Intrinsic Value Ohmori Co.,Ltd. (1844.T)

• Previous Close: ¥616.00
• Intrinsic Value: ¥302.40
• Upside potential: -51%

Stock Valuation Context

Business Model And Market Position

Ohmori Co., Ltd. operates as a specialized construction firm in Japan, focusing on waterworks infrastructure, residential apartment construction, and renewable energy solutions. The company’s core revenue streams derive from civil engineering projects, including upper and lower waterworks, alongside property development and leasing of OLY equipment. Its diversified operations also include photovoltaic power generation equipment sales, positioning it within Japan’s growing sustainability sector. Ohmori’s market position is reinforced by its long-standing presence since 1967, leveraging localized expertise in infrastructure and residential projects. While the construction industry remains highly competitive, Ohmori differentiates itself through integrated services—combining traditional engineering with renewable energy initiatives. This dual focus aligns with Japan’s infrastructure modernization and decarbonization goals, providing a niche advantage. However, its regional concentration in Japan exposes it to domestic economic cycles and regulatory shifts in construction and energy policies.

Revenue Profitability And Efficiency

Ohmori reported revenue of JPY 5.98 billion for FY2024, with net income of JPY 414 million, reflecting a net margin of approximately 6.9%. Operating cash flow stood at JPY 1.48 billion, significantly higher than net income, indicating robust cash conversion. Capital expenditures were modest at JPY 68 million, suggesting efficient reinvestment relative to operational scale.

Earnings Power And Capital Efficiency

The company’s diluted EPS of JPY 22.19 underscores its ability to generate earnings despite a leveraged balance sheet. Operating cash flow coverage of net income highlights strong underlying profitability, though total debt of JPY 4 billion against cash reserves of JPY 3.45 billion signals moderate liquidity constraints.

Balance Sheet And Financial Health

Ohmori’s financial health is mixed, with cash and equivalents covering 86% of total debt. However, the debt-to-equity ratio appears elevated, given JPY 4 billion in total debt against a market cap of JPY 5.28 billion. The firm’s ability to service debt hinges on stable cash flows from construction and leasing operations.

Growth Trends And Dividend Policy

Growth appears steady but unspectacular, with revenue and net income reflecting Japan’s mature construction market. The dividend payout of JPY 10 per share suggests a conservative but shareholder-friendly policy, yielding approximately 1.4% based on current market cap.

Valuation And Market Expectations

Trading at a P/E of around 12.7x (based on diluted EPS), Ohmori is priced in line with niche construction peers. Its low beta (0.244) implies limited sensitivity to broader market volatility, likely due to its localized operations and stable demand for infrastructure services.

Strategic Advantages And Outlook

Ohmori’s strategic focus on waterworks and renewable energy aligns with Japan’s infrastructure priorities, offering long-term stability. However, reliance on domestic demand and debt levels pose risks. The outlook remains cautiously optimistic, contingent on execution in energy-related projects and debt management.

Sources

Company description, financials, and market data sourced from publicly disclosed filings and Bloomberg.