Intrinsic Value Create Medic Co., Ltd. (5187.T)

• Previous Close: ¥1,126.00
• Intrinsic Value: ¥366.22
• Upside potential: -67%

Stock Valuation Context

Business Model And Market Position

Create Medic Co., Ltd. operates in the medical devices sector, specializing in disposable silicone-based medical appliances. The company focuses on urology, gastroenterology, and surgical products, including tracheostomy tubes and microcatheters, catering to both domestic and international markets. Its OEM offerings, such as multi-lumen tubes and hydrophilic coatings, highlight its technical expertise in niche medical applications. Positioned as a specialized manufacturer, Create Medic leverages precision engineering to serve hospitals and healthcare providers with high-quality, single-use medical solutions. The company’s product diversification and OEM capabilities provide resilience against market fluctuations, while its focus on silicone resin technology differentiates it from competitors. With a strong presence in Japan and growing international reach, Create Medic balances innovation with cost-efficient production to maintain its competitive edge in the medical devices industry.

Revenue Profitability And Efficiency

Create Medic reported revenue of JPY 13.03 billion for FY 2024, with net income of JPY 840.9 million, reflecting a net margin of approximately 6.5%. Operating cash flow stood at JPY 2.25 billion, indicating healthy cash generation. Capital expenditures were JPY -387 million, suggesting disciplined investment in maintaining production capabilities without overextending financially.

Earnings Power And Capital Efficiency

The company’s diluted EPS of JPY 95.31 demonstrates its ability to translate revenue into shareholder value. With a robust operating cash flow-to-revenue ratio of 17.3%, Create Medic efficiently converts sales into cash, supporting reinvestment and dividend distributions. Its capital-light model, evidenced by moderate capex, underscores prudent capital allocation.

Balance Sheet And Financial Health

Create Medic maintains a strong balance sheet, with JPY 6.32 billion in cash and equivalents against JPY 800 million in total debt, yielding a net cash position. This liquidity provides flexibility for R&D or strategic acquisitions. The low debt level and high cash reserves indicate minimal financial risk, reinforcing stability in uncertain markets.

Growth Trends And Dividend Policy

The company’s growth is driven by demand for disposable medical devices, though its modest net income suggests incremental rather than explosive expansion. A dividend of JPY 22 per share reflects a commitment to returning capital to shareholders, supported by consistent cash flow generation. Future growth may hinge on international expansion and OEM partnerships.

Valuation And Market Expectations

With a market cap of JPY 8.17 billion, Create Medic trades at a P/E of approximately 9.7x, aligning with niche medical device peers. The low beta of 0.097 indicates minimal correlation to broader market volatility, appealing to risk-averse investors. Market expectations likely focus on steady performance rather than high growth.

Strategic Advantages And Outlook

Create Medic’s specialization in silicone-based medical devices provides a defensible niche, while its OEM segment diversifies revenue streams. The company’s strong cash position and low leverage offer resilience. Challenges include competition and pricing pressures, but its focus on high-quality, disposable products positions it well in a growing global healthcare market.

Sources

Company filings, market data