Koken Ltd. (7963) AI Stock Analysis

• Market Cap: ¥9.66B
• Dividend Yield: 1.89%
• Average Volume (3M): 4.09K
• Price to Earnings (P/E): 10.3
• Beta (1Y): 0.22
• Revenue Growth: 9.47%
• EPS Growth: 37.35%
• Country: JP
• Employees: 321
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Devices
• EPS (TTM): 105.82
• Shares Outstanding: 5,104,003
• 10 Day Avg. Volume: 2,750
• 30 Day Avg. Volume: 4,086
• PEG Ratio: 0.45
• Price to Book (P/B): 0.66
• Price to Sales (P/S): 0.77
• P/FCF Ratio: -39.36
• 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: ¥2,092.00 ▲(12.72% Upside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is held back primarily by weak and volatile cash generation in 2025 (negative free cash flow and low operating cash flow versus earnings). Offsetting this, the stock shows a constructive technical uptrend and appears attractively valued with a low P/E and moderate dividend yield, while leverage remains manageable.

Positive Factors

Revenue Growth

Re-accelerating revenue (+7.2% in 2025) signals strengthening market demand for Koken's medical devices and software. Durable top-line expansion supports recurring service and license revenue, improves predictability for capex and R&D spending, and provides a foundation to scale operations over the medium term.

Margin Sustainability

Stable mid-40% gross margins and improved operating margin (~10.7%) reflect persistent product pricing power and operational leverage. Consistent gross margins support reinvestment in product development and service capabilities, preserving long-term profitability even as the business scales.

Balance Sheet Health

Declining leverage and growing equity indicate an improving capital structure with manageable debt levels. A stronger balance sheet increases resilience to cyclical healthcare spending, preserves financing optionality for strategic investments, and reduces insolvency risk over the medium term.

Negative Factors

Cash Generation

Material deterioration in cash generation (OCF down to 136M; FCF -232M) reduces internal funding for capex, service contracts, and product development. Persistent negative FCF would force external financing or asset sales and constrains durable investment in growth initiatives.

Earnings Quality

A large gap between reported earnings and cash from operations suggests earnings are supported by accruals or timing effects rather than cash conversion. This weakens confidence in reported profitability and raises the risk that earnings will not sustainably fund dividends or reinvestment.

Return Profile

Mid-single-digit returns (~6.4% ROE) imply limited ability to generate outsized shareholder returns versus capital invested. Persistently modest returns signal potential operational inefficiencies or competitive pressure that can cap long-term earnings growth and hamper capital allocation effectiveness.

Koken Ltd. Business Overview & Revenue Model

Company Description

Koken Ltd., together with its subsidiaries, produces and sells occupational personal protective and environment quality improvement equipment in Japan. It operates in Mask-Related Business, Environmental- Related Businesses, and Other Businesses segments. The company offers clean air solutions, including KOACH, a clean zone creator; KOKENLAMINAR, a push-pull ventilation system; and LAMIKOACH, an air ventilation system as contamination source control. It also provides IMADEZE, a copper-based lactate antibacterial agent; masks for medical facilities and general consumers; and functional water production systems, such as electrolyzed water generators, endoscope washers/disinfectors, blood stain washer kits, and portable showers, as well as magnetically treated water. In addition, the company offers respirators for industrial use, including particulate respirators, powered air-purifying respirators, supplied air respirators, chemical cartridge respirators, and gas masks; respirators for general consumers; equipment for accident and disaster countermeasures; and protective clothes, ear plugs, face shields, etc. The company was founded in 1943 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Koken Ltd. generates revenue through multiple streams, primarily from the sale of medical devices and healthcare technology solutions. The company earns money by selling its products directly to hospitals, clinics, and healthcare providers, as well as through long-term service agreements for maintenance and support. Additionally, Koken Ltd. may generate recurring revenue from licensing its technology and software solutions. Partnerships with healthcare institutions and collaborations with other medical technology firms enhance its market reach and contribute to its earnings. The company's focus on innovation and quality helps maintain a competitive edge in the rapidly evolving healthcare sector.

Koken Ltd. Financial Statement Overview

Summary

Income statement and balance sheet are solid (re-accelerating revenue growth and manageable, improving leverage), but the cash flow profile is a major concern: 2025 operating cash flow fell sharply and free cash flow turned negative, raising earnings-conversion and funding-flexibility risk.

Income Statement

Revenue growth re-accelerated in 2025 (annual +7.2%) after a flat 2023 and modest 2024, indicating improving demand. Profitability is solid for the period: gross margin has been steady in the mid‑40% range and operating profitability improved in 2025 versus 2023–2024 (operating margin ~10.7%). However, net profitability remains moderate (~7–8%) and has not consistently expanded versus earlier years, suggesting ongoing cost or below-the-line pressure despite the top-line rebound.

Balance Sheet

Leverage appears reasonable and improving: debt relative to equity declined from roughly 0.57 (2020) to ~0.42 (2025), while equity has grown over time, supporting balance-sheet resilience. Returns on shareholder capital are positive but not high (mid‑single digits in 2023–2025, ~6.4% in 2025), implying the company is not currently generating outsized returns despite a solid capital base. Overall, the balance sheet looks stable with manageable debt, but efficiency/return profile is only average.

Cash Flow

Cash generation weakened sharply in 2025: operating cash flow fell to 136M and free cash flow turned negative (-232M), a material deterioration from 2023–2024 when free cash flow was positive. Operating cash flow covered only a very small portion of net income in 2025, raising earnings-quality and working-capital/capex timing concerns. The multi-year history shows volatility (stronger in 2023, weaker in 2021–2022, and very weak in 2025), making cash flow the key risk area despite reported profitability.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	11.06B	11.86B	10.76B	10.59B	10.60B	10.20B
Gross Profit	5.12B	5.38B	4.92B	4.84B	4.99B	4.65B
EBITDA	1.54B	1.69B	1.45B	1.50B	1.78B	1.61B
Net Income	777.19M	885.29M	722.06M	701.13M	833.11M	862.37M
Balance Sheet
Total Assets	20.83B	22.44B	20.95B	20.87B	20.62B	19.64B
Cash, Cash Equivalents and Short-Term Investments	3.02B	2.68B	2.53B	2.98B	2.39B	2.19B
Total Debt	5.51B	5.79B	5.18B	6.05B	6.13B	6.13B
Total Liabilities	7.71B	8.65B	7.91B	8.52B	8.80B	8.52B
Stockholders Equity	13.12B	13.80B	13.04B	12.35B	11.82B	11.11B
Cash Flow
Free Cash Flow	0.00	-232.16M	445.38M	886.94M	451.74M	417.31M
Operating Cash Flow	0.00	136.14M	666.37M	1.08B	618.95M	655.48M
Investing Cash Flow	0.00	-379.51M	-98.81M	-206.25M	-184.20M	147.58M
Financing Cash Flow	0.00	370.84M	-1.05B	-307.82M	-291.98M	-176.25M

Koken Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1856.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:7963, the sentiment is Neutral. The current price of 1856 is below the 20-day moving average (MA) of 2044.95, below the 50-day MA of 1967.64, and above the 200-day MA of 1802.14, indicating a neutral trend. The MACD of 6.27 indicates Positive momentum. The RSI at 45.28 is Neutral, neither overbought nor oversold. The STOCH value of 19.42 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:7963.

Koken Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6678	78 Outperform	¥20.77B	15.12	―	3.02%	-4.36%	-14.92%
5187	72 Outperform	¥10.32B	12.19	―	3.52%	4.97%	-10.07%
6823	69 Neutral	¥34.61B	10.15	―	2.93%	6.72%	20.01%
7963	67 Neutral	¥9.66B	10.32	―	1.89%	9.47%	37.35%
7600	63 Neutral	¥14.43B	14.76	―	3.12%	3.59%	-163.08%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
6523	51 Neutral	¥126.72B	28.05	2.42%	3.73%	0.04%	―