BESTERRA CO.,LTD FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥8.07B
• Operating Income: ¥535M
• Net Income: ¥219M
• EPS: ¥48.62

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Bestera Co., Ltd. (TSE: 1433) reported FY2026 Q3 (cumulative) consolidated results under JGAAP showing modest topline growth but a sharp recovery in profitability. Revenue was 80.68 billion yen-equivalent at the "oku" scale (80.68), up 0.8% YoY, while operating income rose 305.4% YoY to 5.35, highlighting substantial operating leverage. Gross profit margin registered 15.3% (gross profit 12.37), indicating improved project mix or better cost control versus the prior year. SG&A was 11.05, a ratio of 13.7% of sales, implying good cost discipline relative to the revenue base. Ordinary income was 5.29 (+123.5% YoY), and reported profit before tax was 4.11; the gap versus ordinary income suggests net extraordinary losses during the period. Net income came in at 4.36 (+99.5% YoY), delivering a net margin of 5.4% and a calculated ROE of 8.0% per the provided DuPont bridge. The DuPont components show net margin of 5.4%, asset turnover of 0.92x, and financial leverage of 1.61x (assets/equity), collectively yielding ROE of 8.0%. Liquidity appears solid with current assets of 71.30 against current liabilities of 52.93 (current ratio 1.35x), and the company holds significant financial assets (cash 15.99 and investment securities 34.03). Interest-bearing debt totals 36.23 (short-term 30.00, long-term 6.23), implying gross leverage that is manageable given interest coverage of 36.1x and the scale of equity (54.46). Equity-to-asset ratio is robust at roughly 62% (54.46 / 87.72), underscoring a conservative balance sheet. The effective tax rate printed high at 46.8% based on the provided figures, which may reflect tax adjustments or timing effects. Cash flow statements were not disclosed, limiting assessment of earnings-to-cash conversion; however, working capital is positive at 18.37, and liquidity looks adequate. Dividend inputs (DPS/total dividend) were not reported, but a calculated payout ratio of 42.3% against EPS of 48.62 yen implies an indicative DPS around 20–21 yen if fully annualized on the current run-rate. Overall, the company exhibits improved profitability on stable revenue, strong solvency, and ample financial assets that buffer execution risks in a project-driven business. Key uncertainties stem from the lack of cash flow disclosure, project phasing, and the reconciliation between ordinary income, pretax profit, and tax expense.

Profitability Analysis

roe_decomposition: - Net profit margin: 5.4% (Net income 4.36 / Revenue 80.68). - Asset turnover: 0.92x (Revenue 80.68 / Total assets 87.72). - Financial leverage: 1.61x (Assets 87.72 / Equity 54.46). - Implied ROE: 8.0%, consistent with reported calculated ROE. margin_quality: - Gross margin: 15.3% (12.37 / 80.68), suggesting improved cost discipline or favorable mix in demolition/engineering projects. - SG&A ratio: 13.7% (11.05 / 80.68), leaving an operating margin of 6.6% (5.35 / 80.68). - Ordinary margin: 6.6% (5.29 / 80.68). - Net margin: 5.4%. The spread between ordinary income (5.29) and profit before tax (4.11) indicates net extraordinary losses (~1.18); despite this, net margin remains healthy. operating_leverage: Revenue grew 0.8% YoY while operating income rose 305.4% YoY, indicating significant operating leverage from better gross profitability and/or SG&A efficiency. The jump implies prior-year trough profitability and improved execution this period. Interest burden is low (interest expense 0.15), so most leverage effects are operational.

Growth Assessment

revenue_sustainability: Topline growth of 0.8% YoY is modest and consistent with a stable order inflow environment. Given the project-based nature of the business, revenue depends on order timing and progress recognition; sustained growth will require steady backlog replenishment and timely project execution. profit_quality: Profit expansion far outpaced revenue, driven by margin recovery. The high effective tax rate (46.8%) and the gap between ordinary income and pretax profit suggest non-recurring items and tax timing effects; core operating improvement (OI margin 6.6%) appears the main driver. Non-operating income (1.49) was supported by dividend income (0.56), which is recurring but not core. outlook: If current mix and execution are maintained, operating margins can remain elevated versus the prior year. However, growth visibility hinges on order backlog, project pipeline in plant demolition/engineering, and input cost stability. A normalization of extraordinary items and tax rate could further stabilize net profit.

Financial Health

liquidity: - Current assets 71.30 vs current liabilities 52.93; current ratio 1.35x and quick ratio 1.35x (inventories not disclosed). - Working capital 18.37 supports near-term obligations. - Cash and deposits of 15.99 provide a liquidity cushion, though operating cash flow data are unavailable. solvency: - Total equity 54.46 vs total assets 87.72 implies an equity ratio of ~62.1%, indicating a solid capital base. - Interest coverage is strong at 36.1x (operating income 5.35 / interest expense 0.15). - Effective tax rate is elevated (46.8%), but this affects profitability rather than solvency. capital_structure: - Interest-bearing debt: short-term 30.00 and long-term 6.23 (total 36.23). - Gross D/E (interest-bearing) ~0.67x (36.23 / 54.46); net of cash, net debt ~20.24, implying net D/E ~0.37x. - Significant investment securities (34.03) enhance financial flexibility, though liquidity depends on their nature (strategic vs. marketable).

Cash Flow Quality

earnings_quality: OCF is unreported, limiting direct assessment of earnings-to-cash conversion. The combination of higher operating margin and positive working capital suggests no obvious stress, but confirmation via OCF is needed. fcf_analysis: Capex and OCF are unreported; therefore, FCF cannot be derived. Balance sheet indicates limited capex intensity (intangibles 1.26, goodwill 1.16), consistent with an asset-light service model, but this requires validation. working_capital: Current assets exceed current liabilities by 18.37, and the company likely relies on project receivables and advance payments; receivables and inventories were not disclosed, so turnover metrics cannot be calculated.

Dividend Sustainability

payout_ratio_assessment: Reported payout ratio (calculated) is 42.3% based on EPS of 48.62 yen, implying moderate distributions aligned with profitability. fcf_coverage: OCF and capex are unreported, so FCF coverage cannot be assessed. Cash (15.99) and sizable financial assets (investment securities 34.03) offer a buffer for distributions in the absence of FCF disclosure. policy_outlook: With ROE at 8.0% and leverage low, a steady dividend appears compatible with the balance sheet. Indicative DPS would be around 20–21 yen if the 42.3% payout were maintained; actual policy depends on order visibility, project cash cycles, and capital allocation priorities.

Risk Assessment

Business Risks:

• Order timing and backlog volatility inherent in project-based demolition/engineering
• Execution risk on large, technically complex dismantling projects (schedule delays, cost overruns)
• Input cost inflation (labor, materials, subcontracting) compressing gross margins
• Safety and compliance incidents affecting operations and reputation
• Customer concentration and cyclical exposure to industrial capex and facility renewal
• Permitting and environmental regulation changes impacting project timelines

Financial Risks:

• Cash flow timing risk due to receivable collection and milestone-based billing
• Market risk on investment securities (34.03) impacting non-operating income and equity valuation
• Refinancing/interest rate risk on short-term borrowings (30.00) despite low interest burden today
• Potential tax volatility given the high effective tax rate and extraordinary item impacts

Key Concerns:

• Limited disclosure of cash flow statements, capex, and working capital details restricts earnings quality assessment
• Discrepancy between ordinary income and pretax profit implies extraordinary losses; normalization uncertain
• Sustainability of elevated operating margin with only modest revenue growth remains to be demonstrated

Investment Implications

Key Takeaways:

• Strong margin recovery: operating income +305% YoY on +0.8% revenue indicates improved execution and cost control
• Healthy balance sheet: equity ratio ~62%, interest coverage >36x, net D/E ~0.37x
• Ample financial assets (cash + investment securities ~50) bolster resilience and optionality
• Dividend capacity appears adequate with a calculated payout ratio of ~42%, though FCF is undisclosed
• Earnings composition includes non-operating dividend income (0.56) and extraordinary items; headline to core normalization should be monitored

Metrics to Watch:

• Order backlog and book-to-bill ratio
• Project gross margin and cost variance
• Operating cash flow and FCF conversion
• Receivables days and advance billing/liabilities trends
• Extraordinary gains/losses and effective tax rate normalization
• Leverage mix (short-term vs. long-term debt) and interest costs

Relative Positioning: Within Japan’s demolition/plant engineering niche, Bestera currently combines improving operating margins with conservative leverage and sizable financial asset holdings, positioning it as financially resilient but still reliant on project timing for sustained growth.

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
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis