Meiho Facility Works Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.99B
• Operating Income: ¥769M
• Net Income: ¥571M
• EPS: ¥48.78

Income Statement

Balance Sheet

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

Meiho Facility Works Co., Ltd. (TSE:17170) reported solid FY2026 Q2 standalone results under JGAAP, with revenue of ¥2,987 million (+12.4% YoY) and operating income of ¥769 million (+10.6% YoY). Profitability remains a highlight: gross profit of ¥1,530 million implies a gross margin of 51.2%, and operating margin stands at approximately 25.8%, indicative of an asset-light, service-oriented model. Net income reached ¥571 million (+11.5% YoY), producing a net margin of 19.1%, consistent with disciplined cost control and limited non-operating distortions. The DuPont profile shows ROE of 9.99%, driven predominantly by strong net margin (19.1%) against a modest asset turnover (0.395x) and low financial leverage (assets/equity ≈ 1.32x). Implied ROA is around 7.5% (19.1% × 0.395), consistent with efficient operations given the balance sheet size. Liquidity is very strong, with a current ratio of roughly 394% and working capital of about ¥4.72 billion, offering ample buffer for project timing and receivables collection. Balance sheet risk appears low: total liabilities of ¥2.43 billion versus equity of ¥5.72 billion suggests a conservative capital structure (liabilities/equity ≈ 0.43x). Based on the balance sheet presented, the implied equity ratio is about 75.5% (equity/total assets), despite the reported equity ratio field showing 0.0% (which should be treated as undisclosed). Operating leverage in this half looks measured, as operating income growth of 10.6% trails revenue growth of 12.4%, implying modest cost normalization or project mix effects. SG&A is inferred at around ¥761 million (gross profit minus operating income), roughly 25.5% of revenue, consistent with a controlled cost base. Ordinary income of ¥771 million is very close to operating income, indicating minimal net non-operating impacts. The implied effective tax rate based on disclosed income tax and ordinary income is approximately 24–25%, in line with a normalized tax burden. Cash flow statements are undisclosed in this dataset; therefore, OCF, capex, and FCF cannot be assessed and the presented OCF/NI and FCF figures should be treated as missing rather than zero. Dividend data for the period is also not disclosed (DPS shown as 0.00), and payout metrics cannot be meaningfully assessed from the provided fields. Overall, the company exhibits high-quality margins, robust liquidity, conservative leverage, and mid-to-high single-digit to ~10% ROE, with the main analytical gap being the absence of cash flow disclosure and dividend policy detail for the period.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 19.12%
• asset_turnover: 0.395
• financial_leverage: 1.32
• calculated_ROE: 9.99%
• commentary: ROE is primarily margin-driven. Low leverage and modest asset turnover cap upside, consistent with an asset-light service model. margin_quality:
• gross_margin: 51.2%
• operating_margin: 25.8%
• net_margin: 19.1%
• observations: Sustained high gross and operating margins indicate pricing power and effective project/service delivery. Ordinary income closely tracks operating income, suggesting minimal non-operating noise. Implied effective tax rate ≈24–25%. operating_leverage:
• revenue_growth_yoy: 12.4%
• operating_income_growth_yoy: 10.6%
• commentary: Incremental margin softened slightly as OI growth trailed revenue growth, pointing to modest cost increases or mix effects. SG&A ~25.5% of sales appears well-contained.

Growth Assessment

revenue_sustainability: Double-digit top-line growth (+12.4% YoY) suggests healthy project flow and demand for services. Asset turnover of 0.395x is consistent with an asset-light, project-driven model; sustainability will hinge on order intake and execution timing (not disclosed here). profit_quality: Profit growth (+11.5% NI) roughly tracks revenue growth, with high conversion from operating to net income due to limited non-operating items. High gross/operating margins indicate quality earnings, though cash conversion is unassessable given missing OCF. outlook: With strong liquidity and low leverage, the company has capacity to support ongoing growth. Near-term profitability should remain resilient if the current cost discipline and mix are maintained. Key uncertainty is visibility on backlog, pipeline, and cash collection cycles due to disclosure limits in this dataset.

Financial Health

liquidity:

• current_assets: 6324955000
• current_liabilities: 1605283000
• current_ratio: 394%
• quick_ratio: 394%
• working_capital: 4719672000
• commentary: Very strong liquidity position with ample buffer for working capital swings typical of project-based businesses. solvency:
• total_assets: 7569000000
• total_liabilities: 2430458000
• total_equity: 5715000000
• debt_to_equity: 0.43x (liabilities/equity)
• implied_equity_ratio: ≈75.5% (equity/total assets)
• commentary: Conservative balance sheet with low leverage and high equity buffer. Interest burden appears minimal based on near-equal operating and ordinary income. capital_structure: Primarily equity-funded; low reliance on debt. Flexibility remains high for operational needs and potential shareholder returns, subject to cash flow actuals.

Cash Flow Quality

earnings_quality: Accrual quality cannot be evaluated without cash flow data. However, stable margin structure and minimal non-operating items are positives for earnings quality. FCF_analysis: Operating CF, investing CF, and capex are undisclosed in this dataset; therefore, FCF cannot be computed. Treat reported zeros as missing values. working_capital: Large positive working capital (≈¥4.72bn) offers resilience but may tie up cash in receivables and unbilled items during growth phases. Without OCF, the pace of cash conversion from earnings is unknown.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0% reflects undisclosed dividends in this dataset rather than an actual zero. EPS for the period is ¥48.78, but no DPS is disclosed. FCF_coverage: Not assessable. OCF and FCF are undisclosed; coverage metrics based on zeros are not meaningful. policy_outlook: With strong balance sheet and mid-to-high single-digit to ~10% ROE, capacity for distributions may exist, but any assessment requires visibility on cash generation and stated dividend policy, which are not provided here.

Risk Assessment

Business Risks:

• Order intake and project timing volatility affecting quarterly revenue recognition.
• Project mix shifts that can compress margins if higher-cost or fixed-fee mandates increase.
• Client concentration risk (not disclosed), which can create earnings volatility in an asset-light PM/CM model.
• Execution risk on concurrent projects, including subcontractor availability and cost pass-through.
• Human capital constraints in specialized project management roles impacting delivery and growth.

Financial Risks:

• Cash conversion risk from receivables/unbilled positions; OCF data is undisclosed.
• Potential working capital swings tied to project milestones and billing schedules.
• Limited interest rate sensitivity due to low leverage, but deposit yield changes can affect financial income.
• Tax rate variability around the implied ~24–25% effective rate.

Key Concerns:

• Absence of cash flow disclosure, limiting assessment of earnings-to-cash conversion.
• Lack of dividend information, constraining payout sustainability analysis.
• No visibility on backlog or order book, reducing confidence in growth durability.

Investment Implications

Key Takeaways:

• Strong profitability with gross margin 51.2% and operating margin ~25.8%.
• ROE ~10% supported mainly by high net margin; leverage remains low (assets/equity ~1.32x).
• Robust liquidity (current ratio 394%) and sizable working capital (¥4.72bn).
• Operating leverage modest; OI growth (+10.6%) slightly below revenue growth (+12.4%).
• Ordinary income in line with operating income, indicating limited non-operating noise.
• Cash flow and dividend data are not disclosed, a key limitation for valuation and payout analysis.

Metrics to Watch:

• Order backlog and new order intake to gauge revenue visibility.
• Operating cash flow and OCF/NI conversion ratio once disclosed.
• DSO and working capital turns to monitor cash conversion.
• SG&A ratio and project mix to sustain operating margin.
• Tax rate normalization and any non-operating income/expense changes.
• Capital allocation updates, including dividend or buyback policies.

Relative Positioning: Appears to operate an asset-light, service-centric model with above-average margins and low leverage versus typical construction-related entities, though definitive peer positioning requires comparable disclosures.

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