KANRO makes candy and gummies in Japan. Brands include "Puré Gummy" (their main growth engine), throat lozenges, and a premium direct-channel operation. They hold the #1 position in Japan's candy market and #2 in gummies, with Mitsubishi Corporation (~29.5%) as anchor shareholder.
Operating margins of ~13.5% — exceptional for a confectionery manufacturer. ROIC proxy ~19% on an equity basis, rising from ~7.5% in 2021 as the business shifted toward higher-value gummies and premium SKUs. Net cash balance sheet. 40% payout ratio with a floor dividend that has grown each year.
The business is executing. **FY2025: revenue +9.4%, operating profit +9.5%, beat its own (already-raised) guidance.**Q1 FY2026 came in at +6.2% revenue with 16.1% operating margin. Gummy sales have grown to nearly 50% of total revenue — the mix shift that's been driving margin expansion is intact.
The stock, however, fell roughly 55% from its 52-week high of ¥2,470 to around ¥1,100 today — almost entirely multiple compression rather than fundamental deterioration. The business was priced at ~20x forward earnings in January. It's now at roughly ~13x forward earnings on FY2026 guidance of ¥81.79 EPS.
Optionality worth noting: Kanro America launched in 2025 — the US gummy market is roughly 11x the size of Japan's. Too early to model in, but it's real and operational now. A new gummy production line is also coming online in July 2027, adding ~50% capacity to the existing base.
Risks: The moat is brand and execution, not structural lock-in — gummy competition is intensifying and management says so explicitly. The new capacity line doesn't ship until mid-2027, so near-term growth depends on current supply. Japan confectionery is a mature market; the whole thesis relies on gummy mix shift and the US being more than a narrative. And it's a small Japanese mid-cap with thin liquidity.