Comprehensive Financial Analysis: KOSE Corp vs. Shiseido Co Ltd

This report offers a comprehensive financial analysis comparing KOSE Corporation and Shiseido Co Ltd, two leading Japanese personal care companies. It includes an industry overview using Porter's Five Forces, followed by company-specific SWOT analyses. The study evaluates financial performance using key ratios such as profitability, efficiency, solvency, and liquidity, derived from the companies' annual reports from 2012 to 2016. It also considers recent developments, auditor's reports, and corporate governance practices. The analysis extends to forecasts, potential investment strategies, and a review of share price trends. The report concludes with recommendations for KOSE Corp, emphasizing inventory control and optimal financial structure, while highlighting KOSE's strengths in profitability, liquidity, and investor returns compared to Shiseido. The document is available on Desklib, a platform offering study tools and solved assignments for students.

Financial Analysis

Porter five force analysis of personal care products sector:
Bargaining power of buyers:
High
Bargaining power of suppliers:
Low
Threat of substitutes: High Threat from new entrants: Low
Competition intensity: High
Industry overview

KOSE Corp
 KOSE Corporation is one of the leading Japanese
company which operates at global level.
 It offers personal care products to the customers such
as cosmetic, skin and hair care.
 Further, to assess the financial position and
performance of KOSE in against to the competitor
Shiseido has been considered.
Company overview

Shiseido Co Ltd
 Shiseido is known as the producer of quality skin and
hair care, cosmetic and fragrance related products.
 Such Japanese company has secured first position in
Japan and fifth in the world.
 Both the companies which are undertaken for the study
listed on and traded through Tokyo stock exchange.
CONTD..

 With the motive to evaluate financial results of KOSE over the
rival firm such as Shiseido Co Ltd data has been gathered
through the annual reports of such companies.
 Hence, by accessing income statement and balance sheet of
KOSE as well as Shiseido, pertaining to 5 years from 2012 to
2016, data has been gathered.
 Along with this, to present the better view of issue latest
economic developments and company’s latest announcements as
well as forecasts have also been evaluated. Hence, main source
of information considered for the present study are as follows:
Annual reports of KOSE and Shiseido
Journals and articles related personal care sector
Approach and methodology

 On 4th March 2014, KOSE announced that it has signed
agreement in relation to acquiring 14856 shares.
 This aspect shows that KOSE stake in Tarte accounts for
93.5% respectively whose value is JPY135 significantly.
Review of auditor’s report
 Auditor’s report of KOSE Corp shows that financial
statements of the concerned organization are free from
errors.
 Besides this, auditors entailed in their report that company
has made fair distribution of benefits among the
shareholders and other stakeholders.
Disclosure and announcement by the
companies

 Corporate governance report of KOSE Corp shows that
enhancement of the group’s value is one of the main
objectives of the company.
 Hence, business unit communicates all the business
aspects to the concerned stakeholders by ensuring high
level of transparency and fairness.
 This in turn provides assistance to the firm in establishing
effectual and trustful relationship with the stakeholder’s.
 In addition to this, for managing risk specific committee
has developed by the firm.
Corporate governance report of KOSE
Corp

 Along with, external auditor has appointed by the firm to present the fair view of financial
performance.
CONTD..

On the basis of current performance, market trend as well
as SWOT analysis, it is estimated that in the near future
KOSE corp. will take entry in the developing countries
and thereby attain high margin.
Forecasts and potential investment strategies

SWOT analysis of KOSE Corporation
Strengths
 Effectual control on cost (labor)
 Highly skilled and efficient workforce
 Sound quality management
Weaknesses
 Less emphasis on R&D
 Lower level of focus on promotional campaign
or aspects
Opportunities
 Enhance customer base and profit margin by
taking entry in emerging economies
 Company has opportunity to grab high market
share through innovation and offering new
products as well as services to the customers.
Threats
 Changing rules and regulations
 Presence of strong competitors
Business analysis

SWOT analysis of Shiseido Co Ltd
Strengths
 Effective management
 Sound customer base
 Quality management
 Market leader
Weaknesses
 Lack of training & development
session
 Lack of R&D program
Opportunities
 Expansion of business operations in
global market through mergers and
acquisition
Threats
 Government rules and regulations
CONTD..

Net profit ratio Return on invested
capital %
Profitability ratios
31/3/2015 31/12/2015 31/12/2016 30/8/2017
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
NP ratio
KOSE Corp Shiseido Co Ltd
31/3/2015 31/12/2015 31/12/2016 30/8/2017
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
ROCE
KOSE Corp Shiseido Co Ltd