UEKI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.74B
• Operating Income: ¥1.44B
• Net Income: ¥567M
• EPS: ¥146.32

Income Statement

Balance Sheet

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

Ueki Corporation (18670) reported strong FY2026 Q2 consolidated results under JGAAP, with revenue up 27.8% YoY to ¥28.74bn and operating income up 67.6% YoY to ¥1.44bn, indicating material operating leverage. Net income rose 69.1% YoY to ¥0.96bn, translating to an EPS of ¥146.32. Profitability expanded meaningfully: operating margin reached roughly 5.0%, and net margin stood at 3.34%, supported by improved execution and non-operating balance. The DuPont bridge shows ROE of 3.22% driven by a 3.34% net margin, 0.55x asset turnover, and 1.75x financial leverage, pointing to a return profile primarily margin-led rather than leverage-driven. Gross profit is reported at ¥2.52bn, implying an 8.8% gross margin; note that the presented cost of sales figure does not reconcile with gross profit, so margin analysis relies on the disclosed gross profit and margin metrics. Ordinary income of ¥1.50bn suggests non-operating items were modestly positive relative to operating profit. Interest expense is low at ¥14.25m, yielding robust interest coverage of about 101x. The balance sheet is conservative, with total assets of ¥52.24bn and total equity of ¥29.82bn; the implied equity ratio is approximately 57.1% (despite a reported 0.0%, which appears to be an undisclosed field), and the debt-to-equity ratio is 0.73x. Liquidity appears strong with a current ratio of 191%, underpinned by working capital of ¥15.62bn; inventories are undisclosed, so the quick ratio equals the current ratio by presentation. Cash flow statements are not disclosed in the dataset (zeros indicate unreported), limiting assessment of cash conversion and free cash flow coverage. Dividend per share is shown as ¥0.00 with a 0% payout ratio; this likely reflects timing or non-disclosure for the interim period rather than a definitive full-year policy. Overall, the company demonstrates solid top-line momentum and operating leverage while maintaining a strong capital structure. Profit quality appears reasonable based on the operating-to-ordinary income bridge and interest coverage, though confirmation via operating cash flow is needed. The outlook hinges on order intake, backlog quality, and cost control amid construction input price volatility and labor constraints. Given data gaps (cash flow, share count, inventories, D&A), conclusions are based on available non-zero items and standard interpretations of JGAAP line items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.34% (Net income ¥0.96bn / Revenue ¥28.74bn)
• asset_turnover: 0.55x (Revenue ¥28.74bn / Total assets ¥52.24bn)
• financial_leverage: 1.75x (Total assets ¥52.24bn / Total equity ¥29.82bn)
• calculated_ROE: 3.22% (matches reported 3.22%)
• commentary: ROE is primarily driven by margin expansion and moderate asset efficiency; leverage contribution is modest given a strong equity base. margin_quality:
• gross_margin: 8.8% (based on reported gross profit ¥2.52bn; note cost of sales figure provided does not reconcile and is not used for margin math)
• operating_margin: 5.0% (Operating income ¥1.44bn / Revenue ¥28.74bn)
• ordinary_margin: 5.2% (Ordinary income ¥1.50bn / Revenue ¥28.74bn)
• net_margin: 3.34% (Net income ¥0.96bn / Revenue ¥28.74bn)
• tax_rate: Approximately 27.9% (Income tax ¥0.372bn / [Net income ¥0.960bn + Income tax ¥0.372bn]); effective tax line in provided metrics showing 0.0% reflects non-disclosure format, not actual zero. operating_leverage: YoY revenue growth of +27.8% vs operating income +67.6% indicates positive operating leverage, likely from improved mix and SG&A efficiency. Interest expense is minimal, so financial leverage did not drive the improvement; the operating-to-ordinary income bridge suggests stable non-operating items.

Growth Assessment

revenue_sustainability: Top-line expansion of +27.8% YoY is robust for a general contractor and likely reflects strong order execution and backlog conversion in the first half. Sustainability hinges on order intake in civil engineering/building segments and project timing into 2H. profit_quality: Operating income growth of +67.6% YoY outpaced sales, reflecting better pricing/contingency capture or favorable project mix. Ordinary income exceeds operating income moderately, implying non-operating support is present but not the core driver. outlook: With a conservative balance sheet and strong 1H momentum, full-year growth will depend on backlog replenishment, labor availability, and materials cost trends. Monitoring 2H order bookings, change orders, and cost pass-through will be key to assessing whether margin gains persist.

Financial Health

liquidity: Current ratio 191.4% and working capital of ¥15.62bn indicate ample short-term liquidity. Quick ratio equals current ratio due to undisclosed inventories; actual quick ratio may be lower if inventories/contract assets are material. solvency: Debt-to-equity ratio of 0.73x and implied equity ratio ~57.1% (Total equity ¥29.82bn / Total assets ¥52.24bn) reflect a solid capital base. Interest coverage is ~100.9x, indicating minimal refinancing risk from interest burden. capital_structure: Leverage appears moderate with a sizeable equity buffer. The asset base likely includes contract assets and receivables common in construction; transparency on interest-bearing debt split and cash is limited due to undisclosed cash figures.

Cash Flow Quality

earnings_quality: Earnings quality cannot be fully validated without operating cash flow data (OCF unreported). However, the close alignment of operating and ordinary income and low interest burden suggest core profitability rather than non-recurring financial gains. FCF_analysis: Free cash flow is not computable from the provided dataset (OCF and capex/D&A undisclosed). Construction FCF can be volatile due to milestone billing and advances; confirmation requires cash flow statements. working_capital: Working capital is positive at ¥15.62bn, supporting execution capacity. Further insight requires detail on trade receivables, unbilled receivables, advances from customers, and retention money, which are not disclosed here.

Dividend Sustainability

payout_ratio_assessment: Payout ratio appears at 0% based on undisclosed DPS (¥0.00) and EPS ¥146.32, likely reflecting interim timing rather than policy. Without full-year guidance and cash data, payout capacity cannot be precisely assessed. FCF_coverage: FCF coverage cannot be calculated due to unreported cash flows; thus, dividend coverage assessment is inconclusive from this dataset alone. policy_outlook: Given a strong equity base and low interest burden, the company likely has capacity for stable dividends contingent on cash conversion and backlog visibility. Confirming policy requires management guidance and year-end DPS disclosure.

Risk Assessment

Business Risks:

• Input cost inflation and volatility in materials (steel, cement, fuel) impacting project margins
• Labor shortages and subcontractor capacity constraints affecting scheduling and costs
• Fixed-price contract risk and change-order recoverability
• Backlog replenishment risk as large projects complete
• Project concentration and geographic exposure to regional demand
• Execution risk on complex civil/architectural projects
• Exposure to weather and natural disasters delaying construction schedules

Financial Risks:

• Working capital swings from milestone billing and retention leading to cash conversion volatility
• Counterparty credit risk on receivables and unbilled contract assets
• Potential increase in interest rates affecting future borrowing costs (though current coverage is strong)
• Limited visibility due to undisclosed cash, D&A, and cash flows in this period

Key Concerns:

• Non-reconciliation between disclosed cost of sales and gross profit necessitates caution in margin analysis
• Absence of cash flow data limits validation of earnings quality and dividend capacity
• Interim EPS and DPS timing make payout interpretation uncertain

Investment Implications

Key Takeaways:

• Strong 1H revenue growth (+27.8% YoY) with outsized operating income growth (+67.6% YoY) demonstrates operating leverage
• Healthy profitability: operating margin ~5.0%, net margin 3.34%, ordinary margin ~5.2%
• Solid financial base with implied equity ratio ~57% and interest coverage ~101x
• ROE at 3.22% is margin- and efficiency-driven rather than leverage-driven
• Data limitations (cash flow, D&A, inventories) constrain assessment of cash conversion and FCF

Metrics to Watch:

• Order intake and backlog development for 2H and next fiscal year
• Gross margin trend and SG&A ratio to confirm sustainability of operating leverage
• Cash conversion: OCF, advances from customers, unbilled receivables, and retention balances
• Capex and D&A to gauge maintenance vs. growth investment needs
• Interest-bearing debt and cash balances to refine net leverage and equity ratio
• Effective tax rate trajectory and any extraordinary items

Relative Positioning: Within Japanese general contractors of similar scale, Ueki exhibits stronger-than-average interim growth and conservative leverage, but lacks disclosed cash flow detail needed to benchmark cash conversion and dividend capacity.

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