Kao (4452) AI Stock Analysis

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JP:4452 Dividends

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Kao

(OTC:4452)

64Neutral

Kao's overall stock score of 63.7 reflects a strong financial foundation with low leverage and robust cash generation. However, technical indicators suggest bearish trends, and the valuation appears high, limiting immediate upside potential. While earnings call highlights show significant improvements, challenges in the cosmetics market may impact future performance. Investors should weigh the solid financials against current market trends and valuation concerns.

Positive Factors

Efficiency and Restructuring

Kao has implemented structural reforms aimed at enhancing efficiency and revamping its organization, which are expected to offset potential raw material cost increases.

Sales Growth

Kao appears to have firmly turned around and is on the path to recovery, with a projected increase in net sales across all regions.

Strategic Initiatives

The 'Global Sharp Top Strategy' aims to achieve significant growth by shifting from quantity to quality in product development and expanding the global rollout of high-value-added products.

Negative Factors

Currency Volatility

Potential volatility of JPY may cap near term re-rating and limit upside from currency translation effects.

Environmental Impact

Key downside risks include the prolonged impact of treated water disposal from the Fukushima nuclear power plant and consumption weakness.

Market Risks

Key downside risks include consumption weakness, an increase in input costs, and unsuccessful management's restructuring efforts.

Kao (4452) vs. S&P 500 (SPY)

Market Cap

$2.81T

Dividend Yield2.34%

Average Volume (3M)1.69M

Price to Earnings (P/E)26.0

Beta (1Y)0.13

Revenue Growth6.26%

EPS Growth145.79%

CountryJP

Employees32,566

SectorConsumer Defensive

Sector Strength82

IndustryHousehold & Personal Products

Share Statistics

EPS (TTM)49.19

Shares Outstanding465,900,000

10 Day Avg. Volume1,274,430

30 Day Avg. Volume1,694,383

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$7,160.64

Price Target Upside18.51% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Kao Business Overview & Revenue Model

Company DescriptionKao Corporation, listed on the Tokyo Stock Exchange under the ticker 4452, is a leading Japanese multinational company that operates in the consumer goods sector. The company specializes in beauty care, health care, and home care products, as well as chemicals. Kao's portfolio includes well-known brands such as Biore, Curel, and Laurier, offering products ranging from skincare, haircare, and cosmetics to laundry detergents and sanitary products. The company has a strong presence in both domestic and international markets, providing high-quality products designed to enhance the everyday lives of consumers.

How the Company Makes MoneyKao Corporation generates revenue through the sale of its diverse range of consumer goods and chemical products. The company's revenue streams are primarily divided into four segments: Beauty Care, Health Care, Fabric and Home Care, and Chemicals. The Beauty Care segment includes skincare, haircare, and cosmetics, which are sold under various brand names through retail channels. The Health Care segment encompasses sanitary products and personal health items. The Fabric and Home Care segment offers household cleaning products, such as laundry detergents and cleaning agents. Additionally, Kao's Chemicals segment provides chemical products that cater to industries such as electronics, automotive, and construction. The company's earnings are bolstered by strategic partnerships, research and development investments, and a strong marketing presence to maintain its competitive edge in the global market.

Kao Financial Statement Overview

Summary

Kao exhibits a strong financial position, characterized by healthy revenue growth, efficient operations, and robust cash generation. The company’s low leverage and strong equity base provide a solid foundation for future growth. While profitability ratios show room for improvement, the overall trajectory is positive, positioning Kao well within the Household & Personal Products industry. Continued focus on improving net profit margins and cash flow conversion will further enhance financial performance.

Income Statement

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Kao's income statement shows a solid performance with a gross profit margin of 39.2% and a net profit margin of 6.6% for 2024. The company demonstrated strong revenue growth of 6.3% from 2023 to 2024, indicating a positive growth trajectory. The EBIT margin improved significantly to 9.0%, and the EBITDA margin was 14.4%, reflecting efficient operational management. However, the net profit margin is relatively lower compared to previous years, highlighting a potential area for improvement.

Balance Sheet

Kao maintains a strong balance sheet with a low debt-to-equity ratio of 0.23, indicating prudent financial management and low leverage. The equity ratio of 57.1% showcases a strong equity base and financial stability. The return on equity is impressive at 10.1%, reflecting effective use of shareholder funds. The company’s robust cash reserves further enhance its financial flexibility, allowing for potential strategic investments and risk mitigation.

Cash Flow

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Kao's cash flow statement highlights a stable free cash flow growth of 6.0% from 2023 to 2024, supporting its operational and strategic initiatives. The operating cash flow to net income ratio is 1.87, demonstrating strong cash generation relative to net income, which is a positive indicator of financial health. However, the free cash flow to net income ratio is slightly lower at 1.34, suggesting room for improvement in converting net income into free cash flow.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.63T	1.53T	1.55T	1.42T	1.38T
	Gross Profit
638.40B	560.43B	548.34B	573.19B	590.69B
	EBIT
146.64B	60.03B	110.07B	143.51B	175.56B
	EBITDA
235.07B	154.50B	205.46B	237.32B	260.73B
	Net Income Common Stockholders
107.77B	43.87B	86.04B	109.64B	126.14B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
368.24B	291.66B	271.85B	342.16B	360.43B
	Total Assets
1.87T	1.77T	1.73T	1.70T	1.67T
	Total Debt
245.33B	261.07B	262.89B	268.68B	274.21B
	Net Debt
-112.39B	-30.59B	-5.36B	-67.39B	-78.97B
	Total Liabilities
768.40B	757.70B	730.97B	720.13B	727.42B
	Stockholders Equity
1.07T	983.66B	972.06B	965.14B	923.69B
Cash Flow		Free Cash Flow
144.18B	136.03B	53.70B	104.00B	144.87B
	Operating Cash Flow
201.59B	202.48B	130.91B	175.52B	214.72B
	Investing Cash Flow
-45.90B	-109.30B	-74.91B	-67.23B	-61.94B
	Financing Cash Flow
-104.58B	-79.98B	-139.31B	-141.57B	-87.06B

Kao Technical Analysis

Technical Analysis Sentiment

Negative

Last Price6042.00

Price Trends

50DMA

6317.06

Negative

100DMA

6302.23

Negative

200DMA

6450.80

Negative

Market Momentum

MACD

-77.08

Negative

RSI

44.49

Neutral

STOCH

43.95

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4452, the sentiment is Negative. The current price of 6042 is below the 20-day moving average (MA) of 6044.05, below the 50-day MA of 6317.06, and below the 200-day MA of 6450.80, indicating a bearish trend. The MACD of -77.08 indicates Negative momentum. The RSI at 44.49 is Neutral, neither overbought nor oversold. The STOCH value of 43.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4452.

Kao Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4917	76 Outperform	$63.07B	27.83	3.26%	2.72%	5.21%	33.10%
4912	74 Outperform	$477.98B	22.63	7.22%	1.73%	2.53%	48.92%
4919	72 Outperform	¥87.91B	17.54	10.39%	2.07%	7.44%	25.31%
4958	71 Outperform	¥117.55B	16.04	6.06%	2.54%	10.80%	5.39%
Sector *	64 Neutral	$8.87B	14.81	5.05%	174.26%	3.56%	3.68%
4452	64 Neutral	$2.81T	26.03	10.32%	2.34%	6.26%	145.79%
4911	55 Neutral	¥932.20B	496.62		1.71%	1.80%	-149.74%

* Consumer Defensive Sector Average

Performance Comparison

JP:4452

Kao

6,042.00

-386.73

-6.02%

JP:4911

Shiseido Company,Limited

2,341.50

-1,881.85

-44.56%

JP:4958

T Hasegawa Co

2,868.00

-73.62

-2.50%

JP:4919

Milbon Co

2,696.00

-361.60

-11.83%

JP:4917

Mandom

1,392.00

103.47

8.03%

JP:4912

Lion

1,723.00

319.09

22.73%

Kao Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q4-2024)

% Change Since: -1.55%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant financial improvements, including net income and dividend increases, driven by structural reforms and strong performance in the Chemical segment. However, challenges in the Chinese cosmetics market and increased SG&A expenses were notable lowlights.

Q4-2024 Updates

Positive Updates

Significant Increase in Net Income

Net income attributable to owners of the parent was ¥107.8 billion, up 25.3% or ¥21.8 billion year-on-year.

Record Dividend Increase

The year-end dividend will be ¥76 per share, bringing the annual dividend to ¥152 per share, marking the 35th consecutive year of dividend increase.

Strong Performance in Chemical Business

Operating income in the Chemical business improved by ¥9.9 billion, posting a record high, aided by high value-added products and volume growth.

Gross Margin Improvement

Gross margin improved by 1.9 percentage points to 39.2% due to reformed earning power and structural reforms.

Earnings Power Reform Success

The effect of structural reforms was ¥28 billion, contributing greatly to the overall financial performance.

Negative Updates

Cosmetics Market Challenges in China

Sales in Asia fell by 9.7% due to a slowdown in China, particularly affecting cosmetics.

Operating Loss in Cosmetics Segment

The Cosmetics business experienced an operating loss of ¥3.7 billion, down ¥9 billion year-on-year, primarily due to challenges in China.

Increased SG&A Expenses

SG&A expenses increased, with 50% from marketing, 20% from Bondi Sands joining, and 30% from personnel expenses.

Company Guidance

During the call, the company provided comprehensive guidance on its performance for 2024 and its outlook for 2025, emphasizing various financial and operational metrics. For 2024, net sales increased by 6.3% to ¥1,628.4 billion, with a 3.3% increase excluding foreign exchange effects. The gross margin improved by 1.7 percentage points to 39.2%, and operating income rose by ¥31.9 billion to ¥146.6 billion, improving the operating margin to 9.0%. Net income attributable to owners of the parent was ¥107.8 billion, up 25.3%, with earnings per share reaching ¥231.94. The company declared a year-end dividend of ¥76 per share, marking the 35th consecutive year of dividend increases. For 2025, the forecast aims for net sales of ¥1.67 trillion with a like-for-like growth of 3.1%, operating income of ¥160 billion, and a net income of ¥116 billion. The company plans to increase the annual dividend by ¥2, reflecting continued growth and a focus on global expansion, particularly in the Cosmetics Business, which is expected to contribute significantly to profits.

Kao Corporate Events

Kao Corporation Reports Strong Q1 2025 Financial Performance

May 8, 2025

Kao Corporation reported a significant increase in its financial performance for the first quarter of 2025, with net sales rising by 6.6% and net income attributable to owners of the parent increasing by 38.7% compared to the same period in 2024. The company maintains a stable financial position with a slight decrease in total assets but an improved equity ratio. The forecast for the fiscal year ending December 31, 2025, anticipates continued growth in net sales and income, reflecting Kao’s strong market positioning and strategic initiatives.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.