Kakiyasu Honten Co., Ltd., a food company, produces and sells prepared food products in Japan. The company offers dressed meat, such as beef, pork, and chicken; Japanese confectioneries; and processed food products. It also operates buffet style restaurants serving Japanese, Chinese, or western cuisine. The company was founded in 1871 and is headquartered in Tokyo, Japan.

Japan

Kakiyasu Honten Co., Ltd.

Consumer Defensive

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 outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. 

2294.T reported revenue of JPY 37 052mn in the last 12 months, down 7% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 27% from FY23 to JPY 133.67.

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 8ppts over six months and grown 5ppts 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 ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.3 in the past several years. This ratio implies a excellent 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.

2294.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 may be unstable and is somewhat unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 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 strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, 2294.T is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, 2294.T is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to notable. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. Specifically, the stock is 'expensive' on P/E, neutral on EV/EBITD. 

Kakiyasu Honten Co., Ltd.

¥ 2651

4

Kakiyasu Honten Co., Ltd.

¥ 2651

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 2651

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