Wavelock Holdings Co., Ltd. (7940) AI Stock Analysis

• Market Cap: ¥12.96B
• Dividend Yield: 1.19%
• Average Volume (3M): 59.20K
• Price to Earnings (P/E): 20.1
• Beta (1Y): 0.45
• Revenue Growth: 4.66%
• EPS Growth: 4.90%
• Country: JP
• Employees: 606
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): -3.42
• Shares Outstanding: 11,120,538
• 10 Day Avg. Volume: 45,840
• 30 Day Avg. Volume: 59,200
• PEG Ratio: 0.68
• Price to Book (P/B): 0.30
• Price to Sales (P/S): 0.19
• P/FCF Ratio: 5.46
• 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: ¥1,469.00 ▲(12.39% Upside)

Wavelock Holdings Co., Ltd. scores well due to strong technical indicators and a solid financial foundation, despite some concerns over valuation and cash conversion. The stock's bullish momentum is a significant positive, although caution is advised due to potential overvaluation and overbought conditions.

Positive Factors

Diversified end markets

Wavelock sells resin sheets, films and processed plastics across construction, industrial and consumer channels. This end-market diversification reduces revenue cyclicality, supporting steadier demand and enabling cross-segment pricing and product allocation over the next several months.

Improved free cash flow

A shift to positive free cash flow in 2025 indicates stronger cash generation and operational cash discipline. Durable FCF supports reinvestment, working capital and debt servicing capacity, reducing financing risk and enabling strategic initiatives over a multi-month horizon.

Manageable leverage

A manageable debt-to-equity ratio and stable equity ratio point to a sound capital structure. This financial flexibility allows the firm to fund operations or capex without immediate refinancing risk, improving resilience to sector cycles and supporting medium-term strategic moves.

Negative Factors

Declining operating margins

Falling EBIT/EBITDA margins despite healthy gross margins signal rising operating costs or inefficiencies. Persistent margin compression can erode operating profitability and cash generation, requiring structural actions (cost control, pricing power) to restore sustainable margins over time.

Cash conversion inconsistency

Improving but inconsistent conversion of earnings into cash limits internal funding for growth and increases reliance on external financing. Structural cash conversion issues can constrain capex, slow deleveraging and reduce ability to smooth dividends or withstand demand shocks over the medium term.

Recent revenue decline

A reported ~30% revenue decline over the measured period indicates material demand weakness or loss of volume. Sustained top-line contraction undermines economies of scale, pressures margins and return metrics, and may necessitate strategic repositioning to restore growth over the coming months.

Wavelock Holdings Co., Ltd. Business Overview & Revenue Model

Company Description

Wavelock Holdings Co., Ltd., through its subsidiaries, provides interior, material, and technology solutions in Japan and internationally. The company manufactures and sells plastic sheets/films, synthetic fiber net products, other processed products, and related products; and processes, manufactures, markets, sells, and consults synthetic resins and various materials, as well as produces and sells wallpapers, household goods, and related products. It also processes, manufactures, markets, and sells, and consults insect repellent products and various other materials; imports and sells synthetic resin or miscellaneous materials; and markets various electronic materials, plastic products, etc. The company was founded in 1964 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Wavelock Holdings generates revenue through the sale of its electronic components and systems to various industries, particularly telecommunications providers and manufacturers of industrial equipment. The company's revenue model primarily relies on direct sales, long-term contracts, and partnerships with key players in the telecommunications sector. Significant revenue streams include the sale of high-frequency components, custom-designed solutions, and ongoing support services for their products. Additionally, Wavelock may benefit from strategic alliances with technology firms, which can enhance its market reach and drive growth through collaborative product development and joint marketing efforts.

Wavelock Holdings Co., Ltd. Financial Statement Overview

Summary

Wavelock Holdings Co., Ltd. demonstrates a solid financial foundation with consistent revenue growth and improving profitability metrics. However, declining operating margins and cash conversion remain areas of concern. The company maintains a stable balance sheet with manageable debt levels.

Income Statement

Wavelock Holdings Co., Ltd. has shown a positive revenue growth trend over recent years, with a notable increase from 2024 to 2025. Gross profit margin remains healthy, however, EBIT and EBITDA margins have been on a declining trend, indicating potential operational inefficiencies or increased costs. Net profit margin has improved slightly, reflecting effective cost management despite the declining operating margins.

Balance Sheet

The company's debt-to-equity ratio appears manageable, albeit with some increase in total debt. The equity ratio is stable, showing sound capital structure management. Return on equity has seen fluctuations, potentially indicating some variability in profitability. Overall, the balance sheet shows a stable financial position with room for improvement in leveraging equity more effectively.

Cash Flow

Free cash flow has improved significantly from a negative position in previous years to a positive free cash flow in 2025, indicating better cash management. Operating cash flow to net income ratio suggests that cash generation from operations is improving but still requires attention. The company's ability to convert earnings into cash remains a critical area to focus on.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	26.16B	25.57B	23.56B	22.58B	21.00B	29.25B
Gross Profit	5.97B	5.65B	5.39B	5.14B	4.88B	7.16B
EBITDA	1.67B	1.55B	1.51B	3.78B	1.50B	4.56B
Net Income	576.80M	520.80M	456.34M	2.32B	655.07M	2.39B
Balance Sheet
Total Assets	29.36B	29.19B	28.46B	26.27B	24.26B	26.09B
Cash, Cash Equivalents and Short-Term Investments	3.17B	3.22B	2.58B	2.45B	1.96B	4.88B
Total Debt	5.36B	5.44B	5.34B	3.49B	4.15B	5.03B
Total Liabilities	12.55B	12.48B	12.35B	10.43B	10.49B	11.80B
Stockholders Equity	16.72B	16.62B	16.05B	15.78B	13.72B	14.26B
Cash Flow
Free Cash Flow	0.00	907.10M	-1.03B	-1.11B	-768.82M	1.23B
Operating Cash Flow	0.00	2.23B	139.55M	129.30M	78.10M	2.11B
Investing Cash Flow	0.00	-1.37B	-1.56B	1.40B	-850.08M	1.29B
Financing Cash Flow	0.00	-172.90M	1.55B	-1.01B	-2.18B	-884.74M

Wavelock Holdings Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1307.00
• 50DMA: Positive
• 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:7940, the sentiment is Neutral. The current price of 1307 is below the 20-day moving average (MA) of 1310.10, above the 50-day MA of 1262.22, and above the 200-day MA of 826.70, indicating a neutral trend. The MACD of 20.39 indicates Positive momentum. The RSI at 45.97 is Neutral, neither overbought nor oversold. The STOCH value of 42.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:7940.

Wavelock Holdings Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4625	78 Outperform	¥3.85B	10.68	―	2.27%	1.79%	31.63%
4623	72 Outperform	¥6.56B	10.51	―	3.50%	-8.27%	-3.23%
7940	72 Outperform	¥12.96B	20.06	―	1.19%	4.66%	4.90%
4624	66 Neutral	¥5.63B	11.44	―	1.39%	2.67%	37.55%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
4616	51 Neutral	¥1.94B	26.87	―	2.34%	-2.27%	-12.76%
4615	44 Neutral	¥4.32B	-22.10	―	―	8.66%	-239.07%