Financial Analysis Report

Business Description

Company: Maruwa Co., Ltd.
Core Business: Maruwa Co., Ltd. specializes in the production and sale of ceramic components and electronic devices, with applications across several industries, including automotive, industrial machinery, and consumer electronics.
Business Segments: The company operates primarily in two segments: ceramics and electronic components, catering to both domestic and international markets.
Geographic Footprint: With a notable presence in Japan, Maruwa’s products also reach a global customer base.

Industry Position

Maruwa holds a strong position in the ceramics and electronic components industry, where it competes with other technology and industrial materials manufacturers. The company has been able to secure significant market share through product innovation and a robust supply chain, ensuring competitive advantage through both high-quality and durable components.

Revenue Streams and Customer Base

Revenue: Maruwa reported a substantial increase in net sales, totaling ¥34.82 billion for the six months ending September 30, 2024, a year-on-year growth of 24.1%.
Customer Base: The customer base is diversified, spanning sectors that rely on durable and reliable components for precision machinery and electronics.
Supply Chain: The supply chain is built to support high-demand and high-quality standards, allowing Maruwa to maintain its reputation and customer loyalty.

Financial Statement Analysis

Income Statement

• Net Sales: Maruwa’s net sales grew to ¥34.82 billion, representing a 24.1% increase from the previous period.
• Operating Profit: Increased significantly by 47.9% year-on-year, reaching ¥12.79 billion, signaling operational efficiency.
• Ordinary Profit: Improved by 24.8% to ¥11.99 billion.
• Net Profit: Profit attributable to owners of the parent company stood at ¥8.44 billion, up 24.5%.

Balance Sheet

• Total Assets: Grew from ¥122.52 billion as of March 2024 to ¥131.28 billion by September 2024, indicating asset growth.
• Total Liabilities: Slightly decreased from ¥13.31 billion to ¥13.25 billion, reflecting stable financial health.
• Equity Ratio: The high equity ratio of 89.9% reinforces Maruwa’s strong financial standing and low reliance on debt.

Cash Flow Statement

• Operating Cash Flow: Net cash from operating activities increased by 71% to ¥11.1 billion, driven by higher profits and improved cash management.
• Investing Cash Flow: Net cash used in investing activities decreased to ¥1.45 billion, partly offset by a subsidy of ¥2.68 billion.
• Financing Activities: Cash outflows from financing totaled ¥531 million due to dividend payments.

Dividend

The company declared an interim dividend of ¥47 per share, with a forecast of ¥94 per share for the full fiscal year, signaling continued shareholder returns.

Key Findings and Investor Action

1. Strong Revenue and Profit Growth: A substantial increase in net sales and operating profits showcases robust demand and operational efficiency.
   • Investor Implication: Positive indicator for growth-focused investors; Maruwa appears capable of sustaining profitability.
2. High Equity Ratio: An equity ratio of 89.9% indicates low debt dependency, enhancing financial stability.
   • Investor Implication: Suitable for risk-averse investors as the company is financially stable with low liabilities.
3. Increased Dividends: An increase in dividends reflects a commitment to rewarding shareholders and confidence in future earnings.
   • Investor Implication: Encouraging for income-focused investors seeking steady returns.
4. Proactive Profitability Measures: Subsidies and cost control in operating expenses are improving cash flows and profitability.
   • Investor Implication: Maruwa’s focus on cost efficiency may lead to increased shareholder value over time.

Recommendations

• For Current Investors: Hold – Given Maruwa’s consistent growth and attractive dividend yield, holding the stock could yield continued benefits.
• For Potential Investors: Buy – With promising revenue growth, strong financial health, and a shareholder-focused dividend policy, Maruwa presents an appealing opportunity for long-term investment.

Report Date

• Date: October 29, 2024
• Reporting Period: Six months ended September 30, 2024.

Disclaimer

This recommendation is based solely on Maruwa Co., Ltd.’s latest financial statements and does not account for external economic or market conditions. Investors should consider these factors and their individual financial situations before making investment decisions.