| Valuation method | Value, ¥ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 4626.20 | 88 |
| Intrinsic value (DCF) | 1269.52 | -49 |
| Graham-Dodd Method | 4071.96 | 65 |
| Graham Formula | 1614.52 | -35 |
Regal Corporation (7938.T) is a leading Japanese footwear company specializing in the manufacturing, retail, and repair of men's and women's shoes. Founded in 1902 and headquartered in Urayasu, Japan, the company operates through both physical stores and online platforms, catering to a broad consumer base. Formerly known as Nippon Shoe Co., Ltd., Regal Corporation rebranded in 1990 to reflect its modernized approach to footwear retail. The company operates in the competitive Apparel - Footwear & Accessories sector, a segment of the Consumer Cyclical industry, where it leverages its long-standing heritage and craftsmanship to maintain market relevance. With a market capitalization of approximately ¥7.52 billion, Regal Corporation remains a niche player in Japan's footwear market, balancing traditional retail with e-commerce expansion. Its financial stability, evidenced by a net income of ¥427 million in FY2024, underscores its resilience in a challenging retail environment.
Regal Corporation presents a mixed investment profile. On the positive side, the company maintains a modest net income (¥427 million in FY2024) and a strong cash position (¥5.2 billion), which provides liquidity for potential expansion or debt reduction. However, negative operating cash flow (-¥1.05 billion) and high total debt (¥10.59 billion) raise concerns about financial sustainability. The company's low beta (-0.065) suggests minimal correlation with broader market movements, potentially appealing to risk-averse investors. The dividend yield, at ¥75 per share, may attract income-focused investors, but the negative cash flow from operations could pressure future payouts. Given its niche positioning in Japan's footwear market, Regal Corporation may appeal to investors seeking exposure to domestic consumer cyclical stocks, but its growth prospects appear limited without significant operational improvements.
Regal Corporation operates in a highly competitive segment dominated by global footwear giants and fast-fashion retailers. Its competitive advantage lies in its long-standing brand recognition in Japan and a dual retail strategy combining physical stores with e-commerce. However, the company faces intense competition from international brands like Nike and Adidas, which benefit from stronger global supply chains and marketing budgets. Domestically, Regal competes with ABC-Mart (2670.T) and Onward Holdings (8016.T), both of which have broader product portfolios and stronger financials. Regal's focus on traditional shoe manufacturing and repair services differentiates it somewhat, but this niche may limit scalability. The company's negative operating cash flow suggests inefficiencies in its business model, possibly due to high fixed costs from its retail footprint. To improve competitiveness, Regal could explore partnerships with emerging designers or expand its digital sales channels to offset declining in-store traffic. Its high debt load (¥10.59 billion) further constrains its ability to invest in innovation or marketing, putting it at a disadvantage against better-capitalized rivals.