Nippon Denko Co., Ltd. (5563) AI Stock Analysis

• Market Cap: ¥35.42B
• Dividend Yield: 4.46%
• Average Volume (3M): 469.15K
• Price to Earnings (P/E): 10.2
• Beta (1Y): 0.66
• Revenue Growth: 8.87%
• EPS Growth: -10.93%
• Country: JP
• Employees: 783
• Sector: Basic Materials
• Sector Strength: 60
• Industry: Steel
• EPS (TTM): 0.18
• Shares Outstanding: 137,295,470
• 10 Day Avg. Volume: 393,170
• 30 Day Avg. Volume: 469,150
• PEG Ratio: -0.29
• Price to Book (P/B): 0.48
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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

Nippon Denko Co., Ltd. demonstrates strong financial health with a solid balance sheet and stable profit margins. However, challenges in sustaining net income and cash flow generation are notable concerns. The technical analysis indicates a bearish trend, but the valuation metrics suggest potential undervaluation, with a low P/E ratio and attractive dividend yield. These factors combined result in a moderate overall stock score.

Nippon Denko Co., Ltd. Business Overview & Revenue Model

Company Description

Nippon Denko Co., Ltd., together with its subsidiaries, manufactures and sells ferroalloys, functional materials, and environmental recycling systems in Japan. Its ferroalloys include high-carbon ferromanganese, medium-and low-carbon ferromanganese, ferrosilicomanganese, ferrosilicon, high-carbon ferrochromium, ferrovanadium, and ferroniobium. The company also offers functional materials, such as ferro boron, metal hydride alloys, cathode materials, zirconium oxides, manganese inorganic chemical products, boron oxide, boric acid, and electrolytic metal manganese. In addition, it provides environmental recycling systems, including chromic acid recovery systems for the production of industrial chemicals; boron recovery systems to absorb and eliminate the boron contained in wastewater; nickel recovery systems to recover nickel from nickel-containing drainage; AQUA PACK, a cartridge demineralizer; and MR-PACK, an integral pure water production unit. Further, the company produces and sells fertilizers; industrial chemicals, synthetic resins, special metals, packaging materials, high-pressure gases, abrasives, and pollution control equipment; polyethylene pipes, bags, nets, sheets, and PVC pipes; and roadbed building materials and solar panel installation materials, as well as generates renewable energy power. Additionally, it engages in transportation, warehousing, and sale of materials for steelmaking; recycling of general and industrial waste by melting; collection and haulage of industrial waste; provision of ship agency services; and sale of fuels. Nippon Denko Co., Ltd. was founded in 1925 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Nippon Denko Co., Ltd. generates revenue through the manufacturing and sale of ferroalloys, which are essential additives in steel production, enhancing its strength and durability. The company also produces industrial chemicals, which are sold to various industries, including automotive, construction, and electronics. These products are integral to a wide range of industrial processes. Additionally, Nippon Denko may engage in partnerships and collaborations with other companies to enhance its product offerings and expand its market reach. The company's revenue is significantly influenced by the demand in the steel industry, as well as global economic conditions that affect industrial production levels.

Nippon Denko Co., Ltd. Financial Statement Overview

Summary

Nippon Denko Co., Ltd. displays solid operational metrics with improving profit margins and a robust balance sheet characterized by a strong equity position and controlled leverage. However, the decreasing net income and significant drop in free cash flow highlight potential areas for improvement. The company is in a stable financial position, but sustaining profitability and improving cash flow management will be crucial for future growth.

Income Statement

Nippon Denko Co., Ltd. shows moderate revenue growth of 2.39% from 2023 to 2024, with a notable improvement in gross profit margin at 17.39% for 2024. The net profit margin stood at 4.02% for 2024, indicating profitability, although it has seen a decrease compared to the previous year. EBIT and EBITDA margins have also improved to 8.76% and 12.91%, respectively, demonstrating enhanced operational efficiency. However, the dip in net income from 2023 suggests some challenges in sustaining net profitability.

Balance Sheet

The company maintains a strong equity base with an equity ratio of 72.07% in 2024, indicating financial stability. The debt-to-equity ratio has improved to 0.23, reflecting effective leverage management. Return on Equity (ROE) for 2024 is at 4.27%, indicating moderate returns on shareholder investments. The balance sheet reflects a healthy financial position with a good balance between assets and liabilities.

Cash Flow

The free cash flow has decreased significantly from 2023 to 2024, showing a decline of 58.39%, which could pose potential liquidity challenges. The operating cash flow to net income ratio is 1.90, suggesting strong cash generation relative to net income. The free cash flow to net income ratio is 0.53, indicating lower free cash flow generation compared to net income. Overall, while cash generation remains positive, the decline in free cash flow is a concern.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
78.23B	76.41B	79.34B	65.98B	54.00B
	Gross Profit
13.61B	11.39B	15.38B	14.36B	10.62B
	EBIT
6.86B	4.74B	8.81B	8.44B	3.80B
	EBITDA
8.59B	6.44B	13.36B	8.75B	4.71B
	Net Income Common Stockholders
3.14B	4.38B	7.95B	7.77B	2.62B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.95B	7.87B	8.91B	9.78B	9.60B
	Total Assets
102.20B	101.02B	104.94B	95.89B	86.17B
	Total Debt
17.08B	18.56B	21.47B	18.00B	19.44B
	Net Debt
11.13B	10.70B	12.56B	8.22B	9.83B
	Total Liabilities
28.52B	29.32B	35.72B	31.56B	29.74B
	Stockholders Equity
73.68B	71.70B	69.19B	64.26B	56.37B
Cash Flow		Free Cash Flow
1.66B	3.98B	1.74B	2.53B	5.72B
	Operating Cash Flow
5.96B	8.78B	6.28B	5.25B	10.35B
	Investing Cash Flow
-4.85B	-4.67B	-4.59B	-2.21B	-8.99B
	Financing Cash Flow
-3.06B	-5.24B	-2.68B	-2.92B	701.00M

Nippon Denko Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 257.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:5563, the sentiment is Negative. The current price of 257 is below the 20-day moving average (MA) of 262.40, below the 50-day MA of 273.86, and below the 200-day MA of 279.74, indicating a bearish trend. The MACD of -3.43 indicates Positive momentum. The RSI at 40.21 is Neutral, neither overbought nor oversold. The STOCH value of 15.56 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:5563.

Nippon Denko Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5401	76 Outperform	$3.01T	8.22	6.77%	5.21%	1.42%	-27.64%
5471	70 Outperform	¥218.59B	7.51	6.56%	4.80%	-0.91%	80.48%
5563	67 Neutral	¥35.42B	10.16	4.80%	4.46%	8.87%	-10.93%
5411	66 Neutral	¥1.02T	11.81	3.62%	5.08%	-4.62%	-30.09%
Sector *	49 Neutral	$1.99B	-1.09	-21.26%	3.60%	1.47%	-31.20%
5541	48 Neutral	¥32.67B	―		8.06%	-25.73%	84.97%
5476	39 Underperform	¥6.11B	―		11.99%	-5.41%	-114.91%

Nippon Denko Co., Ltd. Corporate Events

Nippon Denko Reports Strong Q1 2025 Performance and Revises Forecasts

Nippon Denko Co., Ltd. reported a significant improvement in its financial performance for the first quarter of 2025, with net sales increasing by 9.4% and operating profit rising by 22.6% compared to the same period last year. The company has revised its earnings and dividend forecasts for the fiscal year ending December 31, 2025, indicating a cautious outlook amidst market uncertainties.

Nippon Denko Reports Strong Q1 2025 Performance Amid Revised Forecasts

Nippon Denko Co., Ltd. reported a significant improvement in its financial performance for the first quarter of 2025, with net sales increasing by 9.4% and operating profit rising by 22.6% compared to the previous year. Despite the positive results, the company has revised its earnings and dividend forecasts for the fiscal year, indicating caution amidst market uncertainties.

Nippon Denko Revises 2025 Earnings and Dividend Forecasts Amid Market Changes

Nippon Denko Co., Ltd. has revised its consolidated earnings forecasts for the fiscal year ending December 31, 2025, anticipating a decrease in net sales and ordinary profit due to reduced demand for steel products and fluctuations in market prices and exchange rates. The company also updated its dividend forecasts, setting an interim dividend of 5 yen per share, aligning with its strategy to return profits to shareholders, with a minimum annual dividend of 10 yen per share.

Nippon Denko Issues New Shares for Executive Compensation

Nippon Denko Co., Ltd. has announced the issuance of new shares as restricted stock compensation to its directors and executive officers, aiming to align their interests with shareholders and enhance corporate value. This move is part of a broader compensation plan designed to motivate key personnel and ensure long-term commitment, reflecting the company’s strategic focus on sustainable growth and stakeholder value.

Nippon Denko Strengthens Alliance with Nippon Steel

Nippon Denko Co., Ltd. announced its ongoing relationship with Nippon Steel Corporation, which holds a 23% voting stake in the company. This relationship enhances the competitiveness and corporate value of both entities while allowing Nippon Denko to maintain operational independence. Nippon Steel is a major buyer of Nippon Denko’s products, contributing significantly to its sales, yet the partnership does not restrict Nippon Denko’s business activities.

Nippon Denko Co., Ltd. Enhances Corporate Governance and Promotes Diversity

Nippon Denko Co., Ltd. has announced enhancements to its corporate governance framework, including the adoption of an Audit and Supervisory Committee structure to streamline decision-making and strengthen supervisory functions. This move is expected to improve corporate value and tighten governance, with a focus on diversity and the promotion of female employees in management roles. The company also emphasizes the importance of cross-shareholdings for maintaining business relationships and ensuring smooth business execution.

Nippon Denko Proposes Increased Year-End Dividends

Nippon Denko Co., Ltd. has announced a proposal to increase its year-end dividends for the fiscal year 2024 to 7 yen per share, aligning with its long-term strategy to return profits to shareholders. This move reflects the company’s commitment to a new shareholder return policy, aiming for a payout ratio of approximately 40% and a minimum dividend per share of 10 yen, indicating a positive outlook for stakeholders.

Nippon Denko Announces 125th Annual Shareholders Meeting and Dividend Plans

Nippon Denko Co., Ltd. announced its 125th Annual General Meeting of Shareholders, scheduled for March 27, 2025, where key proposals include a dividend payout and the election of new directors. The company plans to distribute a year-end dividend of 7 yen per share, aligning with its strategy to return profits to shareholders, and proposes the election of six directors and one audit committee member, reflecting its ongoing commitment to strong governance.