EXEO Group,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥321.31B
• Operating Income: ¥16.40B
• Net Income: ¥6.49B
• EPS: ¥49.76

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

Exeo Group Co., Ltd. (1951) reported strong FY2026 Q2 consolidated results under JGAAP, with revenue of ¥321.3bn, up 17.5% YoY, indicating broad-based demand strength in core businesses. Operating income rose 59.1% YoY to ¥16.4bn, demonstrating meaningful operating leverage as cost discipline and mix improvements outpaced revenue growth. Net income increased 62.6% YoY to ¥10.25bn, translating to an EPS of ¥49.76 for the period. Profitability improved across the income statement: operating margin reached approximately 5.1%, ordinary margin about 5.0%, and net margin 3.19%. Gross margin stood at 11.7%, implying improved project execution and/or favorable mix in higher-margin segments despite inflationary cost pressures. Interest expense was modest at ¥0.50bn, and the interest coverage ratio of 32.6x indicates a comfortable buffer against financing costs. The company’s DuPont profile shows a calculated ROE of 3.12% for the period, driven by a 3.19% net margin, asset turnover of 0.524, and financial leverage of 1.87. Balance sheet strength appears solid with total assets of ¥613.4bn and total equity of ¥328.3bn; although the equity ratio is shown as 0.0% in the provided summary, simple derivation from assets and equity implies an equity ratio of roughly 53.5%. Liquidity looks healthy with current assets of ¥387.7bn, current liabilities of ¥206.6bn, a current ratio of 187.7%, and working capital of ¥181.1bn. Leverage appears moderate with total liabilities of ¥315.7bn and a debt-to-equity ratio of 0.96x (liabilities/equity basis). Tax expense was ¥5.09bn; while the reported effective tax rate is shown as 0.0%, an implied rate based on tax vs. pre-tax proxy is approximately low-30s percent. Cash flow data (OCF/FCF) and depreciation are not disclosed in the provided dataset, which limits cash flow quality assessment and EBITDA analysis; zeros likely represent undisclosed items rather than true zeros. Dividend data (DPS and payout) and share counts are also not disclosed here, constraining per-share and payout analyses beyond EPS. Overall, results indicate robust topline growth and margin expansion, translating to improved profitability and resilience against financing costs. The balance sheet suggests ample liquidity and moderate leverage, supporting strategic flexibility. However, the lack of cash flow disclosure prevents validation of earnings-to-cash conversion and FCF coverage. Seasonality and order intake visibility will be important to gauge the sustainability of H1 momentum into the second half. The outlook appears constructive on the back of strong operating execution and financial capacity, but monitoring cash generation and project working capital remains key.

Profitability Analysis

ROE_decomposition: Calculated ROE 3.12% = Net margin 3.19% × Asset turnover 0.524 × Financial leverage 1.87. The uplift in operating income (+59.1% YoY) relative to revenue (+17.5% YoY) indicates positive operating leverage, while leverage (Assets/Equity ≈ 1.87) is moderate and not the primary ROE driver. margin_quality: Gross margin 11.7% and operating margin ~5.1% suggest improved cost pass-through and project execution; ordinary margin ~5.0% and net margin 3.19% reflect manageable non-operating costs (interest expense ¥0.50bn). Implied effective tax rate is roughly 33% (based on tax ¥5.09bn vs. pre-tax proxy), consistent with domestic norms. operating_leverage: Operating income growth (+59.1% YoY) outpaced revenue growth (+17.5% YoY), implying meaningful operating leverage from scale benefits and possibly improved mix; further validation would require segment detail and fixed-cost structure insight.

Growth Assessment

revenue_sustainability: Revenue of ¥321.3bn grew 17.5% YoY, indicating healthy demand and potentially strong order execution in H1. Sustainability will hinge on order backlog visibility, infrastructure capex cycles, and project timing into H2. profit_quality: Profit growth outpaced revenue, with operating margin expansion to ~5.1%. Non-operating drag is limited given interest expense of ¥0.50bn and robust coverage. Confirmation of profit quality depends on cash conversion (OCF not disclosed) and absence of one-off gains (not indicated here). outlook: With moderate leverage and ample liquidity, the company appears positioned to sustain execution. Key supports include continued demand in communications and infrastructure solutions (inferred from business model), but watch for cost inflation, supply chain timing, and project phasing into the seasonally stronger second half.

Financial Health

liquidity: Current assets ¥387.7bn vs. current liabilities ¥206.6bn yield a current ratio of 187.7% and quick ratio 185.1%, indicating strong short-term liquidity. Working capital is ¥181.1bn, providing a cushion for project-based cash needs. solvency: Total liabilities ¥315.7bn against equity ¥328.3bn result in a liabilities-to-equity ratio of 0.96x; financial leverage (Assets/Equity) is ~1.87x. Interest coverage is 32.6x, signaling low near-term solvency risk. capital_structure: Equity base of ¥328.3bn underpins an implied equity ratio near 53.5% (equity/assets), despite the reported 0.0% figure in the metrics. The structure is conservative to moderate, supporting strategic investments and buffer against cyclical swings.

Cash Flow Quality

earnings_quality: OCF and FCF are not disclosed in the provided data (zeros likely reflect undisclosed items), preventing direct assessment of earnings-to-cash conversion. Given project-based operations, working capital swings can materially impact period OCF. FCF_analysis: Free cash flow cannot be computed due to missing OCF and capex/depreciation details. EBITDA is also undisclosed, limiting cross-check of non-cash items. working_capital: Balance sheet indicates substantial current assets vs. liabilities, but without OCF and detailed AR/AP/contract assets, we cannot determine whether H1 growth relied on working capital expansion or improved collection cycles.

Dividend Sustainability

payout_ratio_assessment: EPS for the period is ¥49.76, but DPS and payout ratio are undisclosed here (zeros treated as unreported), so payout cannot be assessed from this dataset. FCF_coverage: Unable to evaluate dividend coverage by FCF due to missing OCF and capex data. policy_outlook: No dividend policy details provided in the dataset. Sustainability would depend on normalized OCF generation, capex needs, and leverage, which appear manageable based on balance sheet strength.

Risk Assessment

Business Risks:

• Project execution risk and cost overruns in large-scale infrastructure and communications projects
• Timing risk from order intake, backlog conversion, and seasonal H2 weighting
• Input cost inflation and subcontractor availability affecting margins
• Competitive bidding pressure compressing gross margins
• Regulatory and public-sector budget variability affecting demand visibility
• Technology shifts in communications networks requiring ongoing investment and capability upgrades

Financial Risks:

• Working capital volatility impacting OCF in project cycles
• Potential increases in interest rates raising financing costs (though coverage is currently strong at 32.6x)
• Concentration risk if large projects or customers dominate revenue
• FX exposure on imported materials or overseas projects (not quantified here)

Key Concerns:

• Lack of disclosed OCF/FCF and depreciation impedes validation of earnings quality and cash conversion
• Reported equity ratio and effective tax rate metrics appear placeholder; reliance on implied calculations introduces uncertainty
• Sustainability of margin expansion without detailed segment/mix disclosure

Investment Implications

Key Takeaways:

• Strong H1 topline growth (+17.5% YoY) with outsized operating profit growth (+59.1% YoY) indicates positive operating leverage
• Margins improved to gross 11.7% and operating ~5.1%, with manageable non-operating costs
• Balance sheet is robust: implied equity ratio ~53.5%, current ratio 187.7%, liabilities/equity 0.96x
• Interest coverage of 32.6x provides a cushion against financial shocks
• Cash flow disclosure is insufficient; OCF/FCF not available, limiting assessment of cash-backed earnings
• Implied effective tax rate ~33% aligns with historical norms, despite placeholder metric shown

Metrics to Watch:

• Order backlog and book-to-bill to gauge revenue sustainability
• OCF, FCF, and working capital movements to validate earnings quality
• Segment margins and project mix to assess durability of operating leverage
• Capex and depreciation trends to understand medium-term cash needs
• Interest expense trajectory and refinancing terms amid rate environment

Relative Positioning: Within Japan’s communications and infrastructure engineering peers, Exeo’s H1 profile suggests above-peer growth momentum and solid balance sheet flexibility, though relative cash conversion cannot be judged here due to missing OCF/FCF disclosure.

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
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