GreenEnergy & Company Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.18B
• Operating Income: ¥304M
• Net Income: ¥81M
• EPS: ¥36.80

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

Green Energy & Company (14360) delivered strong top-line and operating profit growth in FY2026 Q2 (cumulative) under JGAAP on a consolidated basis, with revenue up 48.1% YoY to 71.82 and operating income up 88.0% YoY to 3.04. Gross margin was 17.0%, with SG&A ratio at 14.7%, pointing to a modest improvement in operating leverage versus the prior year given the faster pace of operating profit growth. The operating margin was approximately 4.2%, which is typical for EPC/renewable construction-heavy businesses but leaves limited cushion against cost volatility. Ordinary income of 2.42 implies a negative non-operating contribution, mainly driven by interest expense of 0.41, partly offset by 0.23 of non-operating income. Interest coverage is a healthy 7.48x, consistent with operating income relative to interest burden. Net income was 1.51 (+87.0% YoY), equating to a 2.1% net margin and ROE of 2.8% based on the provided DuPont decomposition. The DuPont metrics (net profit margin 2.1%, asset turnover 0.453x, and financial leverage 2.93x) suggest that current ROE is primarily leverage- and turnover-driven rather than margin-led. Balance sheet liquidity is strong with a current ratio of 263.7% and working capital of 69.83, supported by current assets of 112.50. Leverage is moderate: total liabilities of 82.55 against equity of 54.09 yield a debt-to-equity ratio of 1.53x, and loans total 44.01 (short-term 14.33, long-term 29.68). Cash and deposits of 9.79 imply net debt of roughly 34.22, which appears manageable relative to earnings power and interest coverage. The effective tax rate is high at 39.4%, constraining net margin, and there may be extraordinary or classification effects given that the profit bridge between operating, ordinary, and pre-tax income does not fully reconcile due to unreported line items. EPS (basic) of 36.80 JPY aligns with reported net income and average shares, indicating consistent per-share earnings calculation. Book value per share is calculated at 1,312 JPY, implying a moderate financial leverage of 2.93x (assets/equity). Dividend details are largely unreported; however, a calculated payout ratio of 36.9% suggests a conservative stance if maintained, though free cash flow coverage cannot be assessed in the absence of CF data. Overall, the company exhibits strong growth momentum, improved operating leverage, sound liquidity, and manageable leverage, but profitability remains slim and sensitive to cost and non-operating factors. Data limitations (notably OCF, capex, inventories, and detailed operating/non-operating breakdowns) temper confidence in assessing cash flow resilience and sustainability of the earnings trajectory.

Profitability Analysis

ROE_decomposition: Reported ROE is 2.8%, derived from net profit margin 2.1% x asset turnover 0.453x x financial leverage 2.93x. This indicates ROE is supported mainly by asset turnover and leverage, with margins still thin. margin_quality: - Gross margin: 17.0% (gross profit 12.20 on revenue 71.82). - SG&A ratio: 14.7% (10.58/71.82). - Operating margin: ~4.2% (3.04/71.82). - Ordinary margin: ~3.4% (2.42/71.82). - Net margin: 2.1% (1.51/71.82). The step-down from operating to ordinary reflects interest burden; the high effective tax rate (39.4%) further compresses net margin. operating_leverage: Operating income grew 88.0% YoY on 48.1% revenue growth, evidencing positive operating leverage and improved cost absorption. That said, the absolute operating margin remains modest, so incremental profitability is still sensitive to mix and execution. non_operating_and_tax: Non-operating income of 0.23 vs expenses of 0.51 implies a -0.28 headwind, mainly interest expense of 0.41. The effective tax rate of 39.4% is elevated, limiting net profit conversion.

Growth Assessment

revenue_sustainability: Revenue rose 48.1% YoY to 71.82, likely reflecting strong order intake and project execution in renewable/EPC-related activities. Sustainability will depend on backlog health, repeat orders, and policy-driven demand; these details are not disclosed. profit_quality: Operating profit growth (+88.0% YoY) outpaced revenue, implying improved mix and scale benefits. However, non-operating headwinds (interest) and high taxes dilute bottom-line conversion, and extraordinary/other items may have affected the P/L bridge. outlook: With a 4.2% operating margin and robust liquidity, the company is positioned to benefit from continued project momentum. Key to sustaining growth will be order backlog, cost control, and financing terms, especially if rates rise or project sizes increase.

Financial Health

liquidity: Current assets 112.50 vs current liabilities 42.67 produce a current ratio of 263.7% and working capital of 69.83. Quick ratio appears identical due to unreported inventories; true quick ratio may be lower if inventories are material. solvency: Total liabilities 82.55 vs equity 54.09 yield a debt-to-equity of 1.53x. Equity/asset ratio (calculated) is ~34.1% (54.09/158.49). Interest coverage of 7.48x suggests adequate debt service capacity. capital_structure: Loans total 44.01 (short-term 14.33, long-term 29.68). Cash and deposits are 9.79, implying net debt of ~34.22. Financial leverage (assets/equity) is 2.93x, typical for small-cap EPC/renewables firms.

Cash Flow Quality

earnings_quality: OCF is unreported, so accruals and cash conversion cannot be assessed. EPS aligns with net income and average shares, supporting the integrity of earnings per share calculations. FCF_analysis: Capex and OCF are unreported; therefore, FCF cannot be derived. With 9.79 in cash and positive operating earnings, near-term liquidity appears sufficient, but sustainability of FCF is unclear. working_capital: Accounts receivable are 6.53; inventories are unreported. The high current ratio suggests headroom, but project timing can drive significant swings in receivables, unbilled revenues, and advances—areas to monitor when OCF becomes available.

Dividend Sustainability

payout_ratio_assessment: A calculated payout ratio of 36.9% indicates a conservative distribution against current earnings if accurate. However, DPS and total dividends paid are unreported. FCF_coverage: Not assessable due to missing OCF and capex. Cash on hand (9.79) and positive earnings imply capacity for modest dividends, but true coverage hinges on working capital movements. policy_outlook: Given modest margins and growth investments typical of the sector, a stable to modest payout policy would be consistent; confirmation requires management guidance and CF disclosures.

Risk Assessment

Business Risks:

• Project execution risk and cost overruns affecting low single-digit operating margins
• Order intake and backlog volatility in EPC/renewable projects
• Policy and regulatory changes in renewable energy incentives and grid connection rules
• Input cost inflation (materials, subcontracting) and supply chain constraints
• Customer concentration and timing of revenue recognition across large projects

Financial Risks:

• Interest rate risk given loan balance of 44.01 and interest expense of 0.41
• Cash flow timing risk from working capital swings (receivables/unbilled vs advances)
• High effective tax rate (39.4%) lowering net profit resilience
• Potential extraordinary losses or classification impacts not fully visible in disclosures

Key Concerns:

• Thin net margin (2.1%) leaves limited buffer against shocks
• Non-operating headwinds (net -0.28) and interest costs weighing on ordinary income
• Lack of OCF, capex, and inventory disclosures reduces visibility on FCF and liquidity dynamics

Investment Implications

Key Takeaways:

• Strong YoY growth with evidence of positive operating leverage
• Operating margin remains modest (~4.2%), making execution and cost control critical
• Balance sheet liquidity is solid; leverage is moderate and interest coverage is healthy
• Non-operating expenses and high taxes materially dilute bottom-line profitability
• Limited cash flow disclosure constrains assessment of earnings quality and dividend capacity

Metrics to Watch:

• Order backlog and new orders to gauge revenue sustainability
• Operating cash flow and working capital movements (receivables, unbilled revenues, advances)
• Operating margin trajectory and SG&A ratio
• Interest expense trends and refinancing terms
• Effective tax rate drivers and any extraordinary items
• Net debt and cash balance relative to project scale

Relative Positioning: Versus TSE small-cap renewable/EPC peers, the company demonstrates above-average revenue and operating profit growth with moderate leverage and solid liquidity, but it operates with typical sector margins and faces similar sensitivity to financing costs and working capital cycles.

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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