Showa Chemical Industry Co., Ltd. (4990) AI Stock Analysis

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Showa Chemical Industry Co., Ltd.

(TSE/TYO:4990)

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Rating:73Outperform

Price Target:JPY 584.00▲(19.43% Upside)

Action:reiterated

Date:10/03/26

The company's financial strength is the primary driver of the score, anchored by a fortress-like balance sheet and consistent cash generation. A low P/E ratio further enhances the investment case. These positives are partially offset by a neutral technical picture, which shows a stock in an uptrend but lacking strong momentum.

Positive Factors

Improved balance sheetThe substantial reduction in leverage provides Showa Chemical with a stronger capital base and greater resilience against operating volatility. Lower debt dependence can also preserve financial flexibility for investment and working-capital needs over the next several quarters.

Negative Factors

FY2026 revenue contractionA sharp revenue decline following two largely flat years raises concern about the durability of demand and the company’s ability to sustain scale. Continued top-line weakness would reduce operating leverage, constrain investment capacity, and make earnings recovery more difficult.

Showa Chemical Industry Co., Ltd. (4990) vs. iShares MSCI Japan ETF (EWJ)

Market Cap: JPY 5.19B
Dividend Yield: 2.04%
Average Volume (3M): 3,068
Price to Earnings (P/E): 8.6
Beta (1Y): 0.34
Revenue Growth: 0.03%
EPS Growth: 30.72%
Country: Japan
Employees: 216
Sector: Basic Materials
Sector Strength: 61
Industry: Chemicals - Specialty

Showa Chemical Industry Co., Ltd. Business Overview & Revenue Model

Company Description

Showa Chemical Industry Co., Ltd. specializes in the production and distribution of diatomite and perlite filter aids, marketed under its Radiolite trademark and the Topco brand (notably in China), with operations extending across China and Japan. Th...

Showa Chemical Industry Co., Ltd. Financial Statement Overview

Summary

Strong overall financial health. The balance sheet is excellent (Score 90) with very low leverage and growing equity. Cash flow is robust (Score 85), consistently exceeding net income. The income statement (Score 72) shows solid long-term growth and profitability, though recent operating margin contraction is a minor concern.

Income Statement

72Positive

Balance Sheet

90Very Positive

Cash Flow

85Very Positive

Financial statement breakdown
Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	9.31B	9.27B	9.24B	9.20B	9.23B	7.78B
Gross Profit	2.90B	2.91B	2.81B	2.91B	2.95B	2.46B
EBITDA	829.79M	724.63M	877.73M	1.07B	1.13B	799.10M
Net Income	607.32M	624.84M	411.84M	584.40M	616.53M	345.02M
Balance Sheet
Total Assets	15.66B	14.57B	13.66B	13.53B	13.04B	12.61B
Cash, Cash Equivalents and Short-Term Investments	2.60B	2.97B	3.17B	3.15B	2.99B	3.25B
Total Debt	2.08B	2.28B	2.88B	3.21B	3.64B	4.17B
Total Liabilities	5.64B	5.18B	5.54B	5.93B	6.28B	6.49B
Stockholders Equity	10.02B	9.39B	8.12B	7.60B	6.76B	6.12B
Cash Flow
Free Cash Flow	0	436.16M	404.05M	521.71M	371.53M	368.35M
Operating Cash Flow	0	826.62M	766.55M	825.52M	625.07M	518.79M
Investing Cash Flow	0	-369.02M	-135.97M	-160.60M	-281.75M	-185.86M
Financing Cash Flow	0	-665.37M	-435.69M	-514.30M	-581.75M	-211.43M

Showa Chemical Industry Co., Ltd. Technical Analysis

Technical Analysis SentimentNegative

Last Price489.00

Price Trends

50DMA515.32Negative

100DMA505.66Negative

200DMA507.74Negative

Market Momentum

MACD-8.04Positive

RSI41.21Neutral

STOCH47.85Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4990, the sentiment is Negative. The current price of 489.00 is below the 20-day moving average (MA) of 502.20, below the 50-day MA of 515.32, and below the 200-day MA of 507.74, indicating a bearish trend. The MACD of -8.04 indicates Positive momentum. The RSI at 41.21 is Neutral, neither overbought nor oversold. The STOCH value of 47.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4990.

Showa Chemical Industry Co., Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

JP:4990 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JP:4619	76Outperform	JPY 57.13B	9.09	―	5.16%	-0.09%	11.08%
JP:4623	74Outperform	JPY 5.84B	8.80	―	3.41%	30.70%	20.84%
JP:4990	73Outperform	JPY 5.20B	8.57	―	2.04%	0.03%	30.72%
JP:4119	67Neutral	JPY 9.65B	7.52	―	1.95%	6.58%	―
JP:4624	67Neutral	JPY 5.94B	8.05	―	1.25%	6.21%	51.54%
Sector *	61Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
JP:4615	37Underperform	JPY 4.94B	-13.40	―	―	1.61%	-84.56%

* Basic Materials Sector Average

Performance Comparison

JP:4990 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
JP:4990	Showa Chemical Industry Co., Ltd.	489.00	27.57	5.98%
JP:4119	Nippon Pigment Company, Limited	6870.00	3585.22	109.15%
JP:4615	Shinto Paint Co., Ltd.	142.00	16.00	12.70%
JP:4619	Nihon Tokushu Toryo Co., Ltd.	2517.00	458.73	22.29%
JP:4623	Asahipen Corporation	1758.00	101.20	6.11%
JP:4624	Isamu Paint Co., Ltd.	3985.00	446.61	12.62%

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: Oct 03, 2026

Showa Chemical Industry Co., Ltd. AI Stock Analysis