Hakuten Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥14.95B
• Operating Income: ¥1.57B
• Net Income: ¥575M
• EPS: ¥68.20

Income Statement

Balance Sheet

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

Hakuten Co., Ltd. (21730) delivered strong FY2025 Q3 consolidated results under JGAAP, with clear acceleration in operating performance. Revenue reached ¥14.95bn, up 16.4% YoY, indicating healthy demand across experiential marketing and events-related solutions. Operating income surged 81.4% YoY to ¥1.572bn, lifting the operating margin to about 10.5%, signaling stronger pricing, mix, or cost control. Net income rose 84.7% YoY to ¥1.063bn, and the reported net margin stands at 7.11%, underscoring robust bottom-line conversion. ROE is reported at 25.65% via DuPont (net margin 7.11%, asset turnover 1.774x, leverage 2.03x), an attractive level versus typical domestic services peers. Gross profit is reported at ¥3.87bn with a gross margin of 25.9%, implying improved project execution and cost discipline. Interest expense remains modest at ¥10.38m, and interest coverage is high at 151.5x, indicating limited financial risk from borrowings. Liquidity is solid: current ratio 201% and working capital of ¥3.263bn support project execution and seasonal cash needs. The balance sheet shows total assets of ¥8.427bn and total equity of ¥4.145bn, implying an equity ratio around 49% despite the disclosed equity ratio field showing 0.0% (likely not updated in XBRL). Cash flow figures (OCF/FCF) are undisclosed in this snapshot, so cash conversion cannot be assessed from this dataset. Dividend per share is currently nil with a payout ratio of 0%, suggesting an emphasis on reinvestment or balance sheet strengthening; future policy will hinge on visibility of stable cash generation. Effective tax outflow appears around 18.1% based on income tax and ordinary income, despite the display field showing 0.0% (unreported). Overall profitability and capital efficiency are trending favorably, supported by margin expansion and efficient asset turnover. Financial leverage is moderate, and solvency appears sound given strong coverage and equity. Key limitations are the absence of reported cash flow statements, share count, and some detailed working capital components, which constrain assessment of earnings quality and dividend capacity. Even with these data constraints, the growth trajectory and ROE profile suggest operational momentum into the fiscal year-end, subject to project timing and macro sensitivity in client marketing budgets.

Profitability Analysis

ROE_decomposition: Reported ROE is 25.65%, derived from net profit margin 7.11% × asset turnover 1.774 × financial leverage 2.03. The ROE uplift in FY2025 Q3 reflects both margin expansion (operating margin ~10.5%) and strong asset utilization. margin_quality: Gross margin is 25.9% and operating margin is ~10.5% (¥1,572m/¥14,950m), pointing to improved project margins and SG&A efficiency. Net margin at 7.11% benefits from low interest burden and a moderate implied tax rate (~18.1%). operating_leverage: Operating income grew 81.4% YoY on 16.4% revenue growth, indicating positive operating leverage (fixed cost dilution and/or mix). The step-up in OP margin suggests enhanced scale benefits and disciplined overhead control.

Growth Assessment

revenue_sustainability: Revenue growth of 16.4% YoY suggests healthy client demand for experiential marketing and events. Sustainability will depend on order backlog, client budget trends, and event calendars heading into Q4. profit_quality: The significant outperformance at operating income versus revenue evidences mix and cost control gains. Interest expense is minimal, so operating gains translate well to net income. outlook: With elevated ROE (25.65%) and improved margins, momentum appears solid into the fiscal year-end. However, project timing and macro-sensitive marketing spend can introduce quarterly volatility; visibility would be improved with disclosed backlog and bookings.

Financial Health

liquidity: Current ratio is 201% and quick ratio is also 201% (inventories not disclosed), with working capital of ¥3,263m, indicating ample near-term liquidity for project execution. solvency: Total liabilities are ¥4,541m versus equity of ¥4,145m (debt-to-equity 1.10x). Interest coverage is 151.5x, suggesting low financial risk. Implied equity ratio from non-zero data is approximately 49% (¥4,145m/¥8,427m). capital_structure: Leverage is moderate (financial leverage 2.03x via DuPont). The liability structure likely includes trade payables and project-related advances typical of the business model; detailed breakdown is not provided here.

Cash Flow Quality

earnings_quality: OCF and FCF are not disclosed in this dataset. As such, we cannot corroborate earnings with cash generation or assess accrual intensity. FCF_analysis: Free cash flow is not available. Given the project-based model, FCF can swing with working capital (advance receipts, milestone billings, and payables). working_capital: Current assets ¥6,495m and current liabilities ¥3,231m indicate a solid net working capital buffer. Specific components (receivables, contract liabilities, inventories) are not disclosed here, limiting analysis of cash conversion cycles.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0.00 and the payout ratio is 0.0% against EPS of ¥68.20 for the period, indicating retained earnings to support growth or balance sheet resilience. FCF_coverage: FCF coverage cannot be assessed due to undisclosed OCF/FCF. On earnings alone, there appears capacity to initiate or raise dividends, but confirmation requires visibility on cash generation and investment needs. policy_outlook: Given improving profitability and moderate leverage, room exists for a shareholder return discussion contingent on sustained cash flows. Any policy shift would likely balance growth investments with potential dividends.

Risk Assessment

Business Risks:

• Cyclicality in client marketing and event budgets tied to macro conditions
• Project timing volatility affecting quarterly revenue and margins
• Event cancellations or disruptions (e.g., public health, natural disasters)
• Execution risk on large projects and subcontractor management
• Talent availability and labor cost inflation impacting delivery capacity
• Client concentration risk if top accounts drive a large share of sales

Financial Risks:

• Working capital swings due to milestone billing and advance receipts
• Potential increase in borrowing needs during peak project cycles
• Counterparty credit risk on receivables in downturns
• Limited visibility into cash flows due to undisclosed OCF/FCF

Key Concerns:

• Lack of disclosed cash flow statements hampers earnings quality assessment
• Dividend capacity cannot be validated without FCF data
• Sensitivity to macro-driven marketing spend may affect near-term growth

Investment Implications

Key Takeaways:

• Strong FY2025 Q3 with revenue +16.4% YoY and operating income +81.4% YoY
• ROE at 25.65% supported by 7.11% net margin, 1.774x asset turnover, and 2.03x leverage
• Operating margin improved to ~10.5%, indicating positive operating leverage
• Liquidity is robust (current ratio 201%, working capital ¥3.263bn)
• Interest burden is low; coverage at 151.5x mitigates solvency risk
• Cash flow data not disclosed; FCF and cash conversion remain key unknowns
• DPS currently ¥0; payout policy flexibility exists pending cash flow visibility

Metrics to Watch:

• Order backlog and bookings momentum into Q4
• Gross margin and SG&A ratio to validate sustained operating leverage
• Cash conversion cycle: receivables days, payables days, and contract liabilities
• Operating cash flow and free cash flow generation
• Client concentration metrics and repeat business rates
• Headcount utilization and subcontracting ratio
• Effective tax rate normalization versus implied ~18%

Relative Positioning: Within domestic marketing/event services peers, Hakuten currently exhibits above-average ROE and improving operating margins with moderate leverage and strong liquidity; visibility on cash generation is the main differentiator to fully assess durability.

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