ASANUMA CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥86.88B
• Operating Income: ¥4.54B
• Net Income: ¥3.08B
• EPS: ¥38.10

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

Verdict: A strong FY2026 Q2 with double-digit top-line growth and outsized profit expansion, underpinned by margin improvement and robust cash generation. Revenue rose 21.1% YoY to 868.75, while operating income climbed 50.5% to 45.41 and net income increased 66.1% to 30.70. Operating margin expanded to 5.23%, up roughly 103 bps from an estimated 4.20% a year ago (based on disclosed growth rates). Net margin improved to 3.5%, roughly +95 bps YoY (assumed prior ~2.58%). Ordinary income margin also widened to 5.09%, up about 101 bps YoY. Gross profit reached 100.26 with a gross margin of 11.5%, indicating better project mix and/or cost control. Non-operating line was a small net drag (income 1.92 vs expenses 3.12), but did not derail ordinary income growth. Cash flow quality was notably strong: operating cash flow of 91.20 was 2.97x net income, signaling healthy earnings conversion and likely favorable working capital. Liquidity is solid with a current ratio of 197.7% and working capital of 463.57, while leverage remains moderate with D/E at 1.35x and Debt/EBITDA at ~3.1x. Interest coverage is strong at 27.19x, indicating ample capacity to service debt. ROE stands at 6.5% on DuPont, driven primarily by improved profit margin rather than leverage. ROIC of 7.0% aligns with common target ranges and suggests improving capital efficiency. Capex was modest at 2.01, and financing outflows (-67.64) indicate active shareholder returns and/or debt reduction alongside a small share repurchase (1.13). The reported payout ratio of 107.9% is elevated and may not be sustainable if earnings momentum slows, though robust OCF mitigates near-term risk; dividend data, however, are incomplete. Forward-looking, sustained margin discipline and order quality will be key to holding gains, with execution risk and input cost volatility as watch points. Overall, the quarter demonstrates solid execution, healthier margins, and strong cash conversion, positioning the company well if the order environment remains favorable.

Profitability Analysis

ROE (6.5%) decomposition: Net Profit Margin (3.5%) × Asset Turnover (0.779) × Financial Leverage (2.35x). The principal driver of ROE improvement appears to be margin expansion: operating income grew 50.5% vs revenue at 21.1%, implying operating margin widened by ~103 bps YoY to 5.23%. Asset turnover likely improved modestly given strong revenue versus an asset base of 1,115.15, but prior asset data are unavailable to quantify. Financial leverage at 2.35x looks stable and not the driver. Business reasons for margin gains likely include project mix shift toward higher-margin work and improved cost control as gross profit reached 100.26 (11.5% GPM) and SG&A ratio held at ~6.3%. The margin uplift appears partly cyclical and partly execution-driven; sustainability depends on order discipline, subcontractor cost trends, and absence of large loss projects. Non-operating items were a slight net negative (1.92 income vs 3.12 expense) and did not drive results. Watch for SG&A growth versus revenue: current SG&A is 54.84 (6.3% of sales), but YoY SG&A growth is unreported, limiting trend assessment. Overall, operating leverage worked favorably this quarter as revenue growth outpaced overhead growth, improving profitability.

Growth Assessment

Top-line growth of 21.1% YoY to 868.75 indicates a strong order execution environment. Operating income grew 50.5% to 45.41 and ordinary income increased 50.9% to 44.21, outpacing sales growth and signaling stronger operating leverage. Net income up 66.1% to 30.70 reflects margin expansion and a normalized effective tax rate of 31.3%. Revenue sustainability hinges on backlog quality and new orders; these metrics are not disclosed here, representing a key data gap. Profit quality looks solid given operating cash flow substantially exceeds net income (2.97x), suggesting limited accrual build. Non-operating contributions were small, indicating core operations led growth. With ROIC at 7.0%, capital efficiency is in target range; sustaining >7% would likely require maintaining current margins on new orders. Near-term outlook is constructive if input costs remain stable and project execution continues to be disciplined. Medium term, labor availability and materials inflation could pressure margins; continued selectivity in bidding will be important.

Financial Health

Liquidity is strong: current assets 938.15 vs current liabilities 474.58 yield a current ratio of 197.7% (no warning). Quick ratio reported equal to current ratio at 197.7%, with caveat that inventories and receivables are unreported. Solvency is sound: total liabilities 640.38 vs equity 474.76 imply D/E of 1.35x (within conservative range), and Debt/EBITDA ~3.14x is manageable. Interest-bearing debt totals ~156.55 (short-term 40.00, long-term 116.55). Interest coverage of 27.19x indicates ample buffer. Maturity mismatch risk is low: current assets exceed current liabilities by 463.57, and short-term loans (40.00) are small relative to liquidity. No off-balance sheet obligations are disclosed in the data provided; contingent liabilities, guarantees, or JV commitments may exist but are unreported here.

Cash Flow Quality

Earnings quality is high with OCF/Net Income at 2.97x, suggesting strong cash conversion and favorable working capital dynamics. Free cash flow is not fully calculable due to unreported investing CF, but OCF comfortably covers modest capex (2.01), implying positive FCF on an OCF–capex basis. Financing cash outflow of -67.64 reflects shareholder returns and/or debt service; share repurchases were minor at 1.13, and dividends paid are unreported. No signs of aggressive working capital management are evident from the limited data; however, the absence of receivables and payables detail constrains a deeper assessment. Overall, cash generation supports ongoing operations and provides flexibility for debt reduction or shareholder returns.

Dividend Sustainability

The calculated payout ratio of 107.9% is above sustainable benchmarks (<60%) and warrants caution if it reflects run-rate dividends; however, actual DPS and total dividends paid are unreported, so this ratio may reflect timing or interim basis effects. OCF at 91.20 and low capex (2.01) suggest capacity to fund dividends near term, but sustaining payouts above earnings would rely on continued strong cash conversion and stable earnings. Financing CF outflow (-67.64) indicates notable capital returns and/or debt service; without dividend detail, FCF coverage cannot be confirmed. Policy-wise, Japanese general contractors often target payout ratios or DOE frameworks; specific company policy is not provided here. Until clearer disclosure, treat dividends as moderately covered by cash but potentially stretched versus earnings if the >100% payout persists.

Risk Assessment

Business Risks:

• Project execution risk on fixed-price or GMP contracts leading to cost overruns and margin erosion
• Materials and subcontractor cost inflation pressuring gross margins
• Labor shortages and wage inflation in construction impacting project schedules and costs
• Order intake and backlog visibility risk; lack of disclosed backlog/order book
• Client concentration or sector exposure (public vs private) mix changes affecting profitability

Financial Risks:

• Potential dividend overcommitment indicated by a 107.9% payout ratio if sustained
• Refinancing and interest rate risk on 156.55 of interest-bearing debt (mix of short- and long-term)
• Working capital volatility typical of construction cycles impacting OCF
• Limited disclosure on receivables/payables may mask counterparty or collection risk

Key Concerns:

• Sustainability of margin expansion after a strong quarter
• Non-operating expenses exceeding non-operating income, albeit small net impact
• Data gaps (SG&A breakdown, backlog, investing CF) constrain visibility into recurring vs one-time effects
• Effective tax rate normalization variability affecting net earnings

Investment Implications

Key Takeaways:

• Strong revenue growth (+21.1% YoY) with outsized profit growth (OP +50.5%, NI +66.1%)
• Operating margin expanded ~103 bps to 5.23%; net margin improved ~95 bps to 3.5%
• High-quality earnings with OCF 2.97x net income; ample liquidity (current ratio ~198%)
• Moderate leverage (D/E 1.35x) and strong interest cover (27.19x)
• ROIC at 7.0% aligns with target range, signaling improving capital efficiency

Metrics to Watch:

• Order intake and backlog (volume and margin on new orders)
• Gross margin and SG&A ratio trends versus revenue growth
• Working capital components (receivables, payables, advances) for OCF durability
• Debt maturity profile and interest rate exposure
• Dividend policy disclosure and payout/FCF alignment

Relative Positioning: Within Japan’s mid-tier general contractors, the company exhibits improving margins, solid liquidity, and adequate leverage control. ROE at 6.5% is decent but not standout; sustaining the current ROIC (~7%) and OCF conversion would position it competitively if order discipline and cost control continue.

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
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