AMITA HOLDINGS CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.52B
• Operating Income: ¥296M
• Net Income: ¥277M
• EPS: ¥10.56

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

Amita Holdings Co., Ltd. (TSE: 21950) reported FY2025 Q3 consolidated results under JGAAP showing modest top-line growth with mixed profitability dynamics. Revenue grew 0.9% year on year to ¥3,522 million, indicating stable demand but limited expansion momentum. Gross profit reached ¥1,628.6 million, translating to a robust gross margin of 46.2%, which suggests a service-heavy or solution-oriented revenue mix with relatively low inventory intensity. Operating income was ¥296 million, down 1.3% YoY, implying mild negative operating leverage as the small revenue increase did not fully offset cost inflation or higher SG&A. Ordinary income came in at ¥314 million, ahead of operating income due to positive non-operating items net of interest expense of ¥20.5 million, yielding a healthy interest coverage ratio of 14.5x. Net income declined sharply by 33.1% YoY to ¥185 million, pointing to items below the ordinary income line (e.g., extraordinary losses or minority interests) dampening bottom-line performance despite stable core profit. The implied effective tax rate based on disclosed taxes (¥75.9 million) and ordinary income is roughly 24%, though extraordinary items may affect the precise rate at the pre-tax level. DuPont analysis indicates a reported/derived ROE of 6.51% driven by a net margin of 5.25%, asset turnover of 0.473x, and financial leverage of 2.62x. Asset turnover remains modest, reflecting a balance sheet with significant fixed or other assets relative to current period sales, which constrains ROE despite decent margins. Liquidity is strong, with a current ratio of 232% and quick ratio of 229%, supported by low inventories (¥47.7 million), implying disciplined working capital management and a service-heavy model. The capital structure shows total liabilities of ¥3,861 million versus equity of ¥2,843 million (liabilities-to-equity of ~1.36x), and an implied equity ratio near 38% based on totals, despite the equity ratio metric not being disclosed in XBRL. Cash flow statement line items were not disclosed (shown as zero), limiting assessment of earnings-to-cash conversion and free cash flow quality this quarter. No dividend data was effectively disclosed (DPS and payout shown as zero), so distribution policy trends cannot be confirmed for the period. Overall, profitability remains respectable at the gross and operating levels, but the sharp YoY decline in net income is a key watchpoint, likely tied to below-the-line items or one-offs. The company’s strong liquidity, manageable leverage, and healthy interest coverage provide balance sheet resilience. Data limitations (notably cash flow and some per-share metrics) temper confidence in cash conversion and dividend capacity assessments for the quarter.

Profitability Analysis

ROE decomposition (DuPont): Net margin 5.25% x asset turnover 0.473x x financial leverage 2.62x yields a calculated ROE of 6.51%, matching the reported figure. The gross margin of 46.2% is strong and consistent with a services/solutions model and low inventory (¥47.7m). Operating margin is approximately 8.4% (¥296m/¥3,522m), modestly lower YoY given operating income declined 1.3% against +0.9% revenue, indicating slight negative operating leverage. Ordinary margin is ~8.9% (¥314m/¥3,522m), aided by net non-operating income; interest expense is manageable at ¥20.5m. Net margin compressed to 5.25% due to items below ordinary income (taxes and likely extraordinary/minority impacts), leading to the -33.1% YoY net income change. Asset turnover at 0.473x suggests room to improve capital efficiency; better utilization of existing asset base or mix shift to higher-velocity offerings could enhance ROE. Interest coverage is strong at ~14.5x (operating income/interest expense), indicating profitability comfortably services financing costs. Overall margin quality appears solid at the gross level; the key pressure point resides below operating income, implying non-operating or extraordinary volatility rather than core weakness.

Growth Assessment

Revenue growth of +0.9% YoY signals near-flat top-line momentum, likely driven by steady demand but constrained by market conditions or project timing. Operating income decline of -1.3% YoY despite marginal revenue growth indicates limited operating leverage this quarter; SG&A or cost inflation outpaced revenue mix improvements. Ordinary income outperformed operating income, suggesting supportive non-operating items; however, this did not translate to net income growth due to taxes and possible extraordinary/minority effects. Net income decline of -33.1% YoY is a notable divergence from stable operating performance, implying lower-quality growth at the bottom line this period. Gross margin at 46.2% remains a structural strength and supports medium-term earnings resilience if volume growth resumes. Sustainability: with low inventories and strong liquidity, the company appears capable of executing on pipeline opportunities; however, the lack of reported cash flow data limits assessment of cash-funded growth capacity. Outlook: near-term growth likely tracks market demand and execution on contracted projects; margin trajectory will hinge on SG&A discipline and minimizing extraordinary losses. Monitoring conversion of ordinary income to net income will be key to validating earnings quality and sustainability.

Financial Health

Liquidity is robust: current ratio 232.4% and quick ratio 229.5% indicate strong short-term coverage, supported by minimal inventory (¥47.7m). Working capital stands at ¥2,195.2m, providing operational flexibility. Total assets are ¥7,448m and total liabilities ¥3,861m; with equity of ¥2,843m, the implied equity ratio is approximately 38% (equity/assets), though the XBRL equity ratio field was not disclosed. Leverage is moderate with liabilities-to-equity at ~1.36x. Interest expense of ¥20.5m is well covered by operating income (14.5x), suggesting low near-term solvency risk. Absence of detailed debt composition (short vs long-term, fixed vs floating) limits a granular solvency assessment. Overall, the balance sheet appears sound with headroom to navigate volatility.

Cash Flow Quality

Cash flow statement items were not disclosed this quarter (OCF, investing CF, financing CF shown as zero indicate non-disclosure), preventing direct assessment of earnings-to-cash conversion. As a result, derived metrics like OCF/Net Income and FCF are not interpretable for this period. Indirect indicators: low inventories and strong quick ratio imply limited cash tied in stock; however, receivables and contract assets (not disclosed) could be significant given the service-centric model. Depreciation and amortization were not disclosed; therefore, EBITDA metrics reported as zero are not meaningful. Without OCF detail, we cannot validate whether the 5.25% net margin translates into sustainable free cash flow; monitoring cash conversion when data becomes available is essential.

Dividend Sustainability

Dividend per share and payout ratio were shown as zero, indicating non-disclosure rather than confirmed absence of dividends for the period. With net income of ¥185m and solid liquidity, capacity for distributions cannot be assessed without operating cash flow and capital expenditure data. Free cash flow coverage of dividends cannot be calculated given missing cash flow details; therefore, payout sustainability and policy trajectory remain unclear. In the absence of disclosed DPS, we treat dividend outlook as not assessable this quarter; future disclosures on FCF and capital allocation policy will be key.

Risk Assessment

Business Risks:

• Low top-line growth (+0.9% YoY) increases sensitivity to cost inflation and limits operating leverage.
• Dependence on service/solution projects may introduce timing risk and revenue lumpiness.
• Margin sensitivity to SG&A and personnel costs given high gross margin but mid-single-digit operating margin.
• Potential exposure to regulatory or environmental policy shifts if business involves circular economy/sustainability services.
• Customer concentration risk cannot be ruled out due to lack of disclosure.

Financial Risks:

• Net income volatility driven by items below ordinary income (extraordinary losses or minority interests).
• Limited visibility on cash generation due to non-disclosed OCF and capex, constraining assessment of funding capacity.
• Interest rate risk on any floating-rate debt (debt breakdown not disclosed).
• Refinancing and covenant risk cannot be evaluated without debt maturity details.

Key Concerns:

• Sharp YoY decline in net income (-33.1%) despite stable operating performance.
• Absence of cash flow disclosure obscures earnings quality and FCF conversion.
• Modest asset turnover (0.473x) constrains ROE; improvement in capital efficiency is needed for higher returns.

Investment Implications

Key Takeaways:

• Core profitability remains intact at the gross and operating levels, but bottom-line volatility is elevated.
• ROE of 6.5% is supported by moderate leverage and margins but limited by low asset turnover.
• Balance sheet liquidity is strong (quick ratio ~229%), providing operational flexibility.
• Interest coverage is solid at ~14.5x, indicating manageable financial risk.
• Cash flow and dividend visibility are limited due to non-disclosure of CF and DPS details.

Metrics to Watch:

• Operating margin trajectory and SG&A intensity to gauge operating leverage recovery.
• Reconciliation from ordinary income to net income (extraordinary items, minority interests).
• Operating cash flow and capex to assess FCF and dividend capacity when disclosed.
• Asset turnover and working capital days (especially receivables) for capital efficiency.
• Debt composition (maturity, fixed/floating) and any changes in interest coverage.

Relative Positioning: Within small/mid-cap service-oriented peers on the TSE, Amita exhibits stronger-than-average gross margins and liquidity, moderate leverage, and a mid-single-digit ROE constrained by low asset turnover; earnings quality is currently less verifiable than peers with more consistent cash flow 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
• 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