Stock Analysis & Valuation Tenmaya Store Co., Ltd. (9846.T)

• Previous Close: ¥966.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	1986.92	106
Intrinsic value (DCF)	548.66	-43
Graham-Dodd Method	2757.15	185
Graham Formula	1144.25	18

Strategic Investment Analysis

Company Overview

Tenmaya Store Co., Ltd. (9846.T) is a well-established Japanese retail chain specializing in groceries, miscellaneous goods, and clothing products. Founded in 1969 and headquartered in Okayama, Japan, the company operates within the Consumer Defensive sector, catering to essential daily needs. As a regional player in Japan's competitive grocery retail market, Tenmaya Store focuses on providing convenience and affordability to local consumers. The company’s business model emphasizes steady revenue streams from staple goods, making it resilient to economic downturns. With a market capitalization of approximately ¥10.98 billion, Tenmaya Store maintains a stable presence in Japan’s retail landscape, supported by its long-standing brand recognition and localized store operations. The company’s conservative financial approach, reflected in its low beta of 0.021, aligns with its defensive industry positioning. Investors looking for exposure to Japan’s domestic retail sector may find Tenmaya Store an interesting candidate due to its steady cash flows and dividend distribution.

Investment Summary

Tenmaya Store Co., Ltd. presents a low-volatility investment opportunity within Japan’s defensive retail sector. The company’s stable revenue (¥58.68 billion in FY2025) and net income (¥1.58 billion) reflect its resilience in serving essential consumer needs. However, its modest growth prospects and regional focus limit upside potential compared to national or e-commerce-driven retailers. The company’s diluted EPS of ¥137.5 and dividend per share of ¥14 indicate shareholder returns, but high total debt (¥4.53 billion) relative to cash reserves (¥571.8 million) warrants caution. Operating cash flow (¥2.96 billion) comfortably covers capital expenditures (¥1.1 billion), suggesting sustainable operations. Investors should weigh Tenmaya’s stability against limited expansion opportunities and competitive pressures from larger retail chains.

Competitive Analysis

Tenmaya Store Co., Ltd. operates in a highly competitive Japanese grocery retail market dominated by national giants and regional players. Its competitive advantage lies in localized store penetration and brand loyalty in Okayama and surrounding areas. Unlike national chains such as Aeon or Seven & i Holdings, Tenmaya’s smaller scale allows for agile community-focused operations but limits economies of scale in procurement and pricing. The company’s revenue concentration in groceries provides stability but exposes it to margin pressures from discount competitors. Tenmaya’s lack of a strong e-commerce presence contrasts with rivals investing in omnichannel strategies, potentially hindering long-term growth. Its conservative financial management (low beta, steady dividends) appeals to risk-averse investors but may lag in innovation. The company’s regional focus shields it from direct competition with premium or urban-focused retailers but caps market share expansion. Tenmaya’s challenge is balancing cost efficiency with differentiation in a saturated market where larger competitors leverage technology and private-label offerings.

Major Competitors

• Aeon Co., Ltd. (8267.T): Aeon is Japan’s largest supermarket chain with nationwide reach, offering groceries, apparel, and general merchandise. Its strengths include massive scale, private-label products, and integrated retail ecosystems (e.g., Aeon Mall). However, its sprawling operations can lead to inefficiencies, and it faces stiff competition from online retailers. Compared to Tenmaya, Aeon’s diversification is a strength but may dilute focus on regional grocery markets.
• Seven & i Holdings Co., Ltd. (3382.T): Seven & i operates 7-Eleven Japan and Ito-Yokado supermarkets, combining convenience stores with hypermarkets. Its strengths lie in its ubiquitous convenience store network and supply chain efficiency. However, reliance on franchise models and high urban exposure makes it vulnerable to labor costs. Unlike Tenmaya, Seven & i’s scale is unmatched, but its urban focus leaves regional gaps Tenmaya could exploit.
• Three F Co., Ltd. (7544.T): Three F operates discount supermarkets primarily in western Japan, competing on price. Its lean cost structure allows aggressive pricing, but thin margins make it sensitive to input cost fluctuations. Compared to Tenmaya, Three F’s discount model appeals to budget-conscious shoppers but may lack Tenmaya’s localized customer relationships.
• Lawson, Inc. (2651.T): Lawson is a leading convenience store chain with a growing focus on fresh food and digital services. Its strengths include tech-driven logistics and partnerships (e.g., with Rakuten). However, its smaller store format limits grocery selection versus Tenmaya’s supermarkets. Lawson’s urban dominance contrasts with Tenmaya’s regional grocery focus.