Research

Rhythm: Precision parts carry profits; household goods remain in loss

RHYTHM CO., LTD. (7769) · Initiated coverage 2026-10-21 · Beluuga AI Research Team · Independent research

Not investment advice or a solicitation. See Important disclosures below.

Business overview

  • Rhythm has two reportable segments. Precision Components makes stamped and molded parts, high-precision dies, EMS and in-vehicle and information equipment for autos, industrial machinery, optical equipment, office and telecom equipment, solar power and home appliances. Household Products makes wall, table and alarm clocks, clock movements, municipal disaster-warning radios, humidifiers and handy fans; a small Other category covers logistics.
  • Precision Components is the larger segment and the main source of profit; Household Products posted operating losses in both the year to March 2025 and the year to March 2026 (see Performance & Balance). The annual report states that no single customer accounts for a tenth or more of consolidated sales.
  • The group has 12 consolidated subsidiaries and 2,432 employees as of March 31, 2026, with manufacturing in Japan, Vietnam, Indonesia and Dongguan, China. Japan, Vietnam and Indonesia are the largest sales regions by customer location, and two subsidiaries, in Hanoi and Indonesia, each exceed a tenth of consolidated sales.
  • The company was founded in 1950 as Rhythm Watch and formed a technical, sales and capital alliance with Citizen Watch in 1953; it merged with two subsidiaries and took its current name in October 2020. During 2025 and 2026 several overseas subsidiaries were renamed under the Rhythm brand, the U.S. clock sales subsidiary was liquidated and a new North American company was established.

Investment case

  1. On June 23, 2025 the company announced a dividend policy with a minimum consolidated payout ratio and a minimum consolidated dividend-on-equity ratio, raised the dividend for the year to March 2026, and introduced a shareholder benefit program. The first-quarter earnings release for the year to March 2027 forecasts the same annual dividend as the prior year, split for the first time into interim and year-end payments.
  2. At March 31, 2026, cash and cash equivalents exceeded interest-bearing debt, and the company also holds investment securities whose valuation gains rose in the first quarter (see Performance & Balance). The company repurchased its own shares in the year to March 2026 and its articles allow buybacks by board resolution.
  3. Under Medium-Term Plan 2027, covering the years to March 2026 through March 2028, the company targets higher sales, operating margin and ROE, and it published disclosures on cost-of-capital and share-price-aware management in March 2024 and March 2025 with a stated aim of raising its price-to-book ratio. Operating profit for the year to March 2026 roughly doubled, with Precision Components profit up on machine-tool, optical, AI data-server and optical-cable parts.
  4. In the first quarter to June 2026, Precision Components sales and profit rose on in-vehicle parts for hybrid vehicles for Japan and North America, plus machine-tool, semiconductor equipment, AI data-server and air-conditioner parts. Order intake for the segment in the year to March 2026 also rose, with a larger year-end order backlog.

Bear case

  1. Household Products has not returned to an operating profit: it lost money in the year to March 2026 despite strong handy fan and humidifier sales, and swung from a profit to a loss in the first quarter to June 2026 because a slow rise in temperatures held back handy fan shipments. The company states that the clock market continues to shrink.
  2. Net income for the year to March 2026 included gains on the sale of fixed assets and real estate and a gain on the liquidation of a subsidiary. The company forecasts lower net income for the year to March 2027 and its plan sets a lower ROE target for that year than the year to March 2026 actual.
  3. Mobility-related parts sales in China and Southeast Asia remained weak in the year to March 2026, and the annual report cites continued weakness at European automakers; in the first quarter these sales were only flat year on year in those regions.
  4. Impairment losses were booked in the year to March 2025, the year to March 2026 and again in Household Products in the first quarter to June 2026, and the first-quarter ordinary profit fell on foreign-exchange losses.

Catalysts

  • Closing of the acquisition of the plating business of Totech Co., Ltd., through a newly split-off company to be renamed Rhythm Totech, is scheduled for September 7, 2026; the board approved it on July 24, 2026 and the company stated it will not disclose the price, citing confidentiality obligations to the seller. A director of Rhythm is listed as the representative director of the company being acquired.
  • Second-quarter results for the year to March 2027, measured against the company's first-half forecast, including whether handy fan sales recover in the summer season, and the first interim dividend under the new policy.
  • Progress toward the Medium-Term Plan 2027 targets for the years to March 2027 and March 2028, including the plan's goals for mobility sales, comfort-product sales and overseas sales share.

Key risks

  • Foreign-exchange movements: the company hedges with forward contracts and currency options, but the first-quarter release cites the weak yen and higher material costs as factors behind the Household Products loss.
  • Concentration of Household Products manufacturing overseas, mainly at the Dongguan, China plant, exposes supply to political, economic and regulatory changes abroad; natural disasters and pandemics are also listed risks.
  • Raw material and parts procurement, product quality and recalls, impairment of fixed assets, and acquisitions or alliances that do not proceed as planned. The forecast for the year to March 2027 does not include any effect of procurement difficulties, price increases or supply-chain disruption tied to tensions in the Middle East.
  • Governance arrangements: the board has 10 directors, of whom four are outside directors, all serving on the audit and supervisory committee, and the articles reduce the quorum for director elections and special resolutions to one-third of voting rights. Citizen Watch Co.,Ltd. heads the list of major shareholders and the list also includes several banks, insurers and Tamron Co.,Ltd. (see Shareholders).

Trading liquidity

Median daily trading value US$0.55mn
Average daily volume 29,988 shares

2025-10-03 to 2026-10-20 (250 trading days). Trading value is daily closing price × daily volume on the Tokyo Stock Exchange.

Assumptions

  • Financial figures on this page come from beluuga.ai's daily data set; trading liquidity is measured over the period shown. We do not use consensus estimates.
  • The company changed its method of aggregating mobility sales starting with Medium-Term Plan 2027, so mobility sales figures in the plan may not be comparable with earlier disclosures.
  • The first-quarter release does not include a quarterly cash flow statement, and treasury shares reported in it include shares held by the employee stock ownership ESOP trust.
  • Qualitative statements are taken from the annual securities report for the year to March 2026 and the first-quarter earnings release for the year to March 2027.

This is independent research. No company paid for or reviewed it. We do not publish ratings, price targets or buy/sell views. Figures on the other slides of this page come from beluuga.ai's daily data set.

Important disclosures

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Overview
Precision Instruments

RHYTHM CO.,LTD.

Rhythm Co., Ltd. operates two core segments: Precision Parts and Living Products. The Precision Parts segment manufactures and sells high-precision molds, precision components, connection terminals, and EMS solutions for automotive, industrial machinery, optical equipment, telecommunications, and solar power applications. The Living Products segment produces and sells clocks (wall, desk, alarm, and digital), clock movements, disaster-prevention radios, humidifiers, and USB fans, targeting both domestic and international consumer markets.

Market Cap
¥30.0B
US$191M
EV
¥17.8B
US$114M
Stock¥3,760▼-0.40%
US$1 = ¥157.05 (2026-10-22)
LTM EV/EBITDA
5.8
x
LTM EV/EBIT
11.4
x
LTM PER
25.5
x
LTM PBR
0.9
x
Stock vs TOPIX (1Y, base=100)vs TOPIX ▼-10.0%pt
100
Oct 22, 25 – Oct 22, 26StockTOPIX
MC → EV Bridge
30.0BUS$191MMarket Cap8.35BUS$53.1M+ Debt12.7BUS$80.7M− Cash7.80BUS$49.6M− Inv. Sec.17.8BUS$114MEV
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Generating insights…
Performance & Balance
Revenue 5Y (¥B)
30.0US$191M'22/331.2US$199M'23/332.6US$208M'24/332.7US$208M'25/334.8US$221M'26/3
EBITDA 5Y (¥B)
2.21US$14.1M'22/32.27US$14.4M'23/32.08US$13.3M'24/32.16US$13.7M'25/33.03US$19.3M'26/3
Net Income 5Y (¥B)
1.03US$6.56M'22/30.79US$5.06M'23/30.48US$3.04M'24/30.76US$4.83M'25/32.31US$14.7M'26/3
Capital Structure
80%
20%
EquityD/E 0.24xDebt
Liquidity vs Debt 5Y (¥B)▲ Net Cash
CashInv. Sec.Debt
12.0US$76.5M1.58US$10.1M'22/312.5US$79.5M4.66US$29.7M'23/314.4US$92.0M5.56US$35.4M'24/316.7US$107M8.02US$51.0M'25/319.9US$127M8.71US$55.5M'26/3
Shareholders
Top 10 hold 40.8%
1
Citizen Watch Co.,Ltd.
7.40%
2
Nippon Life Insurance Company
5.80%
3
Kankuro UESHIMA
5.40%
4
Saitama Resona Bank, Limited
4.40%
5
Sumitomo Mitsui Banking Corporation
4.20%
6
Sumitomo Mitsui Trust Bank, Limited
3.70%
7
Kyoei Fire & Marine Insurance Co., Ltd.
3.10%
8
The Musashino Bank,Ltd.
2.70%
9
Tamron Co.,Ltd.
2.10%
10
Kazuko SATO
2.00%
Management
9 officers
Takeo YUMOTO
Representative Director, President
Apr 1973 Joined the Company Jun 2004 Director, the Company Apr 2009 Representative Director, President, RHYTHM INDUSTRIAL (H.K.) LTD. Jan 2011 Representative Director, President, RHYTHM INDUSTRIAL (DONG GUAN) LTD. Jun 2012 Representative Director, President, Tohoku Rhythm Co., Ltd. (now Rhythm Co., Ltd.) Jun 2013 Director in charge of Precision Business, the Company Jun 2019 Director, Managing Executive Officer in charge of Precision Business, the Company Oct 2020 Director, Senior Managing Executive Officer, General Manager of Production Headquarters, the Company Apr 2022 Director, Executive Vice President Executive Officer, General Manager of Production Headquarters, the Company Apr 2023 Representative Director, President, the Company (current)
1955-02-06
Tatsuya AIZAWA
Director, Managing Executive Officer, General Manager of Administration Headquarters
Apr 1990 Joined Kyowa Bank, Ltd. (now Resona Bank, Ltd.) Jul 2017 Chief Executive Officer, Resona Merchant Bank Asia Ltd. Jul 2019 Joined the Company Apr 2020 General Manager of Group Management Department, the Company Oct 2020 Executive Officer, Deputy General Manager of Administration Headquarters and General Manager of Corporate Planning Department, the Company Apr 2024 Executive Officer, General Manager of Administration Headquarters and General Manager of Corporate Planning Department, the Company Jun 2024 Director, Executive Officer, General Manager of Administration Headquarters and General Manager of Corporate Planning Department, the Company Jun 2026 Director, Managing Executive Officer, General Manager of Administration Headquarters and General Manager of Corporate Planning Department, the Company (current)
1966-05-31
Yoshikazu KITAJIMA
Director, Executive Officer, General Manager of Production Headquarters
Sep 1984 Joined Kyoshin Kogyo Co., Ltd. (later Rhythm Kyoshin Co., Ltd., now Rhythm Co., Ltd.) Apr 2011 General Manager of Technology Department, Kyoshin Kogyo Co., Ltd. May 2015 Director, Kyoshin Vietnam Co., Ltd. May 2017 Director, Rhythm Kyoshin Co., Ltd. Oct 2020 Executive Officer, General Manager of Quality Assurance Department, the Company Apr 2022 Executive Officer, Deputy General Manager of Production Headquarters, the Company Apr 2024 Executive Officer, General Manager of Production Headquarters, the Company Jun 2024 Director, Executive Officer, General Manager of Production Headquarters, the Company Apr 2025 Director, Executive Officer, General Manager of Production Headquarters and in charge of Product Development Department (current)
1962-05-29
Norihisa YAMAMOTO
Director, Executive Officer, General Manager of Sales Headquarters
Jun 1989 Joined Kyoshin Kogyo Co., Ltd. (later Rhythm Kyoshin Co., Ltd., now Rhythm Co., Ltd.) Apr 2013 General Manager of Sales Department, Kyoshin Kogyo Co., Ltd. May 2017 Director, Kyoshin Kogyo Co., Ltd. Oct 2020 Executive Officer, Deputy General Manager of Sales Headquarters, the Company Apr 2023 Executive Officer, General Manager of Sales Headquarters, the Company Jun 2024 Director, Executive Officer, General Manager of Sales Headquarters, the Company Apr 2026 Director, Executive Officer, General Manager of Sales Headquarters and General Manager of Household Products Sales Department, the Company (current)
1969-08-14
Kiyotaka SAKAI
Director, Full-time Audit and Supervisory Committee Member
Jul 1983 Joined the Company Apr 2009 General Manager of Watch Planning Department, Watch Business Division, the Company Jun 2012 Representative Director, President, RHYTHM INDUSTRIAL (H.K.) LTD. Jun 2012 Representative Director, President, RHYTHM INDUSTRIAL (DONG GUAN) LTD. Jun 2016 Executive Officer, General Manager of Watch Business Division, the Company Apr 2018 Executive Officer, General Manager of Compliance Promotion Office and General Manager of Internal Audit Office, the Company Apr 2020 Executive Officer, the Company Jul 2020 Director and Audit and Supervisory Committee Member, the Company (current)
1956-04-16
Hitomi UCHIDA
Outside Director, Audit and Supervisory Committee Member
Apr 1983 Joined Computer Services Corporation (now SCSK Corporation) May 2003 Joined Recruit Co., Ltd. Sep 2004 Joined Pasona Career Asset Co., Ltd. (now Pasona Inc.) Feb 2015 Founded Hagris Inc., Representative Director (current) Aug 2021 Director, SAIKISS Inc. (current) Jun 2022 Outside Director, Audit and Supervisory Committee Member, the Company (current)
1962-05-09
Hideyasu YOSHIDA
Outside Director, Audit and Supervisory Committee Member
Apr 1987 Appointed Public Prosecutor Apr 1994 Registered as Attorney-at-Law May 1997 Joined Abe, Yoshida & Mikami Law and Accounting Office (current) Jan 2004 Instructor in Defense Counsel, Legal Training and Research Institute of the Supreme Court of Japan Apr 2011 Full-time Professor, Toyo University Law School Apr 2017 Professor, Waseda University Graduate School of Law Jun 2024 Outside Director, Audit and Supervisory Committee Member, the Company (current) Apr 2025 Professor, Waseda University Law School (current) Jun 2025 Auditor, Japan Women's University (current)
1959-08-20
Takashi MIYAJIMA
Outside Director, Audit and Supervisory Committee Member
Apr 1984 Joined The Saitama Bank, Ltd. (now Saitama Resona Bank, Ltd.) Jun 2010 Executive Officer in charge of Tama Area, Resona Bank, Ltd. Apr 2015 Executive Officer in charge of Loan Department and Loan Management Department, Saitama Resona Bank, Ltd. Apr 2016 Managing Executive Officer in charge of Loan Department, Saitama Resona Bank, Ltd. Apr 2017 Representative Director, President, Resona Capital Co., Ltd. Jul 2019 Outside Audit & Supervisory Board Member, Ito En, Ltd. Jun 2020 Outside Director, Audit and Supervisory Committee Member, Tokyo Tokushu Densen Co., Ltd. Jun 2021 Outside Auditor, Monteroza Co., Ltd. (current) Jul 2023 Outside Auditor, Alpha Club Musashino Co., Ltd. (current) Jun 2024 Outside Director, Audit and Supervisory Committee Member, the Company (current)
1960-12-09
Satoko KADOTA
Outside Director, Audit and Supervisory Committee Member
Oct 2001 Joined Deloitte Touche Tohmatsu LLC Dec 2005 Joined Global Alliance Realty Co., Ltd. May 2009 Joined Deloitte Touche Tohmatsu LLC Jan 2015 Opened Kadota Certified Public Accountant Office (current) Apr 2020 Auditor, AppBrew Inc. Jun 2024 Auditor, SHINSEKAI Technologies Inc. Sep 2024 Auditor, Cure-Up Inc. (current) Jun 2026 Outside Director, Audit and Supervisory Committee Member, the Company (current)
1974-03-09
Large Shareholding Reports
Kankuro UEJIMA
2026-05-14
5.73%→4.52%
Annual report (as of 2026-03-31): 5.40%
Kankuro UEJIMA
2026-04-06
7.02%→6.00%
Correction filing (name/detail fix only) — ratio carried over from the original filing
Annual report (as of 2026-03-31): 5.40%
DOE 5 Percent Co., Ltd.
2026-04-06
0.00%→0.00%
Correction filing (name/detail fix only) — ratio carried over from the original filing
Kankuro UEJIMA
2026-03-10
6.00%→5.73%
Annual report (as of 2026-03-31): 5.40%
Kankuro UEJIMA
2026-03-06
7.02%→6.00%
Annual report (as of 2026-03-31): 5.40%
Ueshima Mikuro
2026-01-19
8.05%→7.02%
Annual report (as of 2026-03-31): 5.40%
Kankuro UEJIMA
2025-07-31
1.81%→8.05%
Annual report (as of 2026-03-31): 5.40%
Naturari Co., Ltd.
2025-07-30
4.24%→4.24%
Correction filing (name/detail fix only) — ratio carried over from the original filing
Naturari Co., Ltd.
2025-07-30
4.24%→4.24%
Naturari Co., Ltd.
2025-07-29
4.24%→4.24%
Disclosures
No disclosures
Primary Source Filings
TDnet
2026-08-07
Q1 Earnings Flash
FY ending Mar 2027
EDINET
2026-06-22
Annual Securities Report
Period: Apr 2025 – Mar 2026
EDINET
2026-05-14
Large Shareholding Report
EDINETAmended
2026-04-06
Change Report
EDINETAmended
2026-04-06
Change Report
EDINET
2026-03-10
Large Shareholding Report
EDINET
2026-03-06
Large Shareholding Report
EDINET
2026-02-13
Securities Registration Statement
TDnet
2026-02-13
Q3 Earnings Flash
FY ending Mar 2026
EDINET
2026-01-19
Large Shareholding Report
EDINET
2025-11-12
Semi-Annual Securities Report
Period: Apr 2025 – Mar 2026
TDnet
2025-08-08
Q1 Earnings Flash
FY ending Mar 2026
EDINET
2025-07-31
Large Shareholding Report
EDINET
2025-07-30
Large Shareholding Report
EDINETAmended
2025-07-30
Change Report
EDINET
2025-07-29
Large Shareholding Report
EDINET
2025-06-18
Annual Securities Report
Period: Apr 2024 – Mar 2025
TDnet
2025-02-13
Q3 Earnings Flash
FY ending Mar 2025
EDINET
2024-11-14
Semi-Annual Securities Report
Period: Apr 2024 – Mar 2025
TDnet
2024-08-09
Q1 Earnings Flash
FY ending Mar 2025
EDINET
2024-06-21
Annual Securities Report
Period: Apr 2023 – Mar 2024
EDINET
2024-02-13
Quarterly Securities Report
Period: Oct 2023 – Dec 2023
EDINET
2023-11-13
Quarterly Securities Report
Period: Jul 2023 – Sep 2023
EDINET
2023-08-10
Quarterly Securities Report
Period: Apr 2023 – Jun 2023
EDINET
2023-06-21
Annual Securities Report
Period: Apr 2022 – Mar 2023
EDINET
2023-02-13
Quarterly Securities Report
Period: Oct 2022 – Dec 2022
EDINET
2022-11-14
Quarterly Securities Report
EDINET
2022-08-12
Quarterly Securities Report
EDINETAmended
2022-06-30
Amended Annual Securities Report
EDINET
2022-06-22
Annual Securities Report
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