Kaori Heat Treatment Co., Ltd. (8996) AI Stock Analysis

Kaori Heat Treatment Co., Ltd.

(TWSE:8996)

Select Model

Rating:61Neutral

Price Target:TWD 1,245.00▼(-11.39% Downside)

Action:initiatedcoverage

Date:11/09/26

Kaori earns a moderate score. Its greatest strength is financial performance: explosive revenue and profit growth, healthy double-digit margins, a 19.9% return on equity and a strengthening, low-leverage balance sheet. Offsetting this are quality-of-earnings concerns, with free cash flow down about 61% and margins compressing as growth absorbs working capital and capex. Valuation is the biggest drag — an 85x P/E with a negligible 0.39% yield leaves the shares vulnerable to any growth disappointment. Technicals add near-term caution, as the price has fallen below its 20-, 50- and 100-day averages with negative MACD, although the stock remains above its 200-day average and is now in oversold territory.

Positive Factors

Revenue Growth and ProfitabilityThe combination of strong 2025 revenue growth and a healthy net margin indicates that the company is converting increased demand into meaningful earnings. If sustained, this provides internal resources for reinvestment and supports a stronger earnings base over the next several quarters.

Negative Factors

Weak Cash ConversionThe sharp decline in operating and free cash flow shows that accounting earnings are translating into cash less efficiently. Weaker conversion can constrain internally funded investment, increase reliance on financing, and make results more vulnerable when working-capital needs or reinvestment rise.

Kaori Heat Treatment Co., Ltd. (8996) vs. SPDR S&P 500 ETF (SPY)

Market Cap: TWD 133.46B
Dividend Yield: 0.32%
Average Volume (3M): 3.93M
Price to Earnings (P/E): 96.5
Beta (1Y): 1.63
Revenue Growth: 108.33%
EPS Growth: 146.57%
Country: TW
Employees: 515
Sector: General
Sector Strength: 55
Industry: Industrial - Machinery

Kaori Heat Treatment Co., Ltd. Business Overview & Revenue Model

Company Description

Kaori Heat Treatment Co., Ltd. is a Taiwanese company, established in 1970 and headquartered in Taoyuan City, that specializes in the design, manufacturing, and global distribution of heat exchanger solutions. Their primary product offerings include...

Kaori Heat Treatment Co., Ltd. Financial Statement Overview

Summary

Strong fundamentals overall. Revenue surged roughly 64% to NT$6.58 billion with net income up 40% to NT$830 million, supported by a 27.3% gross margin, 16.5% operating margin and a 19.9% return on equity (Income Statement score 84). The balance sheet is conservatively funded, with equity covering about 51% of assets and debt-to-equity falling to 0.35, its lowest in six years (Balance Sheet score 80). The clear weak spot is cash generation (Cash Flow score 58): operating cash flow fell to NT$598 million despite record profits, free cash flow dropped about 61% to NT$274 million, and margins compressed across the board, pointing to working capital and capex absorbing the benefits of growth.

Income Statement

84Very Positive

Balance Sheet

80Positive

Cash Flow

58Neutral

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	9.81B	6.58B	4.00B	4.33B	2.84B	2.23B
Gross Profit	2.65B	1.80B	1.19B	1.22B	785.63M	593.60M
EBITDA	1.96B	1.28B	930.41M	840.60M	517.04M	318.48M
Net Income	1.38B	829.55M	593.04M	576.53M	301.02M	149.16M
Balance Sheet
Total Assets	10.26B	8.13B	6.10B	4.83B	4.16B	3.41B
Cash, Cash Equivalents and Short-Term Investments	2.61B	1.75B	1.92B	612.57M	313.29M	588.03M
Total Debt	2.59B	1.45B	1.71B	1.35B	1.44B	1.10B
Total Liabilities	5.13B	3.95B	2.67B	2.13B	2.10B	1.53B
Stockholders Equity	5.12B	4.17B	3.44B	2.70B	2.06B	1.88B
Cash Flow
Free Cash Flow	704.95M	273.67M	842.95M	327.04M	-387.08M	194.68M
Operating Cash Flow	1.57B	597.89M	1.04B	679.04M	-287.84M	295.30M
Investing Cash Flow	-783.33M	-218.86M	-194.64M	-346.11M	-167.16M	-131.52M
Financing Cash Flow	225.35M	-578.87M	426.13M	2.27M	203.94M	-204.85M

Kaori Heat Treatment Co., Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

TW:8996 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TW:6691	71Outperform	TWD 75.85B	18.05	―	3.70%	92.72%	86.13%
TW:2467	66Neutral	TWD 50.73B	25.46	―	1.74%	71.68%	144.03%
TW:3131	66Neutral	TWD 49.68B	28.86	―	2.70%	37.72%	73.19%
TW:8996	61Neutral	TWD 131.37B	96.53	―	0.32%	108.33%	146.57%
TW:6196	59Neutral	TWD 92.54B	19.31	―	1.54%	86.15%	58.05%
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
TW:3167	53Neutral	TWD 71.70B	56.60	―	0.49%	103.13%	231.77%

* General Sector Average

Performance Comparison

TW:8996 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
TW:8996	Kaori Heat Treatment Co., Ltd.	1405.00	852.99	154.53%
TW:2467	C Sun Mfg. Ltd.	315.50	141.16	80.96%
TW:3131	Grand Process Technology Corporation	1705.00	325.39	23.59%
TW:3167	Ta Liang Technology Co., Ltd.	801.00	592.01	283.28%
TW:6196	Marketech International Corp.	420.00	177.92	73.50%
TW:6691	YANKEY ENGINEERING Co. LTD.	568.00	175.49	44.71%

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: Nov 09, 2026

Kaori Heat Treatment Co., Ltd. AI Stock Analysis