MIRAIT ONE Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥258.84B
• Operating Income: ¥7.85B
• Net Income: ¥4.85B
• EPS: ¥51.83

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: A strong FY2026 Q2 recovery in profitability driven by operating leverage and non-operating tailwinds, albeit with still-low capital efficiency and limited visibility on cash flow. Revenue grew 3.6% YoY to 2,588.36, while operating income surged 67.8% YoY to 78.51, demonstrating meaningful margin recovery. Ordinary income rose 74.4% YoY to 85.30, aided by a net non-operating gain of 6.79 (non-op income 11.70 minus non-op expenses 4.91). Net income jumped 226.1% YoY to 46.25, reflecting both stronger operations and a low prior-year base. Operating margin expanded to 3.03%, from roughly 1.87% a year ago (+116 bps). Ordinary margin improved to 3.29% from about 1.96% (+133 bps). Net margin rose to 1.79% from about 0.57% (+122 bps), indicating broad-based margin recovery across the P/L. Gross margin stands at 14.2%, suggesting better project mix and execution but still leaves thin room for error in a labor-intensive business. Earnings quality cannot be verified because operating cash flow was unreported; therefore, OCF/NI and FCF coverage are not assessable this quarter. Liquidity is robust with a current ratio of 229% and quick ratio of 229%, and interest coverage is strong at 19.43x, mitigating near-term solvency concerns. Leverage remains moderate with D/E at 0.85x and calculated equity ratio around 54% (Total equity 2,677.65 vs total assets 4,964.22). That said, ROIC is a weak 1.7%, highlighting capital efficiency challenges despite cyclical profit recovery. The effective tax rate is elevated at 42.4%, likely reflecting non-deductible items (e.g., goodwill amortization under JGAAP) that weigh on net profitability. The non-operating income ratio of 25.3% underscores a meaningful contribution from outside core operations, which may not be fully recurring. With goodwill of 363.33 and intangible assets of 750.41, impairment and amortization remain structural headwinds to ROE/ROIC. Forward-looking, sustaining the higher operating margin and lifting ROIC above 5% will be critical, alongside demonstrating cash conversion and disciplined capital allocation to support dividends.

Profitability Analysis

ROE decomposition (DuPont): ROE 1.7% = Net Profit Margin (1.8%) × Asset Turnover (0.521) × Financial Leverage (1.85x). The largest driver of YoY improvement is the Net Profit Margin, which expanded from roughly 0.57% to 1.79% (+122 bps), powered by operating margin expansion and non-operating gains. Asset turnover at 0.521 remains modest, reflecting a balance sheet with significant intangibles and project-related working capital; no clear evidence of efficiency improvement is available this quarter. Financial leverage of 1.85x (Assets/Equity) is stable and not the primary driver of ROE change. Business drivers: stronger project execution and mix improved operating margin to 3.03%, while non-operating gains (dividends 2.91 and interest income 1.59) and lower non-operating expenses netted a positive contribution. Sustainability: operating margin gains could be partly sustainable if cost discipline persists; however, the non-operating component is less predictable and tax rate at 42.4% dampens net margin durability. Watch for signs of negative operating leverage if SG&A were to re-accelerate; current data show SG&A of 288.65 but line-item detail is unreported, limiting diagnostics. Flag: SG&A growth vs revenue growth cannot be assessed due to missing YoY SG&A, but the SG&A burden (SG&A/revenue ~11.2%) remains significant in the context of a 14.2% gross margin.

Growth Assessment

Top-line growth of 3.6% YoY to 2,588.36 indicates steady demand, likely underpinned by telecom-related infrastructure and solutions. Profit growth was outsized: operating income +67.8% and ordinary income +74.4%, implying strong operating leverage and/or normalization from last year’s softer base. Net income +226.1% reflects both core improvement and a low base effect, with additional support from non-operating gains. Operating margin expanded by about 116 bps YoY to 3.03%, evidencing better project pricing and cost control. Non-operating income of 11.70 (dividends 2.91, interest 1.59) provided incremental lift; this is less reliable than operating profit for future periods. Revenue sustainability into 2H hinges on order intake and backlog quality (unreported), as well as customer capex cycles in telecom and public sectors. Profit quality would be more convincing with corroborating OCF; current quarter lacks CF data. Outlook: maintaining a 3%+ operating margin through 2H would support continued ROE improvement, but achieving a ROIC above 5% will require either higher margins, improved asset turnover, or portfolio optimization. Effective tax rate normalization could further aid net margin but may remain structurally high under JGAAP due to amortization of intangibles.

Financial Health

Liquidity: Current ratio 229% and quick ratio 229% indicate ample short-term coverage; no warning (both >1.0). Working capital is strong at 1,566.25. Maturity profile: short-term loans of 170.83 are well covered by cash and deposits of 540.52; current assets of 2,780.58 comfortably exceed current liabilities of 1,214.33, implying low maturity mismatch risk. Solvency: Debt-to-Equity 0.85x (moderate), calculated interest-bearing debt approximately 574.78 (short-term 170.83 + long-term 403.95). Interest coverage of 19.43x (operating income/interest expense) is strong (>5x benchmark). Capital structure: Total equity 2,677.65 implies a calculated equity ratio near 54%, providing balance sheet resilience. Off-balance sheet items: none reported; disclosures on guarantees or operating lease obligations are unavailable this quarter. No thresholds breached (Current ratio well >1.0; D/E <2.0).

Cash Flow Quality

OCF, FCF, and working capital details are unreported, so OCF/NI cannot be assessed and FCF sustainability cannot be confirmed. Consequently, earnings quality cannot be validated through cash conversion metrics this quarter. With interest coverage at 19.43x and ample liquidity, near-term cash strain appears unlikely, but confirmation awaits OCF disclosure. Potential areas to monitor once disclosed: changes in receivables and unbilled/contract assets typical in project businesses, and payables timing, which can swing OCF. No evidence of working capital manipulation can be inferred due to missing AR/AP/inventory data.

Dividend Sustainability

The calculated payout ratio is 148.1%, which would be unsustainably high on earnings alone if accurate; however, DPS and total dividends are unreported, and OCF/FCF data are missing. Without FCF information, coverage of dividends by free cash flow is not assessable. Balance sheet strength (equity ratio ~54%, cash 540.52) provides some flexibility, but recurring distributions should align with mid-cycle FCF rather than episodic non-operating gains. Policy outlook: management may aim for stable/gradual dividend increases typical of infrastructure service firms, but to sustain this, the company must demonstrate consistent OCF conversion and progress on ROIC uplift.

Risk Assessment

Business Risks:

• Project execution risk in fixed-price contracts affecting gross margin (14.2% leaves limited buffer).
• Customer capex cycle dependency, particularly telecom infrastructure demand timing.
• Labor cost inflation and skilled labor shortages compressing margins.
• High effective tax rate (42.4%) structurally dampening net profitability.
• Goodwill and intangibles (363.33 and 750.41) raise amortization and impairment risk.

Financial Risks:

• Low ROIC at 1.7% signals weak capital efficiency and value-creation risk.
• Non-operating income reliance (non-operating income ratio 25.3%) introduces earnings volatility.
• Limited visibility on cash flow (OCF/FCF unreported) obscures dividend coverage and working capital health.
• Potential interest rate risk on floating-rate debt, albeit mitigated by strong coverage (19.43x).

Key Concerns:

• Sustainability of operating margin at ~3% in 2H amid cost pressures.
• Tax rate remaining above 40%, constraining net margin and ROE.
• Possible impairment risk if performance deteriorates relative to carrying intangibles.
• Data limitations (no cash flow, AR/AP/backlog) hinder full quality assessment.

Investment Implications

Key Takeaways:

• Earnings rebound is real at the operating level: OI +67.8% with operating margin up ~116 bps to 3.03%.
• Net income up 226.1% aided by non-operating gains; sustainability depends on core margin retention.
• Balance sheet conservative with equity ratio ~54%, current ratio 229%, and interest coverage 19.43x.
• Capital efficiency remains weak (ROIC 1.7%, ROE 1.7%), requiring margin and asset-turn improvements.
• Cash conversion is the biggest missing piece; OCF/FCF unreported this quarter.

Metrics to Watch:

• Order intake and backlog/book-to-bill for 2H revenue visibility.
• Operating cash flow and FCF; OCF/NI target >1.0.
• Working capital turns: DSO/DPO/unbilled balances when disclosed.
• Operating margin sustainability vs SG&A ratio trajectory.
• ROIC progress toward >5% medium-term; tax rate normalization potential.
• Non-operating income dependence and interest expense trend.

Relative Positioning: Within domestic engineering/telecom-infrastructure peers, the company shows stronger near-term margin recovery and solid balance sheet health but lags on capital efficiency (ROIC/ROE). Sustained improvement will hinge on cash conversion and maintaining 3%+ operating margins while managing elevated tax burden and intangible-related headwinds.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
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