Zaoh Company, Ltd. (9986) AI Stock Analysis

• Market Cap: ¥15.23B
• Dividend Yield: 4%
• Average Volume (3M): 2.93K
• Price to Earnings (P/E): 17.0
• 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: 32.38
• 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: ¥2,913.00 ▲(16.57% 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

Balance sheet strength

Extremely low leverage and an 87% equity ratio give the company durable financial flexibility. Over a 2–6 month horizon this supports stable funding for operations, cushions cyclical demand, keeps interest expense negligible, and preserves capacity for opportunistic capex or dividend maintenance.

High gross profitability

A 44% gross margin indicates the core distribution business retains strong pricing power or cost advantages. Sustained high gross margins provide long-term buffer to absorb SG&A, fund reinvestment, and support margin recovery even if top-line growth is weak, underpinning durable operating resilience.

Reasonable cash conversion

Converting a substantial portion of earnings into cash (OCF/NI 0.83, FCF/NI 0.65) demonstrates structural cash generation ability. Even after year-over-year declines, this conversion profile supports ongoing dividends, working capital needs and modest capex without immediate reliance on external financing.

Negative Factors

Declining revenue

A double-digit revenue decline erodes scale and undermines long-term growth prospects. Persisting top-line contraction will pressure fixed-cost absorption, reduce bargaining power with suppliers, and constrain investment in distribution reach or product/service improvements over the next several months.

Material cash flow deterioration

A >50% drop in operating and free cash flow materially weakens the firm’s liquidity cushion and ability to self-fund growth or dividends. If sustained, this forces tighter capital allocation, may delay necessary capex or require drawing on cash reserves despite a strong balance sheet.

Compressed net profitability and low ROE

Declining margins and low ROE indicate weakening efficiency in converting revenue into shareholder returns. Structural margin compression reduces retained earnings for reinvestment and limits capacity to improve returns on equity, challenging long-term value creation absent operational fixes.

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

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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	3.93B	3.74B	3.88B	4.09B	3.90B	3.32B
EBITDA	1.29B	1.06B	1.32B	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	14.81B	15.12B	14.74B	13.62B
Cash, Cash Equivalents and Short-Term Investments	6.30B	6.76B	6.75B	7.16B	7.54B	6.53B
Total Debt	0.00	43.70M	20.04M	6.38M	0.00	0.00
Total Liabilities	1.85B	1.88B	2.01B	1.95B	2.14B	1.83B
Stockholders Equity	12.32B	12.88B	12.80B	13.17B	12.60B	11.79B
Cash Flow
Free Cash Flow	0.00	401.69M	1.05B	168.54M	1.24B	762.00M
Operating Cash Flow	0.00	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: Neutral
• 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 2634.55, below the 50-day MA of 2589.72, and above the 200-day MA of 2470.05, indicating a bullish trend. The MACD of 16.53 indicates Negative momentum. The RSI at 67.49 is Neutral, neither overbought nor oversold. The STOCH value of 94.35 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
8061	79 Outperform	¥91.03B	14.20	―	3.38%	10.74%	-26.50%
3176	78 Outperform	¥47.63B	5.27	―	3.87%	2.66%	-11.41%
9986	69 Neutral	¥15.23B	16.96	―	4.00%	-1.00%	-14.87%
8103	67 Neutral	¥32.86B	14.30	―	4.05%	-3.82%	18.03%
9902	64 Neutral	¥71.23B	15.26	―	3.17%	5.95%	23.97%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
9830	61 Neutral	¥151.54B	9.98	―	2.42%	9.74%	6.48%