Insight Co., Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥613M
• Operating Income: ¥46M
• Net Income: ¥24M
• EPS: ¥19.64

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

For FY2026 Q1, Insight (21720) delivered solid topline growth with revenue of ¥613.0 million, up 11.8% year over year, indicating resilient demand and/or effective business development. Gross profit reached ¥135.3 million, translating to a gross margin of 22.1%, which frames the company’s value-add after cost of sales. Operating income was ¥46.0 million, increasing 2.1% YoY, but growing more slowly than revenue, suggesting some margin compression at the operating level. Ordinary income of ¥47.0 million slightly exceeded operating income, implying small net financial or other non-operating gains. Net income was ¥31.0 million, up a strong 37.1% YoY, implying favorable below-the-line effects (e.g., financial income, tax normalization) supported bottom-line growth. The net margin stood at 5.06%, consistent with the reported DuPont input. Using end-period balances, asset turnover was 0.432x, and financial leverage was 1.76x, resulting in a calculated ROE of 3.85%, aligned with the reported figure. Liquidity is robust: current assets of ¥1,142.1 million against current liabilities of ¥448.7 million yield a current ratio of approximately 254.6%, with no inventories disclosed and thus a similarly strong quick ratio. Total assets were ¥1,418.0 million, total liabilities ¥501.3 million, and total equity ¥805.0 million; by calculation, the equity ratio approximates 56.8% despite the equity ratio field showing 0.0% (unreported). Working capital is ample at ¥693.5 million, supporting operational flexibility. Interest expense was minimal at ¥0.054 million, and interest coverage was extremely high at about 852x, underscoring very low financial burden. The operating profit margin was roughly 7.5% (¥46.0m/¥613.0m), suggesting some pressure relative to implied prior-year levels given slower operating profit growth than revenue. The tax charge was ¥13.13 million; relative to implied pre-tax profit, this points to a typical mid-to-high 20s effective tax rate, despite an “effective tax rate” field reported as 0.0% (unreported). Cash flow statement items (operating, investing, financing, cash) were not disclosed in this dataset, so cash conversion cannot be assessed this quarter. Dividend and share data were also not disclosed; EPS was ¥19.64, but outstanding shares and DPS fields were unreported. Overall, the company shows healthy growth, strong balance sheet liquidity, and modest ROE constrained by moderate asset turnover and margins, with data gaps in cash flow and dividends limiting assessment completeness.

Profitability Analysis

ROE_decomposition: ROE 3.85% = Net margin 5.06% × Asset turnover 0.432× × Leverage 1.76×. The result indicates modest profitability driven by moderate margins and relatively low asset turnover, with only limited contribution from leverage. margin_quality: Gross margin is 22.1% (¥135.3m/¥613.0m). Operating margin is ~7.5% (¥46.0m/¥613.0m). Net margin is 5.06% (¥31.0m/¥613.0m). YoY, revenue grew faster than operating income (+11.8% vs +2.1%), implying operating margin compression likely from higher cost of sales and/or SG&A. Ordinary income slightly above operating income suggests small net non-operating gains. Tax expense of ¥13.13m implies a normalized tax burden; the 0% effective tax rate shown in the summary metrics is not reflective of the actual tax charge. operating_leverage: With revenue up 11.8% but operating income up only 2.1%, operating leverage was unfavorable this quarter (costs grew faster than sales). This suggests either input cost pressure, mix shift to lower-margin work, or increased SG&A (e.g., hiring, marketing) ahead of growth.

Growth Assessment

revenue_sustainability: Revenue increased 11.8% YoY to ¥613.0m, suggesting healthy demand. Without backlog or segment detail, sustainability cannot be verified; however, the growth rate is consistent with a positive operating environment. profit_quality: Net income rose 37.1% YoY to ¥31.0m, outpacing operating income growth, indicating contribution from non-operating items and/or normalization of taxes. The gap between gross/operating trends and net income highlights reliance on below-the-line factors this quarter. outlook: Absent guidance and cash flow disclosures, near-term outlook hinges on restoring operating leverage by controlling cost of sales and SG&A. Sustaining double-digit revenue growth while stabilizing margins would be key to improving ROE above the current 3.85%.

Financial Health

liquidity: Current assets ¥1,142.1m vs current liabilities ¥448.7m yield a current ratio of ~254.6% and a quick ratio similarly high (inventories undisclosed). Working capital is ¥693.5m, indicating ample liquidity headroom. solvency: Total liabilities ¥501.3m and equity ¥805.0m imply a liabilities-to-equity ratio of ~0.62x. Calculated equity ratio is ~56.8% (¥805.0m/¥1,418.0m), pointing to a conservative capital structure. capital_structure: Leverage (assets/equity) at ~1.76x and negligible interest expense (¥0.054m) reflect low financial risk. Interest coverage is extremely strong at ~852x, leaving room to selectively use debt if needed.

Cash Flow Quality

earnings_quality: Cash flow data (OCF/FCF) were not disclosed this quarter, so cash conversion cannot be assessed. The reported OCF/Net Income ratio of 0.00 is a placeholder due to non-disclosure, not an indicator of poor cash generation. FCF_analysis: Investing and financing cash flows were not disclosed. As such, free cash flow and reinvestment intensity cannot be analyzed for the quarter. working_capital: Balance sheet shows strong current asset coverage; however, without AR/AP breakdown or OCF, we cannot evaluate receivables timing, DSO, or potential build-ups that could affect cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio were not disclosed; the 0.00 figures are placeholders. EPS is ¥19.64, but without DPS we cannot assess payout. FCF_coverage: FCF data were not provided, so dividend coverage by FCF cannot be determined. policy_outlook: No dividend policy information was provided. Given the strong balance sheet and modest ROE, capital allocation could prioritize organic growth or selective returns, but conclusions are limited by disclosure gaps.

Risk Assessment

Business Risks:

• Operating margin pressure as costs outpace revenue growth
• Dependence on non-operating items and tax normalization to support net income
• Potential demand cyclicality affecting revenue growth sustainability
• Limited visibility due to lack of segment/backlog disclosure
• Pricing pressure or unfavorable mix shifts impacting gross margin

Financial Risks:

• Cash conversion uncertainty due to undisclosed OCF and working capital movements
• Possible receivables concentration or collection risk (not assessable without detail)
• Small-cap scale potentially limiting access to low-cost capital despite strong current metrics

Key Concerns:

• ROE at 3.85% is below typical Japanese small-cap cost of equity, requiring margin or turnover improvements
• Negative operating leverage in the quarter despite double-digit revenue growth
• Insufficient cash flow and dividend disclosure limiting assessment of earnings quality and shareholder return capacity

Investment Implications

Key Takeaways:

• Double-digit revenue growth (+11.8% YoY) with modest operating income growth (+2.1%) signals margin pressure
• Net income strength (+37.1% YoY) benefited from below-the-line factors
• ROE at 3.85% reflects moderate margins and asset turnover with low leverage
• Balance sheet strength: current ratio ~255%, equity ratio ~56.8%, and minimal interest burden
• Data gaps in cash flow and dividends constrain evaluation of cash conversion and capital returns

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio
• Gross margin and project/customer mix
• Receivables and payables turnover (DSO/DPO) when disclosed
• Order intake/backlog or pipeline indicators
• OCF and FCF trends, including capex intensity
• ROE trajectory via margin and turnover improvements

Relative Positioning: Financially conservative balance sheet with strong liquidity and low leverage, but profitability (ROE 3.85%, operating margin ~7.5%) appears modest versus typical targets for value-creating returns; improving operating leverage and cash conversion would enhance positioning among Japanese small caps.

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