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Omega Investment Co., Ltd.

Cosmo Bio (Company note – 1Q update)

Coverage
Share price (6/25) ￥1,160 Dividend Yield (25/12 CE) 4.3 %
52weeks high/low ￥888/1,229 ROE(24/12) 3.0 %
Avg Vol (3 month)  3.2 thou shrs Operating margin (24/12) 3.2 %
Market Cap ￥7.02 bn Beta (5Y Monthly) 0.1
Enterprise Value ￥3.91 bn Shares Outstanding 6.048 mn shrs
PER (25/12 CE) 15.4 X Listed market TSE Standard
PBR (24/12 act) 0.8 X    
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1Q FY12/2025: Higher revenue but lower profit, generally in line with the plan. Earnings improvement is expected through productivity enhancement.

◇ Highlights of 1Q FY12/2025 results

Cosmo Bio announced its 1Q FY12/2025 results on May 9, 2025. While the results showed an increase in revenue and a decrease in profit, they were generally in line with the company’s plan.

Net sales was 3.09 billion yen (+5% YoY), operating profit was 270 million yen (-10% YoY), ordinary profit was 290 million yen (-2% YoY), and net profit attributable to owner of parent was 210 million yen (-7% YoY).

Revenue was supported by continued solid domestic demand for life science-related products and the contribution from the start of sales in the U.S. of products from the Institute of Medical Science, announced in November last year. Although the yen depreciated compared to the same period last year (actual rate: 152 yen/USD vs. 146 yen/USD in 1Q FY12/2024; full-year assumption: 152 yen/USD), the gross profit margin improved to 34.2% (+0.7pt YoY) thanks to price revisions and a higher ratio of value-added products. On the other hand, selling, general, and administrative expenses increased as expected, mainly due to personnel costs, resulting in a decline in operating profit. There were no major changes in the balance sheet, including inventories.

◇ 1H and Full-Year FY12/2025 Earnings forecasts unchanged

The company has maintained its forecasts for both the first half and full year.

Assuming an exchange rate of 152 yen/USD (vs. 149 yen/USD in FY12/2024), the company forecasts for the first half:

  • Net sales of 5.5 billion yen (+7% YoY)
  • Operating profit of 290 million yen (-10% YoY)
  • Ordinary profit of 360 million yen (+6% YoY)
  • Net profit attributable to owner of parent of 280 million yen (+8% YoY)

For the full year, the forecasts are:

  • Net sales of 10.7 billion yen (+6% YoY)
  • Operating profit of 490 million yen (+53% YoY)
  • Ordinary profit of 580 million yen (+59% YoY)
  • Net profit attributable to owner of parent of 430 million yen (+64% YoY)

The underlying assumption is that the weaker yen’s negative impact on the cost ratio and increased SG&A expenses will be offset by productivity improvements through DX, resulting in higher profits.

Dividend forecasts are also unchanged (interim dividend of 25 yen, year-end dividend of 25 yen), and the company continues its share buyback program.

◇  Stock price trends and points to watch

The company’s stock price has been rising steadily since August 5, 2024, when initiatives set forth in “to achieve management conscious of capital costs and stock prices” were announced. Except for a temporary sharp market decline after the FY12/2024 results announcement on February 14, 2025, the share price has continued to show a gradual upward trend. It is currently trading stably around 1,150 yen.

This reflects the lack of concern about downside risk in valuation, with a reasonable forecast PER of 15.4x, a PBR of 0.7x, and a forecast dividend yield of 4.3%. Additionally, initiatives to restrain the denominator of ROE—such as a stable dividend policy and share buybacks—are underway.

Company profile

Cosmo Bio Co., Ltd. is a trading company specializing in biotechnology with the objective of ‘contributing to the advancement of life science’. It is one of the leading providers of life science research reagents, offering as many as 12 million items from approximately 500 manufacturers worldwide. In recent years, it has expanded its trading company functions globally and entered into contract services and proprietary manufacturing and sales business. Expectations are high for this contribution to earnings, improved capital efficiency and higher PBR.

Going forward, attention will shift to expanding the numerator of ROE, i.e., profits, toward achieving an ROE of 8%.

In the near term, key points include trends in the dollar-yen exchange rate (currently more favorable than assumed) and whether productivity improvements in the second half will lead to a profit recovery trend.

 Furthermore, expectations are high for:

  • The globalization of the trading company business using IT (strengthening exports to expand profits and reduce foreign exchange risk),
  • The launch of “Scientist3,” a matching site for commissioned services
  • The visualization of the potential of the Chicken Egg bioreactor business.

As these factors come together, the share price is expected to begin undergoing a valuation adjustment toward a PBR of 1x, with an ROE of 8% in sight.

Key financial data

Unit: million yen 2020/12 2021/12 2022/12 2023/12 2024/12 2025/12CE
Sales 8,092 9,231 9,553 9,340 10,037 10,700
EBIT (Operating Income) 753 1,050 817 521 319 490
Pretax Income 1,008 1,099 790 653 369 580
Net Profit Attributable to Owner of Parent 674 737 517 442 262 430
Cash & Short-Term Investments 3,259 3,555 3,036 3,025 2,693  
Total assets 9,640 10,072 10,313 10,872 11,723  
Total Debt 20 28 27 25 23  
Net Debt -3,239 -3,527 -3,009 -3,000 -2,670  
Total liabilities 1,776 1,750 1,693 1,844 2,166  
Total Shareholders’ Equity 7,358 7,787 8,052 8,445 8,968  
Net Operating Cash Flow 803 648 306 744 241  
Capital Expenditure 76 156 119 120 319  
Net Investing Cash Flow 42 -145 -313 -766 -217  
Net Financing Cash Flow -97 -420 -236 -201 -479  
Free Cash Flow 767 617 251 677 25  
ROA (%) 7.27 7.48 5.07 4.17 2.32  
ROE (%) 9.49 9.73 6.53 5.36 3.01  
EPS (Yen) 113.7 126.9 89.1 75.8 45.0 75.5
BPS (Yen) 1,241.2 1,344.5 1,385.1 1,447.2 1,565.0  
Dividend per Share (Yen) 34.00 36.00 36.00 30.00 50.00 50.00
Shares Outstanding (Million shrs) 6.05 6.05 6.05 6.05 6.05  

Source: Omega Investment from company data, rounded to the nearest whole number.

　

Share price

　

Financial data (quarterly basis)

Unit: million yen 　2023/12 　　2024/12 2025/12
  1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
(Income Statement)                  
Sales 2,828 1,999 2,050 2,463 2,943 2,186 2,280 2,628 3,093
Year-on-year -7.2% -3.1% 1.7% 1.5% 4.1% 9.4% 11.2% 6.7% 5.1%
Cost of Goods Sold (COGS) 1,789 1,273 1,350 1,678 1,956 1,460 1,522 1,770 2,034
Gross Income 1,039 726 700 785 987 726 758 858 1,059
Gross Income Margin 36.7% 36.3% 34.1% 31.9% 33.5% 33.2% 33.2% 32.6% 34.2%
SG&A Expense 638 668 711 712 681 708 713 908 785
EBIT (Operating Income) 401 58 -11 73 306 18 45 -50 274
Year-on-year -30.9% 23.4% -114.5% -36.0% -23.7% -69.0% -509.1% -168.5% -10.5%
Operating Income Margin 14.2% 2.9% -0.5% 3.0% 10.4% 0.8% 2.0% -1.9% 8.9%
EBITDA 435 94 28 112 336 50 79 -10 308
Pretax Income 416 136 2 99 353 37 48 -69 321
Consolidated Net Income 279 98 1 83 240 27 34 -32 220
Minority Interest 15 1 -5 8 10 -2 2 -3 7
Net Income ATOP 264 97 5 76 230 28 33 -29 212
Year-on-year -27.9% 136.6% -89.4% 20.6% -12.9% -71.1% 560.0% -138.2% -7.8%
Net Income Margin 9.3% 4.9% 0.2% 3.1% 7.8% 1.3% 1.4% -1.1% 6.9%
                   
(Balance Sheet)                  
Cash & Short-Term Investments 3,026 3,852 3,637 3,025 2,813 3,224 3,044 2,693 2,497
Total assets 10,695 10,852 10,773 10,872 11,594 11,739 11,333 11,723 11,516
Total Debt 183 228 219 25 316 418 370 23 345
Net Debt -2,843 -3,624 -3,418 -3,000 -2,497 -2,806 -2,674 -2,670 -2,152
Total liabilities 1,865 1,762 1,772 1,844 2,101 1,953 1,853 2,166 2,160
Total Shareholders’ Equity 8,250 8,509 8,426 8,445 8,903 9,197 8,889 8,968 8,763
                   
(Profitability %)                  
ROA 3.91 4.44 4.12 4.17 3.66 3.01 3.31 2.32 2.12
ROE 5.13 5.69 5.24 5.36 4.76 3.84 4.23 3.01 2.77
(Per-share) Unit: JPY                  
EPS 45.4 16.6 0.9 13.0 39.4 4.8 5.7 -5.1 37.1
BPS 1,419.2 1,458.0 1,443.9 1,447.2 1,525.8 1,569.7 1,532.0 1,565.0 1,536.8
Dividend per Share 0.00 14.00 0.00 16.00 0.00 14.00 0.00 36.00 0.00
Shares Outstanding(million shrs) 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05

Source: Omega Investment from company materials

Financial data (full-year basis)

Unit: million yen 2015/12 2016/12 2017/12 2018/12 2019/12 2020/12 2021/12 2022/12 2023/12 2024/12
(Income Statement)                    
Sales 7,357 7,427 7,068 7,261 7,590 8,092 9,231 9,553 9,340 10,037
Year-on-year 1.7% 1.0% -4.8% 2.7% 4.5% 6.6% 14.1% 3.5% -2.2% 7.5%
Cost of Goods Sold 4,976 4,655 4,535 4,607 4,710 4,940 5,572 6,112 6,090 6,708
Gross Income 2,381 2,772 2,533 2,654 2,880 3,152 3,659 3,441 3,250 3,329
Gross Income Margin 32.4% 37.3% 35.8% 36.6% 37.9% 39.0% 39.6% 36.0% 34.8% 33.2%
SG&A Expense 2,181 2,257 2,339 2,330 2,474 2,399 2,609 2,624 2,729 3,010
EBIT (Operating Income) 200 515 194 324 406 753 1,050 817 521 319
Year-on-year 23.5% 157.5% -62.3% 67.0% 25.3% 85.5% 39.4% -22.2% -36.2% -38.8%
Operating Income Margin 2.7% 6.9% 2.7% 4.5% 5.3% 9.3% 11.4% 8.6% 5.6% 3.2%
EBITDA 279 600 350 507 613 928 1,216 958 669 455
Pretax Income 407 456 400 403 388 1,008 1,099 790 653 369
Consolidated Net Income 249 276 250 278 246 701 768 552 461 269
Minority Interest 19 22 12 17 8 27 31 35 19 7
Net Income ATOP 230 254 237 260 237 674 737 517 442 262
Year-on-year 14.4% 10.4% -6.7% 9.7% -8.8% 184.4% 9.3% -29.9% -14.5% -40.7%
Net Income Margin 3.1% 3.4% 3.4% 3.6% 3.1% 8.3% 8.0% 5.4% 4.7% 2.6%
                     
(Balance Sheet)                    
Cash & Short-Term Investments 1,498 1,948 1,483 2,268 2,516 3,259 3,555 3,036 3,025 2,693
Total assets 7,790 7,934 8,126 8,501 8,890 9,640 10,072 10,313 10,872 11,723
Total Debt 20 20 20 20 20 20 28 27 25 23
Net Debt -1,478 -1,928 -1,463 -2,248 -2,496 -3,239 -3,527 -3,009 -3,000 -2,670
Total liabilities 1,412 1,350 1,286 1,445 1,566 1,776 1,750 1,693 1,844 2,166
Total Sharehjolders’ Equity 5,951 6,135 6,381 6,581 6,843 7,358 7,787 8,052 8,445 8,968
                     
(Cash Flow)                    
Net Operating Cash Flow 129 573 294 909 569 803 648 306 744 241
Capital Expenditure 175 252 546 152 171 76 156 119 120 319
Net Investing Cash Flow -263 99 -440 -186 -135 42 -145 -313 -766 -217
Net Financing Cash Flow -151 -107 -109 -85 -85 -97 -420 -236 -201 -479
Free Cash Flow 80 444 -185 858 428 767 617 251 677 25
                     
(Profitability %)                    
ROA 2.88 3.23 2.96 3.14 2.74 7.27 7.48 5.07 4.17 2.32
ROE 3.83 4.20 3.80 4.03 3.55 9.49 9.73 6.53 5.36 3.01
Net profit margin 3.13 3.42 3.37 3.59 3.14 8.33 7.98 5.41 4.73 2.61
Asset turnover ratio 0.92 0.94 0.88 0.87 0.87 0.87 0.94 0.94 0.88 0.89
Financial leverage 1.33 1.30 1.28 1.28 1.30 1.30 1.30 1.29 1.28 1.30
(Per-share) Unit: JPY                    
EPS 38.8 42.8 40.0 43.9 40.0 113.7 126.9 89.1 75.8 45.0
BPS 1,003.9 1,034.9 1,076.4 1,110.2 1,154.4 1,241.2 1,344.5 1,385.1 1,447.2 1,565.0
Dividend per Share 16.00 18.00 14.00 14.00 14.00 34.00 36.00 36.00 30.00 50.00
Shares Outstanding(million shrs) 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05

Source: Omega Investment from company materials

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