Rokko Butter Co., Ltd. manufactures and sells food products in Japan. It offers cheese, nuts, desserts, and chocolate products under the QBB brand. The company was formerly known as peace Oil Industries Co., Ltd. and changed its name to Rokko Butter Co., Ltd. in July 1954. Rokko Butter Co., Ltd. was incorporated in 1948 and is headquartered in Kobe, Japan.

Japan

Rokko Butter Co., Ltd.

Consumer Cyclical

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been moderate and on par with its peers. On average, the company pays dividends annually. 

2266.T reported revenue of JPY 42 924mn in the last 12 months, down 3% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS grew 133% from FY23 to JPY 53.45.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 7ppts and its growth decelerated by 11ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 8.0% in the last 12 months, up from 6.5% in FY23. 

Historically, 2266.T has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 2.4%, a growth from 1.0% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 3.0%, below the peers. 

Rokko Butter Co., Ltd. reported a return on equity (RoE) of 3.4% in the last 12 months, up from 1.5% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 2.0% in the last 12 months, an increase from 0.9% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.6 in the past several years. This ratio implies a poor shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

2266.T has poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is usually stable and is unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, negligible return on capital, and poor working capital management. We note low margin volatility, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, 2266.T is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, 2266.T is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

Considering past and projected metrics, the stock is neither 'expensive' nor 'cheap' compared to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, overvalued on P/FCF. 

Rokko Butter Co., Ltd.

¥ 1282

4

Rokko Butter Co., Ltd.

¥ 1282

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 1282

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