Yuka’s Weekend Whisper 4/25/25: Kanro Inc.(2216): OP margin continued to climb, but +12% stock reaction?

A throat drop and gummy co, Kanro (¥65 bn market cap, PE 19.4x, PB 3.55x, ROE 19.4x, no debts) reported its Q1 FY12/25 results on 4/25/25. The stock shot up by 12.3%, reacting to the below #s.

Sales up 7.8% (Y/Y)to Y 8.21Bn

Hard candies: +8.2% core brands (Kenkou nodo ame, non sugar nodo ame) performed well

Gummies: + 6.4% also core brand did well (Pure Gummy, Candemina)

OP: up 15.2% to Y1.4Bn.

OP margin: 15.9% in Q1 FY24 to 17% in Q1 FY25

The candy industry (Gummies in particular) continues to show impressive growth, supported by rising consumer interest in candies and gummies as a convenient way to boost energy and take supplements. Even in Japan, where the population is rapidly declining.

 

Hard Candy sales grew 8.4% Y/Y and Gummy 22.6%

Kanro share:

Hard candy 19.2% (19.6% in Q1 FY 12/24)

Gummy: 14.5% (16.8% in Q1 FY 12/24)

Q1-Q3/FY12 24 share

Hard candy 19.3% (21.4% in Q1-Q3 FY 12/23)

Gummy: 16.2% (15.2% in Q1 -Q3 FY 12/23)

My take:

Sales growth was decent, and the operating profit (OP) increase was solid, although a 12% jump might be slightly overdone. Investors may be gravitating towards no-tariff-related names. This well-known candy brand benefits from a management team adept at adapting to changing consumer tastes, particularly the shift toward gummies.

 

While market share experiences minor fluctuations from quarter to quarter, it remains at a consistently high level. With the candy market continuing to grow in Japan, the gummy segment saw a compound annual growth rate (CAGR) of 21.5% from 2021 to 2024. Though predicting sustained growth in the gummy market is challenging, Kanro has demonstrated flexibility and adaptability to evolving consumer preferences. This resilience solidifies their business model as “defendable.”

Interested in my 10/24 full note on Kanro? Please DM me.

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