MASARU CORPORATION FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥10.65B
• Operating Income: ¥638M
• Net Income: ¥379M
• EPS: ¥455.94

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

Masaru Co., Ltd. (TSE:1795) delivered a solid FY2025 Q4 (consolidated, JGAAP) with clear signs of margin expansion and robust cash generation. Revenue rose 19.0% YoY to ¥10.65bn, while operating income grew 56.6% YoY to ¥0.64bn, driving an operating margin of roughly 6.0%. Net income increased 46.1% YoY to ¥0.41bn, implying a net margin of 3.8% and supporting an ROE of 7.67% per the DuPont calculation provided. The DuPont breakdown shows moderate profitability, healthy efficiency (asset turnover 1.209x), and measured leverage (financial leverage 1.67x), collectively producing a mid–single-digit ROE. Cash generation was a standout: operating cash flow of ¥1.24bn was more than three times net income (OCF/NI 3.06x), and free cash flow was ¥1.25bn despite modest investing cash outflows. Liquidity appears strong with a current ratio of 235% and working capital of ¥3.51bn, offering a sizable buffer for project execution in a construction-oriented business. Solvency looks sound: the equity base of ¥5.28bn against total assets of ¥8.81bn implies an inferred equity ratio around 60% (despite the displayed 0.0% metric), and interest coverage is very high at 147x given low interest expense. Operating leverage worked favorably in the period with revenue growth outpacing opex growth, lifting margins and earnings. The EBITDA margin of 6.3% is modest but improving, consistent with better project mix and/or pricing discipline. Financing cash outflow of ¥0.23bn suggests routine capital structure or shareholder return activities, though dividend data appear undisclosed in this dataset. Several items show as zero (e.g., cost of sales, gross profit, inventories, cash, equity ratio, DPS, shares), which under this data framework indicates non-disclosure rather than actual zero figures. Using available non-zero line items, we infer an effective tax burden in the low-20% range, consistent with the ¥144m tax charge on pre-tax earnings, notwithstanding the displayed 0.0% effective tax metric. Balance sheet strength and positive free cash flow provide flexibility to navigate input cost variability and labor tightness typical in the construction/waterproofing market. Looking ahead, sustainability of the 19% top-line growth will depend on order intake, backlog conversion, and the mix of private/non-residential refurbishment and maintenance work. Overall, the period highlights improving profitability, high cash conversion, and a conservative financial position, albeit with limited disclosure on certain sub-lines and dividends.

Profitability Analysis

ROE_decomposition: Reported ROE 7.67% = Net margin 3.80% × Asset turnover 1.209 × Financial leverage 1.67. Operating margin ~6.0% (¥638m/¥10,647m) supports the uplift from prior year given operating income grew faster than revenue. Asset turnover above 1.2x indicates efficient use of the asset base for a construction/services model. Leverage at 1.67x is moderate, contributing to ROE without undue risk. margin_quality: Net income margin 3.8% and EBITDA margin 6.3% point to relatively thin but improving margins typical for specialty contractors. The large delta between EBITDA and operating margin is small (D&A ~¥28m), implying limited capital intensity. Interest burden is minimal (interest expense ¥4.3m), so below-the-line drag is modest. The implied effective tax rate, using tax expense ¥144m over pre-tax earnings proxied by ordinary income ¥658m, is about 21–22%, consistent with domestic rates. operating_leverage: YoY revenue +19% vs operating income +57% suggests positive operating leverage, likely from better absorption of fixed overheads and improved project pricing/mix. With D&A low, incremental margins on added revenue appear favorable. Sustaining this will depend on backlog quality and execution.

Growth Assessment

revenue_sustainability: Revenue of ¥10.65bn (+19% YoY) indicates strong demand and/or backlog conversion. Sustainability hinges on order intake in refurbishment/waterproofing and maintenance cycles, which tend to be steadier than new build but still sensitive to private capex and public budgets. profit_quality: Net income +46% YoY with OCF/NI of 3.06x reflects high cash realization, pointing to quality earnings rather than accounting-only gains. Low interest expense and modest D&A suggest the earnings uplift is predominantly operational. outlook: Near-term outlook is supported by strong liquidity and balance sheet, enabling selective bidding and execution discipline. Watch for normalization of material and labor costs, competitive intensity on bids, and the stickiness of price increases achieved. If order momentum holds, margins can remain at or above current levels; a weaker order mix or execution slippage could compress them.

Financial Health

liquidity: Current assets ¥6,110m vs current liabilities ¥2,597m yields a current ratio of 235% and working capital of ¥3,513m. Quick ratio equals current ratio in the dataset due to inventories showing as undisclosed (0). This indicates ample short-term coverage for project needs and seasonality. solvency: Total equity ¥5,277m against total assets ¥8,806m implies an inferred equity ratio near 60% (despite the displayed 0.0% metric), denoting conservative capitalization. Interest coverage is 147x (operating income/interest expense), showing very low financial risk from debt service. capital_structure: Debt-to-equity ratio shown at 0.65x suggests manageable leverage for the business model. Financing cash outflow of ¥232m indicates some capital structure or shareholder return movement, but leverage metrics remain comfortable.

Cash Flow Quality

earnings_quality: OCF of ¥1,238m vs net income of ¥405m (3.06x) indicates strong cash conversion, likely aided by favorable working capital (collections, advances, or payables timing). With low D&A, accrual risk appears limited. FCF_analysis: Free cash flow of ¥1,247m (OCF plus small positive investing CF of ¥9m) is robust relative to net income and revenue scale, providing capacity for reinvestment or returns. Investing CF was minimal, consistent with a light-asset contractor model. working_capital: Working capital of ¥3,513m and the large OCF/NI multiple suggest effective working capital management in the period. However, timing-related cash swings are common in this sector; sustainability should be assessed via multi-period trends in receivables, unbilled revenues, and advance receipts (not disclosed here).

Dividend Sustainability

payout_ratio_assessment: The dataset shows DPS and payout ratio as 0.00, which under the data notes indicates non-disclosure rather than true zero. Based on net income of ¥405m and strong FCF of ¥1,247m, there appears ample capacity for dividends in principle. FCF_coverage: FCF comfortably exceeds net income, implying strong coverage for potential dividends; precise coverage cannot be computed without an actual DPS or total dividend amount. policy_outlook: Without disclosed dividend policy or historical DPS, we cannot infer a payout trajectory. Balance sheet strength and stable cash generation would support sustainable payouts if management prioritizes shareholder returns, but policy visibility is limited in this dataset.

Risk Assessment

Business Risks:

• Order intake volatility and project timing affecting revenue recognition.
• Execution risk on fixed-price contracts leading to cost overruns and margin erosion.
• Material and labor cost fluctuations amid a tight construction labor market.
• Dependence on subcontractor availability and quality.
• Weather-related delays impacting waterproofing and exterior works.
• Customer concentration with general contractors or property owners.
• Warranty and defect liability risks post-completion.

Financial Risks:

• Working capital swings inherent to project-based billing and collections.
• Potential increase in interest burden if leverage rises, despite currently low interest expense.
• Credit risk from counterparties in a slowing macro environment.
• Limited disclosure on cash and inventories complicates liquidity visibility.

Key Concerns:

• Sustainability of margin expansion if competitive pricing pressures return.
• Visibility on backlog and pipeline not provided in the dataset.
• Dividend policy and actual distribution amounts are undisclosed.

Investment Implications

Key Takeaways:

• Strong top-line growth (+19% YoY) with outsized operating profit growth (+57% YoY) indicates positive operating leverage.
• ROE at 7.67% is supported by healthy asset turnover and moderate leverage.
• Cash generation is robust (OCF/NI 3.06x; FCF ¥1.25bn), enhancing financial flexibility.
• Liquidity and solvency are strong with an inferred ~60% equity ratio and 235% current ratio.
• Interest burden is de minimis (147x coverage), lowering earnings volatility.
• Disclosure gaps (gross profit, inventories, cash, dividend details) limit some analytical depth.

Metrics to Watch:

• Order backlog and new orders (value and margin profile).
• Operating margin and EBITDA margin progression.
• OCF/NI and working capital days (DSO, DPO, unbilled receivables).
• Equity ratio and net cash/debt once cash and debt details are disclosed.
• Actual dividend payments and payout ratio if/when disclosed.
• Labor and material cost indices impacting project margins.

Relative Positioning: Within Japan’s small/mid-cap construction and specialty contractors, Masaru appears conservatively capitalized with improving margins and superior cash conversion, positioning it favorably versus peers that exhibit thinner liquidity buffers or higher leverage; continued order discipline and execution will be key to sustaining this relative strength.

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