Inaba Seisakusho Co., Ltd. engages in the engineering, manufacture, sale, and support of office furniture and outdoor storage sheds in Japan. Its office furniture products include desks, meeting tables, office chairs, office partitions, storage cabins, and other items; and outdoor storage sheds comprise motorbike sheds/garages and public storage/cycle ports, as well as small, medium, and large sheds. The company was founded in 1950 and is headquartered in Tokyo, Japan.

Japan

Inaba Seisakusho 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 somewhat mixed. In the past 12 months, the dividend yield has been moderate and on par with its peers. On average, the company pays dividends twice a year. 

3421.T reported revenue of JPY 42 276mn in the last 12 months, up 2% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 21% from FY23 to JPY 107.16.

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 4ppts over six months and grown 1ppts 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 10.3% in the last 12 months, a decline from 12.2% in FY23. 

Historically, 3421.T has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 4.1%, down from 5.4% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 3.8%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 3.0% in the last 12 months, an increase from 3.0% in FY24. 

Inaba Seisakusho Co., Ltd. reported a return on equity (RoE) of 4.0% in the last 12 months, down from 4.0% in FY24. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.2 in the past several years. This ratio implies a average 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.

3421.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. 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 moderate. We note strong debt servicing capacity, 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, and negligible return on capital.

In highly turbulent market conditions, 3421.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, 3421.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. 

From both historical and forecast perspectives, the stock is underpriced compared to similar stocks. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITD. 

Inaba Seisakusho Co., Ltd.

¥ 1691

5

Inaba Seisakusho Co., Ltd.

¥ 1691

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 1691

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