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 pays dividends on rare occasions. There have only been a few years with dividend payments in 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. 

2266.T reported revenue of JPY 42 247mn in the last 12 months, down 2% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 40% from FY24 to JPY 31.89.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 7ppts over six months and grown 3ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 6.8% 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 1.5%, a growth from 1.0% in FY23. 

Rokko Butter Co., Ltd. reported a return on equity (RoE) of 2.1% in the last 12 months, up from 1.5% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 1.8%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.2% 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 0.5 in the past several years. This ratio implies a weak 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 relatively 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 moderate. We note low margin volatility, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, and negligible return on capital.

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. 

Based on key historical and expected multiples, the stock is overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, neutral on EV/EBITDA, overpriced on P/FCF. 

Rokko Butter Co., Ltd.

¥ 1266

4

Rokko Butter Co., Ltd.

¥ 1266

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 1266

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