend Yield: 2.37%
• Average Volume (3M): 108.31K
• Price to Earnings (P/E): 11.4
• Beta (1Y): 0.67
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: JP
• Employees: 128
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Leisure
• EPS (TTM): 37.76
• Shares Outstanding: 8,490,103
• 10 Day Avg. Volume: 131,770
• 30 Day Avg. Volume: 108,313
• PEG Ratio: 0.30
• Price to Book (P/B): 1.14
• Price to Sales (P/S): 0.48
• P/FCF Ratio: 11.81
• 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: 82 Outperform
• Price Target: ¥2,031.00 ▲(36.22% Upside)
• Action: N/A Date: 01/04/26
• Date: Action: N/A 01/04/26

The score is driven primarily by strong financial quality (especially the conservative balance sheet and improved profitability) and supportive technical trends (price above key moving averages with positive MACD). Valuation further strengthens the outlook with a low P/E and moderate dividend yield, while the key risk to monitor is cash-flow volatility and softer cash conversion in the most recent period.

Positive Factors

Conservative balance sheet

Near-zero leverage and steadily growing equity (≈¥3.3B in 2020 to ≈¥5.6B in 2025) provide durable financial flexibility. This low-debt profile supports investment, withstands downturns, and lowers refinancing risk, enabling strategic moves without pressuring cash flows.

Sustained revenue expansion

Multi-year revenue growth of this magnitude reflects durable business traction and market demand. Scale gains underpin future operating leverage potential, support continued investment in the leisure business, and create a larger base for margin recovery or reinvestment.

Improving profitability and FCF alignment

Rising operating profit and closer alignment of free cash flow with net income in recent years indicate improving earnings quality. When sustained, this strengthens internal funding for capex/dividends and reduces reliance on external financing, supporting durable cash returns.

Negative Factors

Cash-flow volatility

Intermittent negative cash flow and weaker cash conversion in 2023 and 2025 signal working-capital or timing variability. Persistent volatility can constrain capital allocation, stress liquidity in downturns, and make growth or payout plans less reliable over the medium term.

Gross margin compression

Declining gross margin despite higher sales suggests structural cost pressures or pricing erosion. Margin erosion reduces operating leverage benefits, limits sustainable net profit expansion, and increases sensitivity of earnings to revenue swings over multiple quarters.

Margins and returns below prior peak

ROE and margins not reaching earlier peaks imply the company faces headwinds to prior profitability levels. This inconsistency points to possible structural changes in competitive dynamics or cost base, limiting long-term upside from historical peak performance.

SK Japan Co., Ltd. Business Overview & Revenue Model

Company Description

SK Japan Co.,Ltd. plans, manufactures, and sells character stuffed animals, key chains, household goods, mobile phone accessory goods, prize products, etc. The company was founded in 1989 and is headquartered in Osaka, Japan.

How the Company Makes Money

SK Japan Co., Ltd. Financial Statement Overview

Summary

Strong overall financial quality supported by rapid revenue growth and improving operating profit/net income through 2025, plus a very conservative, near debt-free balance sheet. The main offset is uneven cash-flow consistency (negative in 2023 and weaker cash conversion in 2025) and some gross margin compression versus earlier years.

Income Statement

Revenue has expanded strongly over the last few years (from ~¥6.5B in 2022 to ~¥13.3B in 2025), with a particularly large step-up in 2023–2025 and positive growth again in 2025. Profitability has also improved versus 2022–2023, with operating profit and net income rising materially through 2025. Offsetting this, margins are still below the company’s earlier peak (notably 2020 gross and net margins), and gross margin has drifted down from 2022 to 2025 even as scale improved.

Balance Sheet

The balance sheet is very conservative, with essentially no debt in recent years and a near-zero debt-to-equity profile. Equity has grown steadily (from ~¥3.3B in 2020 to ~¥5.6B in 2025), supporting asset growth while maintaining a strong capital cushion. Returns on equity are solid and improving versus 2022–2023, though not consistently at the highest level seen earlier (e.g., around 2020).

Cash Flow

Cash generation is generally positive, with operating cash flow and free cash flow positive in most years and free cash flow tracking net income reasonably well in 2024–2025. However, cash flow has been volatile: operating and free cash flow turned negative in 2023, and in 2025 operating cash flow covered a notably smaller share of net income than the prior year, pointing to weaker cash conversion in the most recent period.

Breakdown	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	13.96B	13.27B	10.61B	9.73B	6.50B	5.36B
Gross Profit	3.81B	3.56B	2.95B	2.32B	1.98B	1.65B
EBITDA	1.41B	1.34B	1.06B	627.26M	495.30M	275.60M
Net Income	989.22M	929.14M	755.99M	379.38M	334.38M	285.31M
Balance Sheet
Total Assets	7.08B	6.77B	5.98B	4.84B	4.33B	4.07B
Cash, Cash Equivalents and Short-Term Investments	3.53B	3.78B	3.41B	2.57B	2.79B	2.61B
Total Debt	0.00	0.00	0.00	0.00	0.00	966.00K
Total Liabilities	1.36B	1.20B	1.22B	789.11M	596.21M	510.00M
Stockholders Equity	5.72B	5.58B	4.76B	4.05B	3.74B	3.56B
Cash Flow
Free Cash Flow	0.00	538.78M	997.98M	-138.85M	361.64M	404.58M
Operating Cash Flow	0.00	657.11M	1.07B	-87.76M	389.81M	427.23M
Investing Cash Flow	0.00	-117.76M	-134.56M	-53.52M	-30.46M	-25.93M
Financing Cash Flow	0.00	-166.66M	-108.47M	-89.38M	-188.49M	-84.93M

SK Japan Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7608	82 Outperform	¥14.01B	11.42	―	2.37%	―	―
8135	78 Outperform	¥11.16B	11.62	―	3.96%	7.77%	247.26%
7847	75 Outperform	¥4.35B	23.93	―	4.78%	-11.24%	-48.52%
7809	70 Outperform	¥11.87B	8.44	―	2.70%	9.10%	27.73%
7841	62 Neutral	¥10.73B	17.93	―	3.31%	3.14%	-40.34%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
7865	42 Neutral	¥1.61B	202.00	―	―	―	―