Thinca Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.07B
• Operating Income: ¥58M
• Net Income: ¥46M
• EPS: ¥14.63

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

Shinka Co., Ltd. (149A0) reported FY2025 Q3 single-entity results under JGAAP with solid top-line growth and improving bottom-line leverage. Revenue rose 19.3% year over year to ¥1,069 million, indicating robust demand or successful expansion of its service lines. Gross profit was ¥738 million, implying a high gross margin of 69.1%, consistent with a service- or software-oriented business model with limited direct costs. Operating income increased 8.2% to ¥58 million, translating to an operating margin of 5.4%, suggesting elevated SG&A investment relative to gross profit. Net income surged 239.7% to ¥46 million, reflecting improved non-operating balance and a normalizing tax burden versus a weak base period. Ordinary income of ¥59 million is slightly above operating income, and interest expense is modest at ¥0.486 million, resulting in a very strong interest coverage of about 119x. The DuPont-derived ROE is 4.4%, composed of a 4.30% net margin, 0.853x asset turnover, and 1.20x financial leverage. The balance sheet is conservative with total assets of ¥1,253 million, liabilities of ¥251 million, and equity of ¥1,045 million; this implies an equity ratio of roughly 83.5% (the reported 0.0% equity ratio is an unreported placeholder). Liquidity is strong with a current ratio of 441% and working capital of ¥855 million, backed by sizable current assets of ¥1,106 million and no reported inventories. The effective tax rate calculated from disclosed taxes and earnings is approximately 20%, whereas the reported 0.0% rate reflects unreported metrics rather than true zero. Operating cash flow, investing cash flow, and financing cash flow figures were not disclosed in this filing (displayed as zeros), so cash conversion and free cash flow cannot be assessed from the provided data. EBITDA and depreciation are also not disclosed; the displayed zeros are placeholders and not evidence of zero D&A or EBITDA. There is no dividend for the period (DPS reported as zero), consistent with a reinvestment stance or early growth stage; payout ratios based on FCF cannot be determined without cash flow disclosure. Asset efficiency (0.85x turnover) is reasonable for a light-asset model and, combined with low leverage, yields a modest but stable ROE. Overall, the profile is of a growing, cash-light, low-debt company with strong gross profitability and ample liquidity, but with operating margin still in the mid-single digits. Key limitations include missing cash flow data, missing D&A, and placeholder share data, which constrain assessments of earnings quality, per-share valuation dynamics, and dividend capacity. Users should focus on the sustainability of revenue growth, the path of SG&A efficiency, and actual cash conversion once cash flow data are available.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.30% (¥46m / ¥1,069m)
• asset_turnover: 0.853x (¥1,069m / ¥1,253m)
• financial_leverage: 1.20x (Assets/Equity = ¥1,253m/¥1,045m)
• calculated_ROE: 4.4% (matches reported DuPont ROE) margin_quality:
• gross_margin: 69.1% (high, consistent with services/IT-like model)
• operating_margin: 5.4% (¥58m / ¥1,069m), indicates significant SG&A intensity
• net_margin: 4.30% (benefits from low interest expense and normalized taxes) notes_on_data: COGS and gross profit figures are internally inconsistent: implied COGS from revenue–gross profit is ¥330.5m vs reported COGS ¥157.7m. Analysis relies on the provided gross margin. Effective tax recalculated ~20% vs reported 0.0% (unreported placeholder). operating_leverage: Revenue +19.3% YoY versus operating income +8.2% suggests SG&A grew faster than gross profit this quarter; incremental margins appear moderate, indicating room for operating leverage if SG&A growth normalizes.

Growth Assessment

revenue_sustainability: 19.3% YoY revenue growth to ¥1,069m suggests healthy demand; sustainability will hinge on pipeline visibility, client retention, and mix of recurring vs project revenues (not disclosed). profit_quality: Net income +239.7% YoY off a low base; ordinary income only slightly above operating income, with minimal interest expense, indicates earnings driven primarily by operations rather than one-offs (no extraordinary items disclosed). outlook: With high gross margins and ample liquidity, the company has capacity to invest for growth. Near-term upside depends on scaling utilization and SG&A efficiency. Lack of cash flow data limits visibility into cash-backed growth.

Financial Health

liquidity:

• current_ratio: 440.7% (¥1,105.8m / ¥250.9m)
• quick_ratio: 440.7% (no inventories reported; likely low-inventory model)
• working_capital: ¥854.9 million solvency:
• debt_to_equity: 0.24x (liabilities/equity = ¥250.9m/¥1,045m)
• interest_coverage: 119.3x (¥58.0m / ¥0.486m)
• equity_ratio: ≈83.5% (recalculated; reported 0.0% is unreported placeholder) capital_structure: Lightly levered balance sheet with predominantly current assets; low financial risk and capacity for selective investment or buffer against volatility.

Cash Flow Quality

earnings_quality: Cannot assess OCF conversion due to undisclosed cash flow statement (zeros are placeholders). Net income quality appears primarily operating-driven given ordinary income proximity to operating income and minimal interest expense. free_cash_flow_analysis: FCF not derivable. With high gross margin and low fixed assets implied, potential for positive FCF exists if working capital is managed prudently; confirmation requires OCF and capex disclosure. working_capital_dynamics: Current assets are large relative to liabilities; inventory is unreported (likely minimal). Receivables and contract assets details are not disclosed; cash collection efficiency (DSO) cannot be evaluated.

Dividend Sustainability

payout_ratio_assessment: Annual DPS reported at ¥0 and payout ratio 0.0% reflect no dividend. Without OCF/FCF disclosure, payout capacity cannot be judged quantitatively. FCF_coverage: Not assessable; FCF is undisclosed (reported 0 due to missing data). policy_outlook: Given growth and a conservative balance sheet, the company could prioritize reinvestment. A formal policy is not provided; any future dividends would depend on demonstrated OCF stability and capex needs.

Risk Assessment

Business Risks:

• Revenue concentration risk if reliant on a limited client base (not disclosed).
• Execution risk in scaling while controlling SG&A to expand operating margins.
• Potential project timing and seasonality affecting quarterly revenue recognition.
• Human capital and retention risk typical of service-heavy models.
• Competitive pressure compressing pricing and utilization.

Financial Risks:

• Limited visibility on cash generation due to undisclosed OCF/FCF.
• Potential receivables concentration and collection risk (DSO not disclosed).
• Exposure to tax rate variability (effective tax recalculated ~20%).
• Dependence on single-entity financials; lack of consolidated view may omit group-level obligations or guarantees.

Key Concerns:

• Missing cash flow statement and D&A obscure earnings quality and FCF.
• Inconsistency between reported COGS and gross profit figures.
• Placeholder equity ratio and share data complicate capital metrics and per-share analysis.

Investment Implications

Key Takeaways:

• Strong top-line growth (+19.3% YoY) with high gross margin (69.1%).
• Operating margin modest at 5.4%, indicating SG&A efficiency is the main lever.
• ROE of 4.4% driven by healthy asset turnover and low leverage.
• Very strong liquidity (current ratio ~4.4x) and low balance sheet risk.
• Cash flow data absent, limiting assessment of cash conversion and dividend capacity.

Metrics to Watch:

• Operating cash flow and free cash flow once disclosed.
• SG&A-to-sales ratio and operating margin trajectory.
• Receivables days (DSO) and contract asset movements.
• Order backlog/recurring revenue mix and customer retention.
• Effective tax rate normalization and any extraordinary items.

Relative Positioning: Relative to typical small-cap, service-oriented TSE peers, Shinka exhibits above-average gross margins, conservative leverage, and ample liquidity, but currently operates with mid-single-digit operating margins and limited disclosed cash flow detail, resulting in moderate ROE.

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