NANKAI CHEMICAL COMPANY LIMITED (4040) AI Stock Analysis

NANKAI CHEMICAL COMPANY LIMITED

(TSE/TYO:4040)

Select Model

Rating:79Outperform

Price Target:JPY 4,969.00▲(14.49% Upside)

Action:reiterated

Date:08/17/26

Nankai Chemical achieves a strong overall score driven primarily by its extremely attractive valuation and robust profitability metrics. The company boasts remarkable net income growth, aggressive debt reduction, and positive technical momentum. However, a significant divergence between record accounting profits and sharply negative cash generation poses a notable liquidity risk that warrants close investor monitoring.

Positive Factors

Margin ExpansionThe substantial improvement in net, gross, and EBITDA margins indicates stronger profitability and operating efficiency. If retained, this gives the company more earnings resilience, supports internal reinvestment, and provides a stronger foundation for navigating moderate changes in revenue over the coming quarters.

Negative Factors

Weak Cash ConversionNegative operating and free cash flow despite strong reported earnings is the clearest fundamental weakness. This divergence may constrain internally funded investment, reduce financial flexibility, and make the improved earnings profile less durable until cash generation normalizes over the next several quarters.

NANKAI CHEMICAL COMPANY LIMITED (4040) vs. iShares MSCI Japan ETF (EWJ)

Market Cap: JPY 8.67B
Dividend Yield: 1.50%
Average Volume (3M): 10.54K
Price to Earnings (P/E): 2.9
Beta (1Y): 0.96
Revenue Growth: 0.56%
EPS Growth: 238.99%
Country: Japan
Employees: 319
Sector: Basic Materials
Sector Strength: 61
Industry: Chemicals

NANKAI CHEMICAL COMPANY LIMITED Business Overview & Revenue Model

Company Description

Established in 1906 and headquartered in Osaka, Japan, Nankai Chemical Company, Limited operates a diverse enterprise with a presence in both Japanese and international markets. The company's principal focus is the production and sale of a wide range...

NANKAI CHEMICAL COMPANY LIMITED Financial Statement Overview

Summary

Exceptional bottom-line growth and a heavily deleveraged, pristine balance sheet are significantly offset by deeply negative operating and free cash flows, raising potential working capital and earnings quality concerns.

Income Statement

88Very Positive

Balance Sheet

92Very Positive

Cash Flow

32Negative

Financial statement breakdown
Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	21.18B	21.06B	20.90B	19.99B	19.60B	17.43B
Gross Profit	6.21B	5.98B	5.51B	5.50B	4.50B	4.13B
EBITDA	3.21B	2.92B	2.44B	2.59B	1.80B	1.72B
Net Income	3.02B	2.78B	1.02B	1.16B	504.00M	462.00M
Balance Sheet
Total Assets	19.49B	19.55B	22.47B	20.26B	18.35B	17.22B
Cash, Cash Equivalents and Short-Term Investments	1.95B	2.04B	1.70B	1.71B	1.30B	1.28B
Total Debt	3.38B	3.68B	5.64B	5.21B	6.07B	7.41B
Total Liabilities	7.89B	8.38B	13.96B	12.75B	13.15B	12.54B
Stockholders Equity	11.48B	11.05B	8.40B	7.42B	5.13B	4.63B
Cash Flow
Free Cash Flow	0	-1.51B	-1.85B	587.00M	152.00M	392.00M
Operating Cash Flow	0	-259.00M	181.00M	2.65B	1.77B	1.59B
Investing Cash Flow	0	2.87B	-490.00M	-1.94B	-371.00M	-614.00M
Financing Cash Flow	0	-2.31B	243.00M	-327.00M	-1.40B	-858.00M

NANKAI CHEMICAL COMPANY LIMITED Technical Analysis

Technical Analysis SentimentPositive

Last Price4340.00

Price Trends

50DMA4013.81Positive

100DMA3804.85Positive

200DMA3577.61Positive

Market Momentum

MACD112.11Negative

RSI58.48Neutral

STOCH47.54Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4040, the sentiment is Positive. The current price of 4340.00 is above the 20-day moving average (MA) of 4221.50, above the 50-day MA of 4013.81, and above the 200-day MA of 3577.61, indicating a bullish trend. The MACD of 112.11 indicates Negative momentum. The RSI at 58.48 is Neutral, neither overbought nor oversold. The STOCH value of 47.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4040.

NANKAI CHEMICAL COMPANY LIMITED Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

JP:4040 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JP:4360	82Outperform	JPY 8.54B	8.21	―	1.52%	19.58%	―
JP:4040	79Outperform	JPY 10.11B	2.90	―	1.50%	0.56%	238.99%
JP:6568	73Outperform	JPY 10.00B	12.15	―	2.57%	12.39%	22.04%
Sector *	61Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
JP:4531	49Neutral	JPY 7.49B	17.77	―	2.92%	3.90%	-31.32%
JP:4960	44Neutral	JPY 8.17B	26.66	―	1.01%	-5.34%	113.57%

* Basic Materials Sector Average

Performance Comparison

JP:4040 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
JP:4040	NANKAI CHEMICAL COMPANY LIMITED	4340.00	1695.07	64.09%
JP:4360	MANAC Chemical Partners Co.,Ltd	990.00	424.90	75.19%
JP:4531	Yuki Gosei Kogyo Co., Ltd.	343.00	69.91	25.60%
JP:4960	Chemipro Kasei Kaisya,Ltd.	497.00	136.71	37.94%
JP:6568	KNC Laboratories Co.,Ltd.	1285.00	187.38	17.07%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Aug 17, 2026

NANKAI CHEMICAL COMPANY LIMITED AI Stock Analysis