ASANUMA CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥86.88B
• Operating Income: ¥4.54B
• Net Income: ¥1.91B
• 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

Asanuma Corporation (18520) reported robust FY2026 Q2 results under JGAAP on a consolidated basis, with clear signs of positive operating leverage and improving profitability. Revenue rose 21.1% year over year to ¥86.9bn, while operating income increased 50.5% to ¥4.54bn, implying meaningful margin expansion. Gross profit was ¥7.80bn, translating to a gross margin of 9.0%, and operating margin stood at approximately 5.2%, healthy for a mid-tier general contractor. Net income reached ¥3.07bn, up 66.1% YoY, driving a net margin of 3.53% and ROE of 6.47% per the provided DuPont metrics. The DuPont breakdown indicates net profit margin of 3.53%, asset turnover of 0.779, and financial leverage of 2.35, combining to the reported 6.47% ROE and reflecting a balanced mix of margin improvement and efficient asset utilization. Balance sheet strength appears solid: total assets were ¥111.5bn and total equity ¥47.5bn, implying an equity ratio around 42.6% (derived from Assets/Equity = 2.35), despite the reported equity ratio field showing 0.0% (unreported). Liquidity is ample with a reported current ratio of 184.7% and working capital of ¥44.8bn, consistent with the scale and cash conversion cycle of the construction business. Interest expense was modest at ¥66m with operating income coverage of 68.8x, indicating low near-term refinancing risk. Cash generation quality was strong: operating cash flow of ¥7.42bn was 2.42x net income, suggesting earnings are well-supported by cash collections and favorable working-capital movements. Ordinary income of ¥4.42bn was slightly below operating income, indicating limited non-operating headwinds. The reported effective tax rate in the calculated metrics appears as 0.0%, but based on the disclosed income tax of ¥0.99bn and ordinary income of ¥4.42bn, an implied tax rate around the low-20s percent is more realistic. Dividend fields (DPS and payout) are shown as 0.00, which likely reflects non-disclosure at Q2 rather than an actual zero dividend; as such, dividend assessment must rely on cash generation capacity rather than reported payouts. Several items (inventories/WIP, cash & equivalents, investing cash flows, shares outstanding, book value per share) are shown as zero, indicating unreported rather than true zeros; conclusions are therefore made using only available non-zero data. Overall, the company demonstrates improving profitability, strong operating cash flow, conservative leverage, and ample liquidity into the second half. Key swing factors for the remainder of FY2026 include order intake quality, cost pass-through, and project execution during the peak completion period. While near-term financial risk appears contained, the inherently low-margin, project-based nature of construction keeps execution risk elevated.

Profitability Analysis

ROE decomposition: Net margin 3.53% × Asset turnover 0.779 × Financial leverage 2.35 = ROE 6.47%, indicating a balanced contribution from margin improvement and moderate leverage. Operating margin is approximately 5.2% (¥4.541bn OI / ¥86.875bn revenue), and EBITDA margin is 5.7% (¥4.955bn/¥86.875bn), highlighting limited D&A drag typical of contractors with relatively light owned-asset bases. The 50.5% YoY increase in operating income on +21.1% revenue suggests positive operating leverage, likely from improved project mix and better SG&A absorption. Gross margin at 9.0% provides headroom for overhead coverage and has likely expanded YoY given the OI growth outpacing sales, though exact YoY margin is not disclosed. Ordinary income (¥4.421bn) being slightly below operating income implies limited non-operating costs beyond modest interest expense (¥66m). Interest coverage is very strong at 68.8x, indicating profitability is not burdened by financing costs. The net margin of 3.53% is healthy for a mid-sized domestic general contractor and consistent with improving bid discipline and cost control. Margin quality appears supported by cash conversion (OCF/NI 2.42x), suggesting recognized profits are not driven by accruals. Overall profitability is on an improving trajectory with manageable financial leverage supporting ROE rather than driving it.

Growth Assessment

Top-line growth of 21.1% YoY to ¥86.9bn indicates solid execution and likely healthy backlog conversion in H1. Profit growth outpaced revenue (operating income +50.5%, net income +66.1%), pointing to margin expansion and favorable mix. With ordinary income close to operating income, non-operating items are not materially diluting growth. Sustainability into H2 will depend on backlog quality, new order intake, and ability to pass through labor/material cost inflation; these are not disclosed but are typical swing variables. The asset turnover of 0.779 suggests efficient use of the asset base; if scaled to a full-year run-rate, turnover could improve further as H2 completions typically rise. Profit quality is reinforced by OCF/NI at 2.42x, indicating growth is cash-backed rather than purely accounting. No guidance or order-book data are provided, so forward outlook must be inferred from mid-year trends: current trajectory signals potential for full-year earnings growth if execution and pricing discipline hold. Key unknowns include the scale of H2 project handovers and any seasonal working-capital build. Overall, growth appears supported by fundamentals, with execution risk the principal variable.

Financial Health

Liquidity is strong with current assets of ¥97.7bn versus current liabilities of ¥52.9bn, yielding a current ratio of 184.7% and working capital of ¥44.8bn. The quick ratio is reported equal to the current ratio because inventories/WIP are shown as zero (unreported); true quick liquidity is likely somewhat lower but still comfortable. Total liabilities are ¥69.1bn against equity of ¥47.5bn, producing a debt-to-equity ratio of 1.46x and an implied equity ratio near 42.6% (derived), a solid capital base for a contractor. Interest expense is low at ¥66m with coverage of 68.8x, suggesting minimal near-term solvency pressure. The balance sheet composition (large current assets typical of receivables, advances, and WIP) appears standard for the industry, though line-item details are not disclosed. Ordinary income roughly aligns with operating income, indicating limited reliance on investment income or non-core gains. Overall solvency and liquidity metrics point to a conservative financial profile able to absorb project timing variability.

Cash Flow Quality

Operating cash flow of ¥7.42bn versus net income of ¥3.07bn (OCF/NI 2.42x) signals high earnings quality and favorable working-capital dynamics in H1. EBITDA totaled ¥4.96bn, providing a cash earnings base well above interest costs and taxes. Investing cash flow is shown as zero (unreported), so Free Cash Flow cannot be reliably computed; the reported FCF of 0 should be treated as undisclosed rather than an actual zero. Without capex detail, we cannot parse maintenance vs. growth investment, but contractors typically have modest capex relative to revenue. Working capital appears to have contributed positively to OCF given the magnitude versus net income, though breakdowns of receivables, payables, advances received, and WIP are not available. Overall, cash conversion looks strong for the period, decreasing reliance on external financing.

Dividend Sustainability

Dividend fields (DPS 0.00, payout 0.0%, FCF coverage 0.00x) reflect non-disclosure rather than confirmed zero payouts at Q2. Absent confirmed DPS, we evaluate capacity: net income of ¥3.07bn and strong OCF of ¥7.42bn indicate room to fund dividends if the company chooses, subject to capex and working-capital needs. Equity of ¥47.5bn and modest interest burden provide additional flexibility. However, lacking investing CF and capex data, FCF coverage of potential dividends cannot be quantified. Policy outlook is therefore uncertain from this data set; historically, mid-tier Japanese contractors often target stable or progressive dividends, but we cannot assert for this issuer without disclosure. Interim sustainability appears sound on capacity grounds, but confirmation depends on actual DPS guidance and year-end cash needs.

Risk Assessment

Business Risks:

• Project execution risk and potential cost overruns on fixed-price contracts
• Input cost inflation (materials, labor) and pass-through limitations
• Order backlog quality, timing of completions, and book-to-bill volatility
• Competitive bidding pressure in public and private sectors
• Supply chain constraints and subcontractor availability
• Weather, safety, and site-related disruptions impacting schedules
• Customer credit risk and counterparty delays in payment
• Regulatory changes in construction standards and labor laws

Financial Risks:

• Working-capital swings tied to receivables, WIP, and advances received
• Concentration risk in large projects affecting earnings volatility
• Potential increase in interest rates impacting bonding/financing costs
• Limited visibility on capex/investing cash flows (undisclosed in period)
• Margin sensitivity given low inherent industry margins

Key Concerns:

• Sustainability of margin expansion as competition and costs evolve
• Dependence on strong H2 project handovers to meet full-year targets
• Lack of disclosure on inventories/WIP, investing CF, and dividend policy limiting full assessment

Investment Implications

Key Takeaways:

• Strong H1 with revenue +21.1% YoY and operating income +50.5% YoY demonstrates positive operating leverage
• Profitability solid for the sector: operating margin ~5.2%, net margin 3.53%, ROE 6.47%
• Earnings are cash-backed with OCF/NI at 2.42x, supporting quality of results
• Balance sheet is conservative with implied equity ratio ~42.6% and current ratio 1.85x
• Interest burden is minimal (coverage 68.8x), reducing solvency risk
• Data gaps (inventories/WIP, investing CF, DPS) constrain full valuation of FCF and payout capacity

Metrics to Watch:

• Order intake, backlog, and book-to-bill ratio
• Gross margin on new orders and overall gross margin trend
• SG&A ratio and operating margin progression
• OCF to net income ratio and working-capital days (AR, AP, WIP/advances)
• Capex and investing cash flows to derive true FCF
• Equity ratio (Assets/Equity) and debt-to-equity trend
• Dividend announcements and payout policy clarity

Relative Positioning: Within Japan’s mid-tier general contractors, Asanuma’s mid-year operating margin (~5%) and strong cash conversion compare favorably, supported by a solid equity base and low interest burden; however, visibility on backlog quality and FCF is less clear due to disclosure gaps.

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