NEPON Inc. (7985) AI Stock Analysis

• Market Cap: ¥1.50B
• Dividend Yield: 0.7%
• Average Volume (3M): 10.16K
• Price to Earnings (P/E): 1.2
• Beta (1Y): 0.56
• Revenue Growth: -1.08%
• EPS Growth: -1296.58%
• Country: JP
• Employees: 247
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 308.19
• Shares Outstanding: 962,948
• 10 Day Avg. Volume: 20,350
• 30 Day Avg. Volume: 10,163
• PEG Ratio: 0.01
• Price to Book (P/B): 0.64
• Price to Sales (P/S): 0.21
• P/FCF Ratio: 12.49
• 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: 46 Neutral
• Price Target: ¥1,667.00 ▲(0.73% Upside)
• Action: Reiterated Date: 11/13/25
• Date: Action: Reiterated 11/13/25

NEPON Inc.'s overall stock score is primarily impacted by its weak financial performance and valuation metrics. The company's declining profitability and inconsistent cash flow, combined with a negative P/E ratio, suggest financial challenges. Technical indicators also show bearish trends, further weighing down the stock's attractiveness.

Positive Factors

Structural industry tailwinds

NEPON's core products address climate control and energy-efficiency needs for controlled environments. Those needs are durable across agriculture and industry as customers invest in yield, quality and energy savings. This positions the business for steady structural demand beyond cyclical swings.

Diversified end markets

Serving both agricultural and industrial customers spreads demand exposure and reduces reliance on a single vertical. This diversification supports more stable revenue opportunities across seasons and industrial cycles, helping mitigate single-market downturns and smoothing long-term cash flows.

Gross margin cushion

Despite margin erosion, NEPON retains mid-30% gross margins, which indicate product-level pricing power or cost structure that still generates a meaningful buffer. That gross-profit base can help the company absorb input cost swings and support recovery in operating profitability if sales stabilize.

Negative Factors

Declining revenue and profitability

Sustained revenue declines and a move to negative net margins indicate structural pressure on competitiveness or demand. Persistent losses erode retained earnings and constrain investment in R&D, sales expansion and service capabilities, making it harder to regain market share and long-term profitability.

Rising leverage

An increasing debt burden reduces financial flexibility, raises interest obligations and limits capacity to fund capex or weather downturns. Over the medium term, higher leverage can force tighter prioritization of cash uses and increase refinancing risk, constraining strategic options.

Volatile and weak cash generation

Inconsistent operating cash flow and negative free cash flow trends impair the company's ability to self-fund working capital, maintenance capex and growth initiatives. Weak cash conversion amplifies liquidity and leverage concerns and limits durable investment in product and service improvements.

NEPON Inc. Business Overview & Revenue Model

Company Description

NEPON Inc. manufactures and sells agricultural, general purpose, construction, and sanitary equipment in Japan. The company operates through Thermal Equipment Business and Sanitary Equipment Business segments. It offers range of agriculture equipment, such as warm air heaters, environmental control equipment, heat pumps for greenhouse horticulture, photosynthesis promotion equipment, hot water generators, geothermal equipment, fans for greenhouse gardening, temporary toilets, and heat sterilizers, as well as agricultural ICT cloud services. In addition, the company provides sanitary equipment, including simple flush, bubble-type simple flush, disaster, and AU toilets, as well as toilet bowls and pump-up tanks; and heat equipment comprising hot water generators, heaters, and boilers, as well as coin operated showers, warm air heaters, and dryers. Further, it engages in the design and construction of pipe and electrical works. NEPON Inc. was incorporated in 1948 and is headquartered in Tokyo, Japan.

How the Company Makes Money

NEPON Inc. generates revenue through a diversified model that includes subscription fees from its software services, sales of hardware products, and consulting services. The company earns a significant portion of its income from recurring subscription fees for its cloud-based platforms, which provide clients with ongoing access to software updates and customer support. Additionally, NEPON sells proprietary hardware devices that complement its software solutions, contributing to its overall revenue. The company also engages in strategic partnerships with other technology firms, which enhance its product offerings and expand its market reach, thereby driving additional revenue through collaborative projects and joint ventures.

NEPON Inc. Financial Statement Overview

Summary

NEPON Inc. faces challenges in revenue growth and profitability, with declining margins and inconsistent cash flow performance. The balance sheet shows moderate stability but increasing leverage, which could pose financial risks. The company needs to address operational inefficiencies and improve cash generation to enhance its financial health and support future growth.

Income Statement

NEPON Inc. has experienced a decline in revenue and profitability over the years. The gross profit margin has decreased from 35.7% in 2020 to 34.7% in 2025. The net profit margin turned negative in 2025, indicating profitability challenges. Revenue growth has been inconsistent, with a notable decline in recent years. The EBIT and EBITDA margins have also weakened, reflecting operational inefficiencies.

Balance Sheet

The company's debt-to-equity ratio has increased, indicating higher leverage, which could pose financial risks. However, the equity ratio remains relatively stable, suggesting a balanced capital structure. Return on equity has declined, reflecting reduced profitability. Overall, the balance sheet shows moderate stability but with increasing leverage concerns.

Cash Flow

NEPON Inc.'s cash flow performance has been mixed. Operating cash flow has fluctuated, with a significant decline in 2023. Free cash flow has shown volatility, with a negative trend in recent years. The operating cash flow to net income ratio indicates challenges in converting profits to cash. The company needs to improve cash generation to support its operations and growth.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	7.24B	7.28B	7.77B	7.99B	7.49B	7.26B
Gross Profit	2.51B	2.52B	2.79B	2.99B	2.72B	2.68B
EBITDA	230.62M	232.68M	281.48M	591.32M	489.24M	453.76M
Net Income	-380.18M	-280.18M	64.98M	285.17M	219.00M	168.02M
Balance Sheet
Total Assets	5.53B	6.02B	6.90B	7.22B	6.58B	6.54B
Cash, Cash Equivalents and Short-Term Investments	790.53M	521.37M	528.45M	532.34M	432.32M	589.05M
Total Debt	1.76B	1.93B	1.99B	2.14B	1.72B	1.75B
Total Liabilities	3.45B	3.69B	4.28B	4.61B	4.23B	4.02B
Stockholders Equity	2.07B	2.33B	2.63B	2.61B	2.36B	2.53B
Cash Flow
Free Cash Flow	0.00	119.70M	57.90M	-284.76M	181.41M	-44.03M
Operating Cash Flow	0.00	170.88M	217.91M	-10.14M	446.46M	82.37M
Investing Cash Flow	0.00	-58.32M	-21.39M	-274.23M	-205.52M	-114.60M
Financing Cash Flow	0.00	-87.33M	-204.10M	381.15M	-397.60M	13.00M

NEPON Inc. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1655.00
• 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:7985, the sentiment is Neutral. The current price of 1655 is above the 20-day moving average (MA) of 1596.80, above the 50-day MA of 1552.70, and above the 200-day MA of 1528.14, indicating a neutral trend. The MACD of 21.96 indicates Positive momentum. The RSI at 46.11 is Neutral, neither overbought nor oversold. The STOCH value of 41.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:7985.

NEPON Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6396	79 Outperform	¥4.98B	-66.26	―	1.19%	-6.39%	-3.86%
6334	68 Neutral	¥4.51B	-15.45	―	1.22%	12.31%	138.05%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6147	57 Neutral	¥1.48B	-3.21	―	3.08%	-4.18%	-192.32%
6347	54 Neutral	¥3.74B	54.21	―	1.67%	-13.82%	81.18%
6276	48 Neutral	¥1.14B	-2.04	―	2.93%	-20.33%	-1780.05%
7985	46 Neutral	¥1.50B	1.20	―	0.70%	-1.08%	-1296.58%