CANDEAL Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥13.86B
• Operating Income: ¥420M
• Net Income: ¥84M
• EPS: ¥21.23

Income Statement

Balance Sheet

Cash Flow Statement

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

CandIR (14460) delivered steady topline growth and stronger operating leverage in FY2025 Q4 (JGAAP, consolidated). Revenue rose 4.8% YoY to ¥13.86bn, while operating income increased 17.1% YoY to ¥0.42bn, indicating positive operating leverage. Net income advanced 42.3% YoY to ¥0.196bn, aided by improved cost control and low non-operating drag, resulting in EPS of ¥21.23. Gross profit was ¥4.692bn, implying a gross margin of 33.8%, which supports a service-centric or value-added business mix. Operating margin reached 3.0% (¥420m/¥13,860m), up YoY, though still modest for the sector. Ordinary income of ¥417m was close to operating income, reflecting limited non-operating volatility and manageable interest burden. The interest coverage ratio was a comfortable 33.7x, as interest expense was only ¥12.5m. The effective tax rate based on available figures is approximately 50.8% (¥212m tax on ~¥417m ordinary income), which is elevated and partially constrains net profitability. DuPont analysis shows a calculated ROE of 6.62% driven by slim net margin (1.41%) offset by healthy asset turnover (2.206x) and moderate financial leverage (2.12x). Operating cash flow was strong at ¥418m, 2.13x net income, indicating high earnings quality and good cash conversion. Free cash flow was positive at ¥326m after ¥92m investing outflow, providing internal funding capacity. The balance sheet appears sound with total assets of ¥6.282bn and total equity of ¥2.961bn, implying an equity ratio around 47% (computed from the balances; the provided 0.0% should be treated as undisclosed). Liquidity is adequate with a current ratio of 124% and quick ratio of 120%, and working capital of ~¥717m. Capital structure is moderate with a debt-to-equity ratio of 1.13x, consistent with the comfortable interest coverage. No dividend was reported (DPS 0), resulting in a payout ratio of 0% despite positive FCF, suggesting a reinvestment or balance sheet strengthening stance. While some items are undisclosed (e.g., cash balance, equity ratio, share count), the available data indicate stable growth, improving margins, and solid cash generation, positioning the company to sustain measured investment and potential future shareholder returns.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 1.41% (¥196m / ¥13,860m)
• asset_turnover: 2.206x (¥13,860m / ¥6,282m)
• financial_leverage: 2.12x (¥6,282m / ¥2,961m)
• calculated_ROE: 6.62% (matches reported)
• commentary: ROE is primarily constrained by a thin net margin, while strong asset turnover and moderate leverage provide offsets. margin_quality:
• gross_margin: 33.8% (¥4,691.6m / ¥13,860m), consistent with value-added service/repair mix
• operating_margin: 3.0% (¥420m / ¥13,860m), up YoY indicating cost discipline
• EBITDA_margin: 3.5% (¥481.7m / ¥13,860m)
• tax_effect: Effective tax ~50.8% constrains net margin; monitor for one-offs or structural drivers operating_leverage: Revenue +4.8% YoY vs operating income +17.1% YoY evidences positive operating leverage from scale and overhead absorption; ordinary income closely tracks operating income, indicating minimal non-operating volatility.

Growth Assessment

revenue_sustainability: Topline grew 4.8% YoY to ¥13.86bn, implying steady demand in core service lines; sustainability hinges on recurring maintenance/repair work and client retention. profit_quality: OCF at 2.13x net income supports the quality of earnings; gross margin levels suggest pricing power and mix benefits, though operating margin remains modest. outlook: With asset-light characteristics (high asset turnover) and improving operating leverage, incremental revenue growth should translate into disproportionate operating profit gains, barring adverse cost inflation or tax normalization.

Financial Health

liquidity:

• current_ratio: 124.2%
• quick_ratio: 119.6%
• working_capital: ¥716.9m
• assessment: Adequate short-term coverage; positive working capital underpins operational stability. solvency:
• equity_ratio: Approximately 47% (¥2,961m / ¥6,282m); provided 0.0% should be treated as undisclosed
• debt_to_equity: 1.13x (interest-bearing mix not fully disclosed)
• interest_coverage: 33.7x (EBIT/interest), indicating low refinancing risk at current debt levels capital_structure: Balanced with moderate leverage and strong interest protection; room for selective investment funded by internal cash generation.

Cash Flow Quality

earnings_quality: OCF/Net Income at 2.13 indicates robust cash conversion and limited accrual risk. FCF_analysis: Free cash flow of ¥326m (OCF ¥418m less investing CF ~¥92m) supports self-funded growth and optionality. working_capital: Positive working capital and strong OCF suggest effective receivables and inventory management; continued monitoring of DSO/DPO turnover is warranted (not disclosed).

Dividend Sustainability

payout_ratio_assessment: Reported DPS is 0 and payout ratio 0%. With ROE at 6.62% and positive FCF, capacity exists, but management appears focused on reinvestment or balance sheet resilience. FCF_coverage: FCF comfortably covers a hypothetical modest dividend; actual coverage not applicable given DPS=0 (undisclosed policy details). policy_outlook: If operating leverage and cash generation persist, future distributions are feasible; however, current stance suggests prioritizing growth and financial flexibility.

Risk Assessment

Business Risks:

• Demand cyclicality in renovation/maintenance and retail/commercial fit-out activity
• Client concentration risk if dependent on large retail or corporate customers
• Labor availability and subcontractor cost inflation impacting gross margins
• Project execution risk (schedule, quality, warranty/repair costs)
• Exposure to material cost volatility and supply-chain constraints
• Seasonality and macro sensitivity of discretionary refurbishment projects

Financial Risks:

• Moderate leverage with predominance of current liabilities increases refinancing/rollover needs
• Potential volatility in effective tax rate (~51%) affecting net income
• Working capital swings could impact OCF despite current strength
• Limited disclosure of cash balance and interest-bearing debt composition
• Interest rate risk on floating-rate borrowings (quantum not disclosed)

Key Concerns:

• Sustainability of operating margin expansion from a low base
• High effective tax burden dampening net margin and ROE
• Visibility on order backlog and receivables quality not disclosed

Investment Implications

Key Takeaways:

• Steady topline growth (+4.8% YoY) with stronger operating leverage (+17.1% YoY OI)
• Healthy asset turnover (2.21x) and moderate leverage (2.12x) support a 6.62% ROE
• Strong cash conversion (OCF/NI 2.13x) and positive FCF (¥326m)
• Comfortable interest coverage (33.7x) and adequate liquidity (CR 124%)
• Dividend withheld despite capacity, indicating reinvestment focus

Metrics to Watch:

• Order backlog and book-to-bill (not disclosed)
• Gross and operating margin progression
• OCF/NI and FCF sustainability
• Receivables days (DSO) and payables days (DPO)
• Effective tax rate normalization and drivers
• Equity ratio and net debt/cash once cash and debt details are disclosed

Relative Positioning: Within Japanese construction/maintenance services, the company appears asset-light with high asset turnover and improving profitability, but ROE remains mid-single digit and below top-tier peers; balance sheet and cash generation provide a stable platform for incremental margin-driven returns.

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