Zaoh Company, Ltd. (9986) AI Stock Analysis

• Market Cap: ¥15.16B
• Dividend Yield: 4%
• Average Volume (3M): 2.93K
• Price to Earnings (P/E): 20.5
• Beta (1Y): 0.16
• Revenue Growth: -1.00%
• EPS Growth: -14.87%
• Country: JP
• Employees: 199
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Distribution
• EPS (TTM): 37.00
• Shares Outstanding: 6,266,000
• 10 Day Avg. Volume: 2,630
• 30 Day Avg. Volume: 2,926
• PEG Ratio: -0.54
• Price to Book (P/B): 1.01
• Price to Sales (P/S): 1.54
• P/FCF Ratio: 32.39
• 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: 69 Neutral
• Price Target: ¥2,900.00 ▲(16.05% Upside)
• Action: Reiterated Date: 08/06/25
• Date: Action: Reiterated 08/06/25

Zaoh Company, Ltd. has a strong financial foundation with minimal debt and a high equity ratio, which are significant strengths. However, challenges such as declining revenue, profitability margins, and cash flow generation weigh on the score. The technical indicators suggest a lack of strong momentum, while the valuation is supported by an attractive dividend yield. The absence of earnings call data and corporate events limits the analysis to these factors.

Positive Factors

Very low leverage

Extremely low debt and an 87.24% equity ratio provide durable financial flexibility and low fixed‑cost burden. This capital structure supports resilience through cyclical downturns, funds strategic investments from equity, and preserves borrowing capacity over the next 2–6 months.

High gross margin

A 44.3% gross margin indicates structural pricing power or operational efficiency in core distribution activities. That buffer helps absorb SG&A or temporary revenue pressure while maintaining product-level profitability and supports longer‑term margin sustainability if cost controls persist.

Reasonable cash conversion

Operating cash flow converts a substantial portion of reported earnings into cash and free cash flow remains a material share of net income. This conversion capacity supports ongoing dividend payments and routine capex, giving durable funding for operations despite recent absolute declines.

Negative Factors

Declining revenue

A >10% revenue contraction signals structural demand pressure or market share loss rather than a transient blip. Sustained top‑line decline compresses operating leverage, limits reinvestment, and makes margin recovery and long‑term earnings growth more difficult without strategic product or distribution changes.

Material cash flow erosion

Steep drops in operating and free cash flow sharply reduce internal financing for capex, working capital and dividends. Even with low leverage, persistent cash erosion forces reliance on external funding or asset adjustments and weakens the firm’s ability to invest or respond to competitors.

Falling profitability margins

Declining net, EBIT and EBITDA margins indicate worsening cost control or adverse mix effects, reducing returns on operations. Lower profitability constrains retained earnings and ROE improvement, and if persistent will impair capacity to fund growth or sustain shareholder distributions over the medium term.

Zaoh Company, Ltd. Business Overview & Revenue Model

Company Description

ZAOH Company, Ltd. imports and sells machines for anti-pollution and cleaning in Japan. The company is also involved in the sale of machines and devices for construction, manufacturing, measurement, and transportation; and sale of metalworking oils and related products. Its products include sweepers, vacuum cleaners, floor scrubbers, high pressure cleaners, carpet scrubbers and cleaners, steam cleaners, alkali ionized machines, and other products. The company was incorporated in 1956 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Zaoh Company generates revenue primarily through the sale of its semiconductor products and integrated circuits. The company has established a robust revenue model based on both direct sales to manufacturers and long-term contracts with large-scale clients in various industries. Key revenue streams include the production of custom chips tailored to client specifications, as well as standard products that cater to mass-market needs. Additionally, Zaoh benefits from strategic partnerships with technology firms and electronics manufacturers, which enhance its market reach and operational efficiency. The company also invests in research and development to innovate new products, ensuring a sustainable growth trajectory and adaptation to market trends.

Zaoh Company, Ltd. Financial Statement Overview

Summary

Zaoh Company, Ltd. demonstrates strong financial stability with minimal debt and a high equity ratio, which are significant strengths. However, the company faces challenges with declining revenue and profitability margins, as well as reduced cash flow generation. These areas present opportunities for improvement to enhance overall financial performance.

Income Statement

Zaoh Company, Ltd. has shown a decline in revenue from 2024 to 2025, with a negative revenue growth rate of -10.34%. The gross profit margin for 2025 is 44.30%, indicating strong profitability in its operations. However, the net profit margin has decreased to 7.30% in 2025, reflecting reduced efficiency in converting revenue into profit. The EBIT margin is 10.79%, and the EBITDA margin is 12.70%, both showing a decline from the previous year, suggesting a need for improved cost management.

Balance Sheet

The company's balance sheet is robust, with a very low debt-to-equity ratio of 0.0034, indicating minimal leverage. The equity ratio stands at 87.24%, highlighting strong financial stability and asset ownership. Return on equity (ROE) is 4.79%, which is relatively low, suggesting that the company could improve its efficiency in generating profits from shareholders' equity.

Cash Flow

Zaoh Company, Ltd. experienced a significant decline in operating cash flow from 2024 to 2025, with a decrease of 56.69%. The free cash flow also decreased by 60.65%. The operating cash flow to net income ratio is 0.83, and the free cash flow to net income ratio is 0.65, indicating that the company generates sufficient cash relative to its net income, though there is room for improvement.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	9.43B	8.45B	9.43B	9.65B	8.95B	6.82B
Gross Profit	4.01B	3.74B	3.99B	4.16B	3.98B	3.32B
EBITDA	1.31B	1.07B	1.35B	1.45B	1.37B	1.06B
Net Income	782.33M	616.60M	1.02B	1.05B	1.17B	789.42M
Balance Sheet
Total Assets	14.17B	14.76B	14.80B	15.12B	14.74B	13.71B
Cash, Cash Equivalents and Short-Term Investments	6.30B	6.76B	6.75B	7.16B	7.54B	6.69B
Total Debt	0.00	43.70M	22.16M	6.38M	0.00	0.00
Total Liabilities	1.85B	1.88B	2.00B	1.95B	2.14B	1.88B
Stockholders Equity	12.32B	12.88B	12.80B	13.17B	12.60B	11.83B
Cash Flow
Free Cash Flow	202.99M	401.69M	1.02B	87.08M	1.16B	762.00M
Operating Cash Flow	202.99M	513.71M	1.19B	178.36M	1.30B	798.38M
Investing Cash Flow	0.00	52.29M	-159.40M	-92.95M	-87.03M	865.73M
Financing Cash Flow	0.00	-550.91M	-1.44B	-459.42M	-361.17M	-1.08B

Zaoh Company, Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2499.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:9986, the sentiment is Positive. The current price of 2499 is below the 20-day moving average (MA) of 2587.50, below the 50-day MA of 2546.00, and above the 200-day MA of 2449.54, indicating a bullish trend. The MACD of 27.52 indicates Negative momentum. The RSI at 80.39 is Negative, neither overbought nor oversold. The STOCH value of 97.99 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:9986.

Zaoh Company, Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9845	79 Outperform	¥43.11B	10.56	―	1.78%	-0.94%	51.59%
7417	77 Outperform	¥20.21B	9.50	―	3.81%	-4.72%	-10.50%
8147	76 Outperform	¥7.76B	11.43	―	1.69%	11.54%	33.71%
9986	69 Neutral	¥15.16B	20.49	―	4.00%	-1.00%	-14.87%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
8089	63 Neutral	¥26.17B	6.37	―	3.55%	12.31%	90.88%
7624	59 Neutral	¥7.89B	24.41	―	2.78%	1.08%	82.69%