Fantasista Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥9.42B
• Operating Income: ¥211M
• Net Income: ¥-449M
• EPS: ¥-1.41

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

Fantasista (17830) delivered FY2025 Q4 results with top-line resilience but sharp earnings compression and a bottom-line loss. Revenue rose 7.0% YoY to ¥9,422m, showing demand robustness and/or project execution progress. Gross profit was ¥2,250m, implying a gross margin of 23.9%, which is decent but insufficient to offset a surge in SG&A or project cost pressure, given operating income fell 74.5% YoY to ¥179m. Ordinary income turned to a loss of ¥41m, reflecting non-operating headwinds (e.g., interest and other non-operating items). Net income was a loss of ¥264m, with EPS of -¥1.56. The tax line shows ¥452m despite a loss, suggesting non-cash tax adjustments (e.g., valuation allowance changes or prior-period tax effects) materially weighed on the bottom line. DuPont analysis indicates ROE of -4.16% driven by a negative net profit margin of -2.80%, modest asset turnover of 1.024x, and moderate financial leverage of 1.45x. Operating cash flow was strong at ¥2,462m, resulting in positive free cash flow (FCF) of ¥1,437m after ¥1,025m investing outflows—implying solid cash conversion, likely aided by working capital release. Financing cash outflows of ¥2,649m suggest deleveraging and/or distributions; share data are not disclosed, making exact attribution uncertain. Liquidity appears solid with a current ratio of 183% and working capital of ¥5,634m. Leverage is moderate with debt-to-equity at 1.20x and interest coverage of 3.3x (EBIT/interest), though ordinary loss highlights earnings fragility. EBITDA was ¥200m (2.1% margin), underscoring weak operating leverage and thin cushions against cost overruns. The company paid no dividend (DPS ¥0), appropriately conserving cash given a net loss. Several items are undisclosed or mapped differently (e.g., cash balance, inventories, shares, equity ratio), so interpretations rely on reported non-zero values. Overall, fundamentals show stable sales but pressured profitability, good liquidity, improving FCF, and manageable leverage, with the key swing factors being cost control, non-operating/tax effects, and sustainability of working capital-driven OCF.

Profitability Analysis

ROE of -4.16% is driven by: net margin -2.80%, asset turnover 1.024x, and financial leverage 1.45x. The negative margin is the dominant driver of weak ROE, outweighing reasonable asset utilization and moderate leverage. Gross margin of 23.9% indicates some value-add, but operating margin shrank to about 1.9% (¥179m/¥9,422m), down sharply YoY (-74.5% in operating income), pointing to elevated SG&A, project cost slippage, or lower-margin mix. EBITDA margin at 2.1% (¥200m) is thin, leaving limited buffer for contingencies. Interest expense was ¥54.6m; EBIT-based interest coverage stands at ~3.3x, still adequate but declining earnings reduce headroom. Ordinary income of -¥41m signals that non-operating costs (including interest) and/or other items erased operating gains. The sizable tax expense despite a pre-tax loss depressed net profit, complicating margin quality. Operating leverage appears unfavorable this period: incremental revenue growth (+7.0% YoY) failed to translate into profit due to cost pressure and likely mix effects. Focus areas include project bidding discipline, SG&A containment, and reducing non-operating drags.

Growth Assessment

Revenue grew 7.0% YoY to ¥9.4bn, suggesting healthy demand or steady backlog execution. However, profit growth is weak: operating income fell 74.5% YoY to ¥179m and net income was -¥264m, indicating that growth was not profitable this period. Margin compression likely reflects cost inflation, pricing pressure, or a lower-margin sales mix, given gross margin remained 23.9% but operating margin was only ~1.9%. Ordinary loss (-¥41m) shows non-operating headwinds, and a large tax expense further reduced net income. Sustainability of revenue growth depends on pipeline visibility and order quality; the strong OCF suggests significant collections or working capital release, which may not repeat. Near-term outlook hinges on stabilizing project execution and SG&A efficiency to restore operating leverage. If cost normalization and mix improvement occur, ordinary income could recover given adequate interest coverage; however, recurring non-operating/tax effects remain a risk to net profit. Monitoring backlog quality, pricing, and cost pass-through will be key to validating growth sustainability.

Financial Health

Liquidity looks solid: current ratio 183% and working capital ¥5,634m support near-term obligations (current liabilities ¥6,781m). Quick ratio equals current ratio due to undisclosed inventories; thus, we interpret liquidity conservatively as strong but note disclosure limitations. Solvency is manageable: total liabilities ¥7,599m vs. equity ¥6,351m implies debt-to-equity of 1.20x. Interest coverage of 3.3x indicates capacity to service interest, albeit with compressed EBIT. Asset turnover of 1.024x reflects efficient asset use relative to peers in project-based businesses. The equity ratio field is undisclosed (reported as 0%); given equity and assets provided, balance-sheet ratios should be interpreted using the non-zero items reported. Note that reported current assets exceed total assets, indicating mapping or timing inconsistencies in disclosures; conclusions rely primarily on provided ratio outputs and totals for liabilities and equity.

Cash Flow Quality

Earnings quality is mixed: despite a net loss of ¥264m, operating cash flow was strong at ¥2,462m, yielding an OCF/NI ratio of -9.33 (OCF far exceeding net income in magnitude). This suggests major non-cash/timing items, likely working capital release (collections, lower receivables, advances) and/or tax-related non-cash expenses. Free cash flow was positive at ¥1,437m (OCF minus ¥1,025m investing outflows), indicating internally generated cash after investments. Financing cash outflows of ¥2,649m imply debt repayment and/or other distributions; share data are not disclosed to parse buybacks. Depreciation and amortization were modest at ¥21m, so cash generation was not driven by heavy non-cash charges. Sustainability of OCF depends on repeatability of working capital movements; a normalization could reduce OCF in subsequent periods absent profit recovery. Working capital positions (current assets and liabilities) are reported, but the absence of inventory and cash detail constrains deeper analysis; nonetheless, reported working capital of ¥5,634m supports operations.

Dividend Sustainability

The company paid no dividend (DPS ¥0), with a payout ratio of 0%, appropriate given a net loss. Positive FCF (¥1,437m) would, in principle, cover dividends, but management appears to prioritize balance sheet resilience and/or debt reduction (financing CF -¥2,649m). With operating profit under pressure and net income negative, reinstating or increasing dividends would require visible earnings recovery and confidence that OCF is not solely driven by transient working capital releases. Policy outlook likely remains conservative near term, focusing on profit normalization, maintaining liquidity, and reducing leverage. Any future payout would hinge on sustainable operating margins, stable ordinary income, and consistent FCF after capex.

Risk Assessment

Business Risks:

• Project cost overruns and lower-margin mix eroding operating margin (operating income -74.5% YoY).
• Pricing pressure or limited cost pass-through amidst input cost volatility.
• Execution risk on backlog leading to margin variability and revenue recognition timing.
• Dependence on working capital release to support OCF, which may not be repeatable.
• Competitive dynamics potentially compressing gross margins over time.

Financial Risks:

• Earnings fragility with ordinary loss (-¥41m) and negative net income (-¥264m).
• Non-operating and tax effects (¥452m tax expense despite loss) creating volatility in net profit.
• Moderate leverage (D/E 1.20x) with thin EBIT cushions, though interest coverage currently ~3.3x.
• Potential refinancing and covenant risks if profitability remains weak.
• Disclosure limitations (undisclosed cash, equity ratio, inventories) constrain transparency.

Key Concerns:

• Sustainability of OCF given heavy reliance on working capital movements.
• Restoring operating margin from ~1.9% to a level consistent with cost of capital.
• Addressing tax expense drivers that depress net income despite weak pre-tax results.

Investment Implications

Key Takeaways:

• Top-line grew 7.0% YoY to ¥9.4bn, but profit collapsed; net loss of ¥264m.
• ROE -4.16% from negative net margin; asset utilization and leverage are not the core issues.
• OCF strong at ¥2.46bn; FCF positive at ¥1.44bn, aided by working capital release.
• Liquidity solid (current ratio 183%); leverage moderate (D/E 1.20x); interest coverage ~3.3x.
• Dividend suspended (DPS ¥0); prudent given earnings pressure and focus on balance sheet.

Metrics to Watch:

• Operating margin recovery and SG&A ratio trajectory.
• Ordinary income trends and interest coverage sustainability.
• Working capital metrics (receivables, payables, advances) and OCF repeatability.
• Backlog quality, win rates, and pricing to gauge revenue sustainability.
• Tax line normalization and effective tax rate versus profit profile.

Relative Positioning: Compared to typical project-based peers, Fantasista shows respectable asset turnover and liquidity but weaker current-period profitability and higher earnings volatility driven by non-operating and tax items; positive FCF is a differentiator, though its sustainability hinges on working capital dynamics.

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