Ebara Jitsugyo Co.,Ltd. manufactures and sells environment and related products in Japan. It is also involved in the engineering operations for waterworks and sewerage. In addition, the company sells various industrial machines, such as a pump and air-conditioning/heating and cooling equipment, etc. Ebara Jitsugyo Co.,Ltd. was founded in 1946 and is headquartered in Tokyo, Japan.

Japan

Ebara Jitsugyo Co.,Ltd.

Industrials

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, and there is an evident trend. In the past 12 months, the dividend yield has been good and slightly above its peers. On average, the company pays dividends twice a year. 

6328.T reported revenue of JPY 37 503mn in the last 12 months, up 3% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 1% from FY23 to JPY 264.32. Market expects EPS to reach JPY 267.50 in FY25.

Over the past six months, the stock has consistently fallen, resulting in a 27% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 23ppts. 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 12.2% in the last 12 months, a decline from 12.4% in FY23. 

Historically, 6328.T has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 8.4%, down from 8.7% in FY23. 

Ebara Jitsugyo Co.,Ltd. reported a return on equity (RoE) of 14.2% in the last 12 months, down from 15.9% in FY23. The market consensus projects an RoE of 18.1% in FY24, again ahead of its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 13.0%, above the peers. The consensus estimate for FY24 for RoCE is 22.6%, again ahead of the peers. 

Another important profitability metric, return on assets (RoA), amounted to 7.4% in the last 12 months, a decrease from 8.3% in FY23. The market analysts predict that RoA will be 9.1% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.5 in the past several years. This ratio implies a strong 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.

6328.T has below average 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 quite 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 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 poor working capital management.

In highly turbulent market conditions, 6328.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, 6328.T is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. 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 moderately underpriced compared to similar stocks. In particular, the stock is reasonably priced on P/E, 'cheap' on EV/EBITD. 

Ebara Jitsugyo Co.,Ltd.

¥ 3260

5

Ebara Jitsugyo Co.,Ltd.

¥ 3260

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

¥ 3260

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