NITTOH Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.34B
• Operating Income: ¥173M
• Net Income: ¥96M
• EPS: ¥28.88

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

For FY2026 Q2 (cumulative), NITTOH posted revenue of ¥5,343 million (+3.4% YoY) with operating income of ¥173 million (+24.4% YoY) and net income of ¥117 million (+21.5% YoY), indicating meaningful operating leverage. Gross profit reached ¥1,287.9 million, translating to a 24.1% gross margin, consistent with a contracting/services mix where materials and subcontracting are significant. Operating margin improved to approximately 3.2%, outpacing topline growth and suggesting better mix, execution, and/or cost control. Ordinary income of ¥185 million and modest interest expense of ¥4.1 million resulted in a strong interest coverage of 42.2x, underscoring low financial strain. The reported net margin was 2.19%, with net income benefiting from disciplined SG&A and low financing costs. DuPont decomposition shows ROE of 2.5% driven by a 2.19% net margin, 0.716x asset turnover, and 1.59x financial leverage; this reflects moderate profitability on an efficient balance sheet with conservative leverage. Liquidity is strong: current ratio at ~200.6% and quick ratio at ~144.2%, with working capital of ~¥1,996 million, providing solid short-term protection. The balance sheet appears robust with total equity of ¥4,687 million against assets of ¥7,464 million, implying an equity ratio of roughly 62.8% (the reported equity ratio of 0.0% is an undisclosed placeholder). Cash generation quality is favorable: operating cash flow of ¥245.9 million is ~2.1x net income, supported by non-cash charges and working capital management. Depreciation and amortization were ¥46.5 million, indicating modest capital intensity; however, investing cash flows were not disclosed, limiting free cash flow assessment. Dividend information shows DPS and payout as 0.0%; given interim timing and missing FCF data, dividend conclusions are constrained. Overall, the company demonstrates steady topline growth, expanding operating profit, strong liquidity, and conservative leverage, with improving earnings quality. The key uncertainties stem from undisclosed investing cash flows, cash balance, and share data, which restrict per-share and FCF-based evaluations. Effective tax expense appears to be recognized (¥54.1 million), implying an effective tax rate near low-30s, despite a reported metric placeholder of 0.0%. Outlook hinges on sustaining order intake, executing backlog at stable margins, and maintaining disciplined working capital.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.19% (NI ¥117m / Rev ¥5,343m)
• asset_turnover: 0.716x (Rev ¥5,343m / Assets ¥7,464m)
• financial_leverage: 1.59x (Assets ¥7,464m / Equity ¥4,687m)
• calculated_ROE: 2.50% (matches provided DuPont figure; note interim period) margin_quality:
• gross_margin: 24.1% (Gross profit ¥1,287.9m)
• operating_margin: 3.24% (OP ¥173m / Rev)
• ordinary_income_margin: 3.46% (OI ¥185m / Rev)
• net_margin: 2.19% (NI ¥117m / Rev)
• drivers_commentary: YoY operating income growth (+24.4%) outpaced revenue (+3.4%), indicating mix benefits and operating cost discipline. Low interest burden supports flow-through from operating to ordinary income. operating_leverage: High in this period: +3.4% revenue vs +24.4% operating income. Incremental margins appear healthy, suggesting improved project execution and/or SG&A efficiency.

Growth Assessment

revenue_sustainability: Topline growth of +3.4% YoY is steady. For a contractor/service provider, sustainability hinges on backlog and order intake; not disclosed here, so visibility is limited. profit_quality: Expansion in operating income and stable gross margin indicate improving execution. Interest expense is low, so earnings largely reflect operating performance rather than financial engineering. outlook: If current mix and cost control persist, operating margins can remain in the 3% range or better. Near-term outlook depends on maintaining utilization and avoiding cost overruns; macro and public/private capex cycles will influence demand.

Financial Health

liquidity:

• current_ratio: 200.6% (CA ¥3,980.0m / CL ¥1,983.6m)
• quick_ratio: 144.2% (CA - Inv = ¥2,860.7m / CL ¥1,983.6m)
• working_capital: ¥1,996.4m solvency:
• equity_ratio_computed: 62.8% (Equity ¥4,687m / Assets ¥7,464m) [Reported 0.0% is undisclosed placeholder]
• debt_to_equity: 0.60x (Total liabilities ¥2,816.7m / Equity ¥4,687m)
• interest_coverage: 42.2x (EBIT ≈ OP ¥173m / Interest ¥4.1m) capital_structure: Conservative leverage with substantial equity buffer and minimal interest burden; ample headroom for working capital needs and moderate capex.

Cash Flow Quality

earnings_quality: OCF ¥245.9m is ~2.10x net income (¥117m), supported by non-cash D&A of ¥46.5m and favorable working capital; this indicates solid cash conversion for the period. free_cash_flow_analysis: Investing cash flows are undisclosed (0 indicates not reported), preventing a true FCF calculation. Proxy FCF cannot be determined without capex. working_capital: Inventory at ¥1,119.3m within current assets of ¥3,980.0m; positive OCF suggests either collections outpaced billings growth or payables/supportive advances. Sustainability of WC inflows should be monitored, as contracting cash flows can be volatile.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0% and DPS 0.00 appear undisclosed or not set at this interim stage. EPS is ¥28.88 (interim). Without confirmed dividend policy or interim DPS, payout assessment is inconclusive. FCF_coverage: Not assessable due to undisclosed investing cash flows and FCF (reported 0 as a placeholder). policy_outlook: With strong liquidity and low leverage, the balance sheet could support dividends; however, absent disclosed DPS and FCF, policy direction cannot be inferred. Many Japanese companies finalize year-end DPS; watch full-year guidance and board resolutions.

Risk Assessment

Business Risks:

• Project execution risk and potential cost overruns impacting margins
• Order intake/backlog cyclicality tied to construction and facility investment cycles
• Material and subcontractor cost volatility affecting gross margin
• Labor availability and wage inflation pressures
• Client concentration risk if major projects dominate revenue (not disclosed)

Financial Risks:

• Working capital swings inherent to contract accounting and billing milestones
• Potential increase in interest costs if borrowing rises, despite currently low interest expense
• Capex requirements unknown due to undisclosed investing cash flows
• Tax rate variability; effective tax estimated ~31–32% this period

Key Concerns:

• Lack of disclosure on investing cash flows and cash balance limits FCF visibility
• Equity ratio reported as 0.0% in metrics (undisclosed), requiring reliance on computed figure
• Share count not disclosed, constraining book value per share and some ratio analyses

Investment Implications

Key Takeaways:

• Solid topline growth with stronger operating profit indicates positive operating leverage
• Healthy liquidity (current ratio ~201%, quick ratio ~144%) and conservative leverage (D/E ~0.60x)
• Strong interest coverage (42x) reduces financial risk
• Cash conversion is strong this half (OCF/NI ~2.1x), but FCF unknown due to missing capex
• ROE of ~2.5% reflects modest profitability; scope to improve via margin and asset turnover gains

Metrics to Watch:

• Order intake and backlog to gauge revenue visibility
• Gross and operating margins by project mix and input cost trends
• Working capital movements (receivables, unbilled revenues, advances)
• Capex and investing cash flows to assess true FCF
• Effective tax rate normalization into year-end
• Leverage trend and interest costs amid potential rate changes

Relative Positioning: Within Japanese construction/services peers, NITTOH exhibits conservative leverage, strong liquidity, and mid-20% gross margins with low-single-digit operating margins; profitability is modest but improving, and cash conversion is favorable versus peers that often experience lumpier OCF.

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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