Stock Analysis & Valuation Daido Metal Co., Ltd. (7245.T)

• Previous Close: ¥1,027.00
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	1087.73	6
Intrinsic value (DCF)	460.52	-55
Graham-Dodd Method	1457.28	42
Graham Formula	789.24	-23

Strategic Investment Analysis

Company Overview

Daido Metal Co., Ltd. (7245.T) is a leading Japanese manufacturer specializing in high-performance bearings and related components for automotive, industrial, and energy applications. Founded in 1939 and headquartered in Nagoya, the company produces metal-polymer plain bearings, engine bearings for passenger and commercial vehicles, and turbomachinery bearing systems used in power generation and marine engines. Daido Metal serves a global customer base across Japan, North America, Europe, and Asia, with applications spanning construction equipment, high-speed trains, and power plants. The company’s diversified product portfolio includes modular assembly products, lubrication systems, and capacitors, positioning it as a critical supplier in the automotive and industrial sectors. With a strong focus on precision engineering and reliability, Daido Metal plays a vital role in Japan’s industrial supply chain while expanding its international footprint in growing markets.

Investment Summary

Daido Metal presents a stable investment opportunity with its niche expertise in high-performance bearings and strong presence in Japan’s automotive sector. The company’s low beta (0.251) suggests resilience to market volatility, while its modest net income (¥2.57B) and operating cash flow (¥16.66B) reflect steady profitability. However, high total debt (¥63.38B) relative to cash reserves (¥24.59B) raises liquidity concerns, and capital expenditures (¥7.61B) indicate ongoing reinvestment needs. The dividend yield (~1.5% based on ¥18/share) is conservative. Investors should weigh Daido’s entrenched market position against cyclical exposure to automotive demand and global supply chain risks.

Competitive Analysis

Daido Metal competes in the specialized bearing market with a focus on high-tolerance applications, particularly in automotive (engine bearings) and heavy machinery. Its competitive edge lies in proprietary metal-polymer composites and long-standing relationships with Japanese automakers. However, the company faces pressure from global players with larger R&D budgets and broader geographic reach. Daido’s smaller scale (¥128.7B revenue) limits its ability to compete on cost with mass-market bearing manufacturers, but its technical expertise in turbomachinery and niche industrial applications provides differentiation. The company’s reliance on Japan (likely a significant revenue base) exposes it to domestic economic trends, while international rivals benefit from diversified manufacturing footprints. Daido’s vertically integrated production and focus on precision engineering help maintain margins, but commoditization risks in standard bearings and dependence on cyclical industries (auto/construction) remain challenges.

Major Competitors

• NTN Corporation (6472.T): NTN is a larger Japanese bearing manufacturer with global operations and stronger diversification across automotive and industrial markets. It outperforms Daido in scale and R&D investment but lacks Daido’s specialization in high-performance polymer bearings. NTN’s extensive overseas presence provides resilience to Japan’s economic fluctuations.
• JTEKT Corporation (6473.T): JTEKT, a Toyota-affiliated supplier, dominates the automotive steering and bearing market with superior economies of scale. Its integrated supply chain gives it cost advantages over Daido, though Daido retains an edge in specialized turbomachinery bearings. JTEKT’s reliance on the auto sector mirrors Daido’s cyclical risks.
• SKF (SKF-A.ST): SKF is a global leader in bearings with a strong European industrial base and advanced R&D capabilities. It surpasses Daido in brand recognition and distribution but faces higher production costs. Daido’s focus on Asian markets and polymer composites allows it to avoid direct competition with SKF’s premium metallic bearings.
• Schaeffler AG (SCHN.VI): Schaeffler is a major automotive and industrial supplier with vertically integrated manufacturing. Its global scale and OE relationships overshadow Daido’s regional presence, but Daido’s agility in custom solutions for Japanese clients provides a localized advantage. Schaeffler’s recent electrification focus may pressure Daido’s traditional engine bearing business.