TASUKI Holdings Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥74.41B
• Operating Income: ¥8.81B
• Net Income: ¥2.67B
• EPS: ¥90.99

Income Statement

Balance Sheet

Cash Flow Statement

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 top- and bottom-line beat with margin expansion and ROE improvement, but earnings quality is weak due to deeply negative operating cash flow and debt-funded growth. Revenue rose 56.8% YoY to 744.12, while operating income surged 116.8% to 88.15 and net income jumped 122.5% to 49.33. Gross profit reached 147.92, yielding a 19.9% gross margin. Operating margin printed at 11.9%, ordinary margin at 10.5%, and net margin at 6.6%. Using reported growth rates to back-solve, operating margin expanded by approximately +328 bps YoY (from ~8.6% to 11.9%). Net margin expanded by roughly +196 bps YoY (from ~4.7% to 6.6%). ROE improved to a healthy 14.9% on a DuPont basis, driven primarily by higher net margin and supported by 2.52x financial leverage. ROIC of 12.8% is above the 8% excellence benchmark, indicating that growth is value accretive at the project/asset level. Liquidity looks ample with a current ratio of 382.8% and cash and deposits of 262.03; interest coverage is strong at 11.45x despite higher absolute interest expense (7.70). However, operating cash flow was -57.70 (OCF/NI = -1.17x), and FCF was -74.88, indicating a substantial working capital build and capex funded by financing CF of 192.60. Debt-to-equity of 1.52x is on the higher side of comfort, and long-term loans (300.58) dominate the liability structure, consistent with an expansion phase. Intangibles and goodwill total about 60.6 (7.3% of assets), introducing some impairment risk if growth slows. Equity-method income is minimal (0.22), so profits are primarily driven by core operations, not affiliates. Dividend data are limited, but the calculated payout ratio is a modest 20.0%; that said, negative FCF implies dividends are effectively financed by balance sheet this year. Forward-looking, the key swing factor is converting rapid earnings growth into positive operating cash flow; if OCF normalizes as projects convert, the balance sheet can support continued expansion, otherwise leverage risk rises. Net-net: quality and sustainability hinge on working capital normalization and disciplined funding of growth.

Profitability Analysis

Step 1 (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 6.6% × 0.894 × 2.52 ≈ 14.9%. Step 2: The largest change driver YoY is net profit margin, inferred from net income growth (+122.5%) outpacing revenue (+56.8%); leverage is stable-to-slightly supportive. Step 3: Margin improvement likely reflects operating leverage (SG&A at 59.77 implies an SG&A ratio of ~8.0%) and better gross-to-operating conversion; financing costs are manageable given 11.45x interest coverage. Step 4: Sustainability: Partly sustainable if scale benefits persist and cost discipline holds; however, negative OCF suggests some margin benefit may be tied to revenue recognition timing and working capital expansion—this raises persistence risk if demand timing slips. Step 5: Watch for concerning trends: any acceleration of SG&A growth above revenue would erode operating leverage; for now, operating income growth outpacing revenue points to positive operating leverage.

Growth Assessment

Revenue growth of +56.8% YoY is strong, and operating income growth of +116.8% shows clear scale effects. Net profit growth of +122.5% indicates improved cost absorption and stable financing conditions. Operating margin at ~11.9% vs an implied ~8.6% last year suggests meaningful structural improvement, not only mix. Non-operating line was a net expense (income 0.97 vs expenses 11.04), so core operations drove the beat. Equity-method income (0.22; 0.3% of profit) is immaterial, limiting affiliate volatility risk. ROIC at 12.8% implies growth is value accretive vs typical 7–8% hurdle. Outlook hinges on converting order/backlog into cash; current negative OCF indicates heavy project build or inventory/receivable growth. If working capital normalizes, growth appears sustainable; if not, additional debt raises risk and may cap growth.

Financial Health

Liquidity is strong: current ratio 382.8% and cash 262.03 vs short-term loans 104.77; no immediate liquidity stress. Solvency: debt-to-equity 1.52x is at the upper end of comfort; we flag it as borderline but not extreme. Interest coverage is robust at 11.45x, indicating adequate buffer against rate increases. Maturity profile: noncurrent liabilities 304.98 exceed current liabilities 197.45, which aligns with longer-dated project financing; near-term refinancing risk looks contained given cash and working capital of 558.32. No off-balance sheet obligations were disclosed in the data provided. Equity base is 330.05 with retained earnings 84.85, supporting capacity for investment, though leverage usage is material.

Cash Flow Quality

OCF/Net Income = -1.17x (flag) indicates poor earnings-to-cash conversion this year, likely due to working capital build (e.g., project inventory or receivables). Free cash flow was -74.88, and capex was -14.21, with financing CF +192.60 bridging the gap—growth is debt-funded. Interest expense (7.70) is well-covered by EBITDA (88.89), but persistent negative OCF would erode this cushion over time. No overt signs of working capital manipulation are evident from available data, but the magnitude of OCF shortfall warrants monitoring of inventory/receivables turnover and advance collections. Sustainability: Current dividend and growth capex are not covered by FCF; improvements require project cash conversion.

Dividend Sustainability

Calculated payout ratio is 20.0%, which appears conservative on an accrual basis, but FCF coverage is -7.59x, indicating dividends are effectively financed by balance sheet this period. DPS and total dividend paid are unreported, so assessment relies on payout ratio proxy. With strong ROE (14.9%) and liquidity, maintenance of a modest dividend is feasible if OCF normalizes; absent that, continued dividends depend on financing access. Policy outlook: absent explicit policy disclosure, assume a flexible payout aligned to earnings; near-term sustainability hinges on cash conversion of the growth pipeline.

Risk Assessment

Business Risks:

• Execution risk in scaling projects while maintaining margins
• Working capital risk from project inventory/receivables build leading to cash flow timing gaps
• Cost inflation risk (construction/materials) compressing margins
• Demand cyclicality in real estate/related markets impacting sales velocity

Financial Risks:

• Elevated leverage (D/E 1.52x) combined with negative OCF
• Refinancing and interest rate risk despite current 11.45x coverage
• Potential impairment risk from goodwill and intangibles totaling ~60.6 (≈7.3% of assets)

Key Concerns:

• OCF/NI at -1.17x indicates weak earnings quality
• Dependence on financing CF (+192.60) to fund operations and capex
• Sensitivity to project timing and cash collections

Investment Implications

Key Takeaways:

• Strong growth and margin expansion delivered a 14.9% ROE and 12.8% ROIC
• Core operations, not affiliates, drove performance; equity-method income is negligible
• Earnings quality is weak with OCF negative and FCF deeply negative
• Leverage is elevated but currently manageable given liquidity and coverage
• Forward performance hinges on working capital normalization

Metrics to Watch:

• OCF/Net Income ratio (target >1.0)
• Free cash flow and inventory/receivables turnover
• Debt/EBITDA and interest coverage sustainability
• Operating margin trajectory and SG&A growth vs revenue
• Order backlog/pre-sales and project cash collection timing

Relative Positioning: Among Japanese mid-cap developers/asset-light property operators, Tasuki Holdings combines above-peer ROE/ROIC and margin expansion with weaker cash conversion and somewhat higher leverage; near-term upside depends on converting growth into cash without further leveraging.

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