> ## Content Index > Fetch the complete content index at: https://www.navaresearch.com/llms.txt > Use this file to discover other available public pages before exploring further. # Ryobi: Japan's Leading Auto Die Caster at 0.5× Book - URL: https://www.navaresearch.com/untitled/ - Published: 2026-11-12T12:07:00.000Z - Updated: 2026-11-14T08:44:06.000Z - Author: Adhik Ramanathan, CFA - Tags: Industrials, Autos, Initiation, Japan, Research Aluminum Die Casting for Autos · Market cap ≈ ¥79.4bn · FY25 ended Dec 2025 · Prices as of 10 Nov 2026 · November 2026 **Adhik Ramanathan, CFA ·** **adhik@navaresearch.com** Disclaimer: This research is intended solely for professional and institutional investors (in Japan, registered investment management businesses and trust banks acting for institutional accounts) and is not directed at retail investors or persons in India. It is educational research, not investment advice, a recommendation, or an offer to buy or sell any securities; Nava publishes no ratings or price targets. At publication, the author holds no position in this security. Full terms: navaresearch.com/disclaimer-terms-of-use. [Download the full note (PDF) ](https://www.navaresearch.com/content/files/2026/11/Ryobi%5FInvestment%5FThesis%5FNava%5Fv1.pdf) ## 01Investment summary **¥2,530**Price **¥79.4bn**Market cap **0.43×**P/B (Sept 2026 book) **6.7×**P/E FY26 guidance **4.2×**EV/EBITDA FY26E **4.2%**Dividend yield ### The investment case in brief Japan’s largest independent aluminum die caster makes drivetrain parts for every Japanese carmaker and for Ford and GM. At ¥2,530 the stock trades at 0.43× book and 6.7× guided earnings. Markets think EVs, which need far fewer of these parts, and Chinese competition will hurt the company. That may be pessimistic. Operating margins of about 4% are mid-cycle, so the low P/E is not flattered by peak profit. Hybrid sales are rising, tariffs are making local, non-Chinese capacity in North America scarce, and Ryobi’s US sales have more than tripled since 2020\. Like many Japanese companies, Ryobi earns too little on its capital; management has started to fix this with an ROE target, buybacks and cross-shareholding sales. The stock trades at about 2.2× its end-2022 level (¥1,147) but remains 17% below February’s high (¥3,065). The 2023 re-rating came as management raised operating-profit guidance by 40% and boosted dividend from ¥50 to ¥70. ## 02Business overview ### Ryobi casts car parts, mostly engine blocks Ryobi makes metal parts for cars by die casting. Molten aluminum is forced into a steel mold at high pressure and sets into a precise, thin-walled shape. This works out economical for complex parts needed in large numbers. Ryobi designs and builds its own dies, casts more than 270,000 tonnes a year, and machines the parts before they ship. Die casting is the core business accounting for 89% of sales or ¥274bn in FY25, at a 4.1% margin. Most of it caters to powertrains - the cylinder blocks and transmission cases at the heart of petrol or hybrid cars. Body and chassis parts, motor and inverter housings and battery cases are a growing share, though the company doesn’t report them separately. Its customers are essentially every Japanese carmaker + Ford and GM, which together account for about 23.5% of group sales. Carmakers want suppliers close to their assembly lines, so Ryobi has plants in Japan, the US, Mexico, the UK, China and Thailand. Japan is 44% of sales, the US 20% and China 15%. The other two businesses are small. Printing equipment (8% of sales) makes RMGT offset presses, the machines commercial and packaging printers use when they need long, high-quality runs of brochures, posters and cartons. Demand follows printers’ spending on equipment. Housing equipment (4%) makes door closers, a product Ryobi leads in Japan, along with automatic door openers. A common confusion is that Ryobi power tools are part of this company. Ryobi sold its tool business to Kyocera in 2018. ### Does it have a moat? **It has incumbency, not a moat.** Once Ryobi wins a model it usually supplies it for the model’s life; switching mid-cycle means new dies, re-qualification and launch risk for customers. In-house die-making, high-vacuum casting (which lets body parts be heat-treated and welded) and a recycled alloy now used in a customer’s steering knuckle are real skills. But every model change is re-bid against capable rivals, and carmakers hold the pricing power. The returns indicate this. ROE has been low at between 4 to 7% since FY23. ## 03Earnings drivers ### Revenue up, profit down: the metal and yen effect - Sales grew 12% a year from FY21 to FY25, to ¥309bn, but much of it was recovery from the Covid-era chip shortage, higher aluminum prices and weaker yen. - Margins have recovered, not expanded. FY25’s 4.1% compares with about 6.3% in FY3/18 and losses in FY20–21. - The first nine months of FY26 show the operating leverage. Sales rose 7%, but real volume fell, labor and depreciation rose, and printing sales fell 32%. Operating profit fell 24% to ¥6.2bn. - To meet guidance, the company needs a record fourth quarter: ¥6.8bn of operating profit, about 50% above last year’s. Management expects higher volumes, catch-up on metal pass-through and cost cuts. | **Segment** | **FY23A** | **FY24A** | **FY25A** | **9M FY26** | **FY26E** | | -------------------- | --------- | --------- | --------- | ----------- | --------- | | **SALES (¥bn)** | | | | | | | Die castings | 247.6 | 257.9 | 274.3 | 223.0 | 307.0 | | Printing equipment | 24.1 | 24.1 | 23.7 | 12.1 | 21.5 | | Housing equipment | 10.8 | 11.0 | 10.9 | 7.7 | 11.5 | | **OPERATING MARGIN** | | | | | | | Die castings | 4.4% | 3.5% | 4.1% | 3.0% | 4.1% | | Printing equipment | 4.7% | 3.9% | 5.6% | (0.6%) | 1.4% | | Housing equipment | 1.6% | (3.7%) | 1.1% | (4.8%) | 1.7% | *9M FY26 = January–September 2026\. FY26E = company segment guidance (August 2026, unchanged in November). Die castings is about 89% of sales and of operating profit.* ### Key metrics | **Metric** | **FY24A** | **FY25A** | **Read-through** | | ------------------------- | --------- | --------- | ----------------------------------------------------------------------------------------------------- | | Operating margin | 3.2% | 4.1% | Mid-cycle: the FY3/18 peak was 6.3%. | | ROE | 4.4% | 6.4% | Below an 8–9% cost of equity; target 7.0% for FY27. | | Operating cash flow (¥bn) | 29.2 | 13.9 | FY25 hit by working capital, including paying suppliers earlier under Japan’s new subcontracting law. | | Investing cash flow (¥bn) | (13.7) | (22.5) | FY26 capex cut to ¥20bn from ¥22bn; depreciation about ¥19bn. | | Free cash flow (¥bn) | 15.4 | (8.6) | +¥3.1bn in 9M FY26. | | Net debt (¥bn) | – | 43.5 | About ¥46bn at September 2026; equity ratio 54%; D/E held at 0.5× or below. | | Dividend per share (¥) | 85 | 100 | ¥106 guided; progressive through FY27; 28% payout. | *Free cash flow = operating less investing cash flow. Net debt = interest-bearing debt less cash and deposits. Buybacks: ¥1.5bn in October 2025; ¥1.1bn of the ¥1.5bn announced August 2026 completed by September.* ## 04Investment thesis ### What is the market missing? **The market’s view:** electric cars will shrink demand for Ryobi’s engine parts, and it earns a 6% ROE, so it is worth less than half its book value. Nine-month profit fell 24% and full-year guidance is flat. **Our view:** the EV threat is real but slow, and the price assumes a faster decline than the evidence shows. On guided earnings that sit mid-cycle, the stock does not need growth. It needs margins back to their norm and more cash needs to be returned. ### How Value Can be unlocked? #### Avenues for revenue growth - **Hybrids.** Hybrids are the fastest-growing powertrain in the US: 14% of sales in Q1 2026, up from 12% a year earlier, while pure EVs fell to \~5% from 8% (Cox Automotive). That suits Ryobi. A hybrid keeps the engine block and transmission case and adds motor and inverter housings. - **EV content.** Even if EVs pick up long-term, there are advantages. Ducker Carlisle expects EV-specific parts to add about 54kg of aluminum per car from 2022 to 2030, led by e-drive housings (23kg). Motor housings sit closest to Ryobi’s current skill set. - **North America.** Tariffs and local-content rules are pushing carmakers to buy castings made in North America over imports. Ryobi already makes in the US and Mexico what it sells there, so the 15% US tariff on Japan hit it lightly, and as local capacity gets scarcer it is in a position to take share. The shift shows in the numbers: US sales rose from ¥17.2bn in FY20 to ¥62.2bn in FY25. - **Large castings (option).** Tesla pioneered a cheaper way to build car bodies, replacing dozens of stamped steel parts and welds with a single aluminum casting. Ryobi is pursuing a similar approach, having installed a 6,500-ton machine at Kikugawa, the first of its kind at an independent Japanese die caster, making prototype rear underbodies and suspension members for carmakers to test. There are no production contracts yet. The key question is whether carmakers will outsource these castings, as Tesla and Toyota currently do them in-house. #### Margins expansion prospects Carmakers hold the pricing power, and die-casting margins fell to about 3% this year. Three things can lift them: - **Volume.** Most non-metal costs are fixed: about ¥19bn of depreciation a year, plus core labor. In FY20 sales fell 22% and operating profit swung to a ¥1.8bn loss. The same operating leverage can work upward as sales improve. - **Pass-through.** Metal costs reach selling prices months late, which squeezed H1\. The squeeze reverses as prices catch up. A fall in aluminum can lower revenue and raise margins at the same time. - **Productivity and pricing.** Ryobi is cutting its own costs through standard die parts, automated inspection and solar power at two plants. It is also gaining some pricing power: since 2023, Japan’s government has pushed carmakers to let suppliers raise prices when wages and energy costs rise, which they used to resist. #### Valuation multiple expansion Like many Japanese stocks, Ryobi earns little on its capital base. It pays out under 30% of profit, so equity keeps growing faster than earnings, and capital is tied up in cross-shareholdings and two non-core businesses that are losing money this year. The Tokyo Stock Exchange has been pushing companies trading below book to fix this since 2023, and Ryobi is showing real intent: - **ROE target set by management** 7% by FY27 and 9% or more by 2035. - **Buying back shares.** ¥1.5bn in 2025, with the shares cancelled, and another ¥1.5bn under way this year. - **Selling cross-shareholdings.** ¥3.1bn sold since 2025, and a 2025 share offering let long-standing holders exit. - **Raising the dividend.** From ¥20 in FY21 to ¥106 this year, with a commitment not to cut it through FY27. - **Spending less, borrowing less.** FY26 capex was cut from ¥22bn to ¥20bn, and borrowings are falling toward ¥70bn. ### Are there reasons to look at the stock now? **Q3 results (published 5 November) were weak.** Operating profit was ¥1.7bn, against ¥2.1bn a year earlier. Guidance was left at ¥13.0bn, which now needs a record ¥6.8bn in Q4, so a cut in February looks likely. The stock dipped 4% after the results and has since recovered to ¥2,530\. A cut could still offer a better entry. ## 05Valuation ### How does it compare with peers? | **Company** | **Revenue growth** | **Op. margin** | **P/E** | **EV/EBIT** | **EV/ EBITDA** | **P/B** | **ROE** | **Comments** | | ---------------------------- | ------------------ | -------------- | -------- | ----------- | -------------- | --------- | -------- | ------------------------------------- | | **Ryobi (at current price)** | **5.4%** | **4.1%** | **7.3×** | **10.7×** | **4.2×** | **0.43×** | **6.4%** | **Aluminum die casting** | | Ahresty (5852) | 2.6% | 2.2% | 4.3× | 11.6× | 2.8× | 0.28× | 6.6% | Die caster; FY3/27 profit to fall 86% | | Topre (5975) | 1.4% | 7.4% | 8.6× | \~5× | – | \~0.65× | \~8% | Body stamping, what giga replaces | | Nemak (Mexico) | 0.5% | \~4% | n.m. | \~10× | \~3.5× | \~0.3× | Loss | Global caster; bought GF unit | *Latest fiscal year: Ryobi and Nemak FY12/25, Ahresty and Topre FY3/26\. Ryobi at ¥2,530 (10 Nov 2026) with September 2026 net debt and minorities; Ahresty at ¥625 and Topre at ¥3,230 (October 2026). Nemak multiples from third-party data, mid-2026\. Orange = Nava estimate or approximate.* Ryobi sits in the middle of a cheap group. No listed caster trades near book, and Ahresty, the nearest Japanese peer, is cheaper still because its profit is collapsing. The discount is sector-wide, so a re-rating has to come from Ryobi’s own returns, not from its peers. ### Upside and downside scenarios | **Valuation component** | **Base · FY26E / today** | **Bear · FY29** | **Bull · FY29** | | --------------------------------- | ------------------------ | ----------------- | ----------------- | | **DIE CASTINGS** | | | | | Revenue (¥bn) / CAGR | 307.0 | 298.0 / (1.0%) | 345.3 / 4.0% | | EBIT margin / EBIT (¥bn) | 4.1% / 12.5 | 3.0% / 8.9 | 5.5% / 19.0 | | **PRINTING & HOUSING** | | | | | EBIT (¥bn) | 0.5 | 0.2 | 1.5 | | **GROUP** | | | | | Group EBIT (¥bn) | 13.0 | 9.1 | 20.5 | | **EV/EBIT · EV (¥bn)** | **10.4× · 135.3** | **12.0× · 109.7** | **10.5× · 215.3** | | **EQUITY BRIDGE** | | | | | Net debt (¥bn) | (46.0) | (42.0) | (30.0) | | Minority interests (¥bn) | (9.9) | (10.0) | (11.0) | | **Implied equity value (¥bn)** | **79.4** | **57.7** | **174.3** | | Shares (m) | 31.40 | 31.40 | 30.50 | | **Implied value per share (¥)** | **¥2,530** | **¥1,838** | **¥5,715** | | Implied P/B | 0.43× | 0.29× | 0.83× | | **Upside / (downside) vs ¥2,530** | **–** | **−27.4%** | **+125.9%** | *Nava estimates in orange. Method: group EBIT × multiple, less net debt and minority interests; no discounting. Base ties to FY26 guidance and the 10 Nov price. Shares exclude treasury stock (Nava estimate after the 2026 buyback). FY29 book value per share estimated at ¥6,250 (bear) and ¥6,900 (bull). Scenario values are illustrations, not price targets.* **Base case:** today; the price capitalizes flat guided profit at 10.4× EBIT (4.2× EBITDA). If Q4 only matches last year, EBIT is about ¥10.8bn and the multiple is about 12.5×. **Bear:** High car prices and rising loan rates push US car sales into a downturn, hitting Ryobi’s fastest-growing region. In the downturn, Ford or GM cuts suppliers at a model change and Ryobi loses an engine programme, leaving a line idle. With most non-metal costs fixed, the die-casting margin falls to 3% and sales drift down 1% a year. The market pays the 2022 trough multiple of 0.29× book. **Bull:** hybrids and North America lift die-casting sales 4% a year over the next 3 years at a 5.5% margin, still below FY3/18’s 6.3%; printing recovers or is sold. Value \~¥5,715 (+126%), at 0.83× book, still below book. ## 06Risks ### What would prove us wrong? (next 12–18 months) - **Volume:** a global auto slowdown. A 10% fall in tonnage roughly halves operating profit. - **EV pace:** Ford, GM or Japanese carmakers push pure-EV programmes faster than motor housings replace blocks. - **Customers:** Ford and GM are about 23.5% of sales; a lost programme leaves a line idle and risks an impairment. - **Costs:** wages and energy are not passed on, and the die-casting margin stays near 3%. - **China:** soft volumes, and cheaper Chinese casters, especially in large castings. - **Capital:** capex rises again or buybacks stop, and ROE stalls below 6%. ## 07Access, liquidity and ownership **Liquidity:** Prime-listed, about ¥79bn of market cap. Average volume over three months is about 127,000 shares a day (roughly ¥320m), so a ¥1bn position takes about three weeks to build at 20% of volume. **Ownership:** no controlling shareholder. Ryobi’s supplier shareholding association holds 6.9%, Techtronic Industries about 5.0%, the MUFG group 5.0% and Meiji Yasuda 4.4%; UBS AG Hong Kong held 5.7% as nominee at end-2025\. In October 2025 Ryobi arranged a secondary offering so holders could sell and widen the free float, alongside a ¥1.5bn buyback. No activist is on the register, so a re-rating is likelier to come from management’s capital policy than from pressure. *Sources: company filings, Q3 FY26 results (5 Nov 2026), results presentations and briefing transcripts (logmi), EDINET large-shareholding reports, Kabutan, Cox Automotive, Ducker Carlisle, Nemak filings, market data. Prices as of 10 Nov 2026; ownership per filings to October 2026\. Orange = Nava assumption or estimate. 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