Kohsai Co.Ltd. (7878) AI Stock Analysis

• Market Cap: ¥2.20B
• Dividend Yield: 5.13%
• Average Volume (3M): 1.19K
• Price to Earnings (P/E): 28.8
• Beta (1Y): 0.85
• Revenue Growth: 0.99%
• EPS Growth: -42.44%
• Country: JP
• Employees: 25
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Luxury Goods
• EPS (TTM): 9.23
• Shares Outstanding: 1,584,000
• 10 Day Avg. Volume: 1,960
• 30 Day Avg. Volume: 1,186
• PEG Ratio: -4.59
• Price to Book (P/B): 1.08
• Price to Sales (P/S): 0.40
• P/FCF Ratio: 32.00
• 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: 72 Outperform
• Price Target: ¥1,743.00 ▲(79.88% Upside)
• Action: Upgraded Date: 02/20/26
• Date: Action: Upgraded 02/20/26

The score is driven primarily by solid financial performance (strong growth, improving margins, and a stable balance sheet), offset by weaker free cash flow trends. Technicals show a strong uptrend but with extreme overbought readings that elevate near-term downside risk. Valuation is a headwind given the high P/E and only moderate dividend yield.

Positive Factors

Revenue Growth

Sustained 11.5% revenue growth indicates durable demand for Kohsai's precision machinery and components. Combined with stated long-term contracts and diversified end markets, this trend supports continued scale, recurring order visibility and provides a stable base to fund R&D and incremental margin gains over the next several quarters.

Margin Improvement

Improving gross and operating margins reflect better cost management and operational leverage in manufacturing. These margin gains are structural if driven by process improvements or product mix shifts, helping protect profitability through cycles and creating capacity to reinvest in product development and customer support over the medium term.

Operating Cash Generation

Strong operating cash flow and a 1.59 OCF/net income ratio show healthy cash conversion from operations. Durable cash generation increases financial flexibility to fund capex, service debt, or support strategic initiatives without relying heavily on external financing, bolstering medium-term investment capacity.

Negative Factors

Free Cash Flow Drop

A near-50% fall in free cash flow driven by higher capex is a structural concern if elevated investment persists. Reduced FCF limits ability to return capital, buffer downturns, or fund unexpected needs, and may force trade-offs between growth projects, dividends, or higher leverage to maintain strategy execution.

Low Net Profitability & EPS Decline

A low 2.2% net margin together with a steep EPS decline signals limited bottom-line resilience and sensitivity to cost swings or revenue pressure. Persistently weak net profitability constrains free cash flow and return on capital, increasing vulnerability to cyclical shocks or competitive pricing pressure over the medium term.

Small Workforce / Scale Risk

A very small employee base raises execution and scalability risks for a manufacturing supplier. It may indicate reliance on key individuals or outsourcing, limiting capacity to rapidly expand production, integrate new projects, or absorb turnover—heightening operational risk in growth phases or during complex customer programs.

Kohsai Co.Ltd. Business Overview & Revenue Model

Company Description

Kohsai Co.,Ltd. engages in the jewelry business in Japan. It offers jewelry and jewelry parts, which include earring parts and clasps, and forged rings. The company was formerly known as Kosaikogei Co.,Ltd. and changed its name to Kohsai Co.,Ltd. in August 2017. The company was founded in 1955 and is headquartered in Kai, Japan. Kohsai Co.,Ltd. operates as a subsidiary of Estio Co., Ltd.

How the Company Makes Money

Kohsai Co. Ltd. generates revenue through multiple streams, primarily by selling its precision machinery and components to various sectors, including automotive and electronics. The company benefits from long-term contracts with major manufacturers, ensuring a steady flow of income. Additionally, Kohsai engages in research and development, allowing it to introduce new products that cater to emerging market demands. Strategic partnerships with key players in the industry further enhance its market reach and provide opportunities for collaborative projects, contributing significantly to its revenue. Service contracts and maintenance agreements for their machinery also serve as a recurring revenue source, ensuring ongoing engagement with their customer base.

Kohsai Co.Ltd. Financial Statement Overview

Summary

Financials are solid overall: strong revenue growth (+11.5%) and improved profitability metrics (gross margin 18.3%, EBIT margin 3.8%, EBITDA margin 5.2%). Balance sheet is stable with a 48.4% equity ratio and manageable leverage (debt-to-equity 0.74). Key drag is cash flow quality, as free cash flow fell 48.4% despite stronger operating cash flow, and net margin is low at 2.2%.

Income Statement

Kohsai Co.Ltd. demonstrates strong revenue growth with a 11.5% increase from the previous year. The gross profit margin improved to 18.3%, indicating efficient cost management. However, net profit margin slightly decreased to 2.2%, reflecting a need for better operational efficiency. The EBIT margin improved to 3.8%, and EBITDA margin rose to 5.2%, showcasing enhanced profitability.

Balance Sheet

The company's balance sheet shows a sound equity position with an equity ratio of 48.4%. The debt-to-equity ratio stands at 0.74, a moderate level indicating manageable leverage. Return on equity is at 6.1%, suggesting decent returns, though there is room for improvement. Overall, the balance sheet reflects stability but with potential for optimizing capital structure.

Cash Flow

Operating cash flow has improved significantly to $140.7 million, suggesting strong cash generation. However, free cash flow decreased by 48.4% due to higher capital expenditures, impacting the company's liquidity. The operating cash flow to net income ratio is 1.59, indicating healthy cash conversion. The company should focus on enhancing free cash flow to support growth initiatives.

Breakdown	Jan 2025	Jan 2024	Jan 2023	Jan 2022	Jan 2021
Income Statement
Total Revenue	3.93B	3.53B	3.36B	2.99B	2.12B
Gross Profit	719.57M	600.38M	466.84M	431.64M	373.04M
EBITDA	205.16M	177.70M	110.06M	77.56M	92.99M
Net Income	88.40M	91.99M	27.75M	30.05M	24.50M
Balance Sheet
Total Assets	3.01B	2.75B	2.61B	2.46B	2.39B
Cash, Cash Equivalents and Short-Term Investments	685.48M	482.55M	448.55M	535.46M	718.39M
Total Debt	1.07B	885.85M	923.24M	682.21M	755.87M
Total Liabilities	1.55B	1.36B	1.31B	1.18B	1.13B
Stockholders Equity	1.46B	1.39B	1.30B	1.28B	1.26B
Cash Flow
Free Cash Flow	49.34M	95.56M	-304.85M	-123.42M	35.40M
Operating Cash Flow	140.69M	124.01M	-252.00M	-15.85M	61.92M
Investing Cash Flow	-102.21M	-39.91M	-25.86M	-68.45M	-44.34M
Financing Cash Flow	167.27M	-50.26M	214.05M	-88.60M	235.50M

Kohsai Co.Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 969.00
• 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:7878, the sentiment is Positive. The current price of 969 is below the 20-day moving average (MA) of 1215.00, below the 50-day MA of 1077.79, and below the 200-day MA of 1085.50, indicating a bullish trend. The MACD of 101.31 indicates Negative momentum. The RSI at 65.59 is Neutral, neither overbought nor oversold. The STOCH value of 50.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:7878.

Kohsai Co.Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9904	75 Outperform	¥11.48B	24.66	―	5.21%	6.89%	-1.46%
7878	72 Outperform	¥2.20B	28.83	―	5.13%	0.99%	-42.44%
7771	66 Neutral	¥9.25B	92.11	―	―	-0.41%	512.76%
2736	65 Neutral	¥2.32B	13.39	―	1.21%	1.04%	-66.56%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
7810	50 Neutral	¥3.68B	155.02	―	0.25%	18.69%	5.17%
7872	50 Neutral	¥6.74B	-11.57	―	4.64%	-0.68%	46.43%