| Valuation method | Value, ¥ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 1220.34 | 20 |
| Intrinsic value (DCF) | 435.28 | -57 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
Yorozu Corporation (7294.T) is a leading Japanese automotive parts manufacturer headquartered in Yokohama, specializing in suspension systems, structural components, and other critical auto parts for cars, trucks, and tractors. Founded in 1948, Yorozu has built a strong reputation for designing and producing high-quality suspension members, rear beams, engine mounts, and body parts, serving global automotive OEMs. The company operates in the highly competitive Auto - Parts sector, a key segment of the Consumer Cyclical industry, where precision engineering and cost efficiency are paramount. Yorozu’s diversified product portfolio and global manufacturing footprint position it as a key supplier in the automotive supply chain. Despite recent financial challenges, including a net loss in FY2024, Yorozu maintains a solid cash position and continues to invest in production capabilities. Investors should note its exposure to cyclical automotive demand and supply chain risks, but its long-standing industry presence and technological expertise offer resilience in a rapidly evolving market.
Yorozu Corporation presents a mixed investment case. The company operates in a competitive but essential segment of the automotive industry, supplying critical suspension and structural components. However, FY2024 saw a net loss of ¥3.93 billion, with negative diluted EPS (-¥162.05), reflecting margin pressures and potential operational inefficiencies. Positively, Yorozu generated ¥12.53 billion in operating cash flow, though capital expenditures (¥13.45 billion) exceeded this, indicating heavy reinvestment needs. The company maintains a reasonable liquidity position (¥22.29 billion cash) but carries significant debt (¥33.26 billion). With a low beta (0.106), Yorozu may appeal to investors seeking lower volatility, but its cyclical exposure and recent profitability challenges warrant caution. The dividend yield (¥31 per share) provides some income appeal, but sustainability depends on a turnaround in earnings. Investors should monitor restructuring efforts and demand recovery in global auto production.
Yorozu Corporation competes in the automotive parts sector, where scale, technological innovation, and cost efficiency are critical. Its core strength lies in suspension systems and structural components, where it has established long-term relationships with Japanese and global automakers. However, the company faces intense competition from larger global suppliers with broader product portfolios and stronger financial flexibility. Yorozu’s competitive positioning is hampered by its recent unprofitability, which may limit R&D and expansion capabilities compared to peers. Its focus on Japan (home market) and selective international operations provides stability but also exposes it to regional demand fluctuations. The company’s ability to adapt to electric vehicle (EV) structural demands—such as lightweighting—will be crucial, as traditional suspension parts may see reduced demand in EV platforms. Yorozu’s smaller scale relative to multinational rivals could be a disadvantage in pricing negotiations with automakers, but its specialization in suspension modules could differentiate it in niche applications. Supply chain localization and partnerships with Japanese OEMs remain key advantages, though diversification into higher-growth markets or EV-specific components could improve its long-term outlook.