NJS Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥18.42B
• Operating Income: ¥2.95B
• Net Income: ¥1.87B
• EPS: ¥198.99

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

NJS (23250) reported FY2025 Q3 consolidated results under JGAAP with revenue of ¥18.416bn, up 7.3% YoY, indicating steady top-line growth. Gross profit reached ¥7.500bn, translating to a strong gross margin of 40.7%, suggesting favorable project mix and pricing. Operating income was ¥2.953bn (+9.3% YoY), yielding an operating margin of roughly 16.0%, reflecting disciplined SG&A control and operating leverage as revenue scaled. Ordinary income came in at ¥3.018bn, slightly above operating income due to modest net non-operating gains, while net income was ¥1.894bn (+1.6% YoY). Net margin was 10.3%, with the slower net profit growth versus operating income implying headwinds below the operating line and/or a normalized tax rate. The effective tax expense reported was ¥929m; based on net income plus tax, the implied effective tax rate is approximately 32.9% (not 0.0% as shown in the provided metric table, which reflects data limitations). Asset turnover stood at 0.516x and financial leverage at 1.24x, producing a calculated ROE of 6.6% via DuPont, consistent with the reported ROE. The balance sheet appears very conservative: total assets ¥35.663bn against total liabilities of ¥4.931bn implies an equity ratio around 80.6% (the 0.0% displayed is a placeholder due to unreported data). Liquidity metrics are very strong with a calculated current ratio of ~588%, driven by ¥25.464bn of current assets versus ¥4.327bn of current liabilities; the quick ratio matches due to inventories being unreported. Interest expense is de minimis at ¥27k, and interest coverage is extraordinarily high (~109,370x), consistent with minimal financial leverage. Cash flow statement items were unreported (zeros), so operating cash flow and free cash flow cannot be assessed from the provided data. Dividend data also appear unreported (DPS and payout ratio at 0.00), and share count is not provided; however, EPS of ¥198.99 and net income of ¥1.894bn imply roughly 9.5 million average shares outstanding. Overall, results point to resilient profitability, a robust balance sheet, and modest ROE constrained by low leverage and moderate asset turnover. Revenue growth is healthy, and operating leverage is evident, but net income growth lagged operating income, likely due to tax normalization and/or non-operating items. Data limitations (notably cash flow, dividends, shares, inventories) constrain depth of cash flow and capital allocation analysis, but available indicators suggest solid fundamentals and low financial risk.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.1028
• asset_turnover: 0.516
• financial_leverage: 1.24
• calculated_ROE: 0.0659
• commentary: ROE of ~6.6% is driven by healthy margins, tempered by moderate asset turnover and very low leverage. Incremental ROE improvement would likely require either higher turnover (faster project execution/billing) or continued margin expansion. margin_quality: Gross margin at 40.7% suggests favorable project mix and disciplined cost control; operating margin of ~16.0% indicates efficient SG&A spend and scale benefits. Ordinary margin (~16.4%) modestly exceeds operating margin, implying small net non-operating gains. Net margin of ~10.3% reflects a normalized tax burden; the implied effective tax rate is ~32.9%. operating_leverage: Operating income growth (+9.3% YoY) exceeded revenue growth (+7.3%), indicating positive operating leverage. This likely stems from fixed-cost absorption and execution efficiency. Sustaining this will depend on order intake quality and utilization rates.

Growth Assessment

revenue_sustainability: Top-line growth of 7.3% YoY appears steady. For an engineering/consulting model, this likely reflects stable public/private sector demand and a healthy order backlog. Sustainability hinges on continued project wins and timely progress recognition under JGAAP revenue policies. profit_quality: Gross and operating margin expansion indicate quality growth, likely underpinned by mix and cost discipline. Net income growth (+1.6% YoY) lagged operating growth due to tax and below-the-line items; underlying operating performance remains solid. outlook: With strong liquidity and minimal leverage, NJS is positioned to pursue backlog execution and selective growth investments. Key dependencies include public-sector budget trends, environmental/infra demand, and capacity utilization. Absence of cash flow data limits visibility into conversion from earnings to cash.

Financial Health

liquidity: Current assets ¥25.464bn vs. current liabilities ¥4.327bn yield a current ratio ~5.9x. Quick ratio mirrors this due to unreported inventories. Working capital stands at ~¥21.136bn, providing ample operating flexibility. solvency: Total liabilities of ¥4.931bn against total assets of ¥35.663bn imply an equity ratio near 80.6% (computed), indicating a very conservative balance sheet. Interest expense is negligible, and coverage is extraordinarily high. capital_structure: Leverage is very low (liabilities/equity ~0.17x), limiting financial risk but also constraining ROE. No explicit debt breakdown is disclosed; the reported 'debt-to-equity' likely reflects total liabilities to equity.

Cash Flow Quality

earnings_quality: Due to unreported cash flow statements, OCF/NI and FCF cannot be assessed from provided data. Earnings quality appears supported by consistent margins, but cash conversion is unknown. FCF_analysis: Free cash flow is unreported. Capex and working capital movements are not available, limiting assessment of reinvestment needs and cash generation. working_capital: High current assets vs. current liabilities suggest a net cash-like position and ample liquidity. However, without receivables/unbilled details or DSO metrics, collection risk and WIP dynamics cannot be evaluated.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are unreported (zeros). EPS is ¥198.99; without DPS, payout cannot be derived. Historically informed conclusions cannot be drawn from provided data alone. FCF_coverage: FCF is unreported; coverage cannot be assessed. Balance sheet strength and minimal interest burden imply capacity to sustain ordinary dividends, but cash flow data are needed to confirm. policy_outlook: No explicit guidance or policy disclosed here. With strong capitalization, the company has flexibility for shareholder returns, but visibility is limited pending disclosure of DPS and cash flows.

Risk Assessment

Business Risks:

• Order intake and backlog timing in public-sector and infrastructure markets
• Project execution risk under percentage-of-completion accounting (cost overruns, delays)
• Utilization and staffing constraints affecting delivery and margins
• Pricing pressure in competitive bidding environments
• Regulatory and budget variability in environmental and infrastructure spending
• Client concentration risk if revenue is skewed to major public entities

Financial Risks:

• Working capital collection risk (receivables and unbilled not disclosed)
• Potential tax rate normalization variability impacting net profit
• Exposure to cost inflation in subcontracting and labor
• Limited ROE given very low leverage, potentially pressuring capital efficiency metrics

Key Concerns:

• Lack of disclosed cash flow data prevents assessment of cash conversion and FCF
• Dividend data not disclosed, limiting payout sustainability analysis
• Zero placeholders for inventories, shares, and equity ratio obscure detailed ratio analysis

Investment Implications

Key Takeaways:

• Revenue grew 7.3% YoY with operating income up 9.3%, evidencing operating leverage
• Margins are robust: gross 40.7%, operating ~16.0%, net ~10.3%
• ROE ~6.6% reflects strong margins but low leverage and moderate turnover
• Balance sheet is very conservative with an implied equity ratio ~80.6%
• Cash flow, dividend, and share data are largely unreported, constraining analysis depth

Metrics to Watch:

• Order intake and backlog trends
• Operating margin sustainability and SG&A efficiency
• Cash conversion (OCF/NI) and receivables collection once disclosed
• Effective tax rate vs. prior periods
• Headcount and utilization rates impacting delivery capacity

Relative Positioning: Within Japanese engineering/consulting peers, NJS appears to carry above-average margins and a stronger equity base with very low leverage; however, ROE is mid-range due to conservative capital structure and modest asset turnover. Full relative assessment requires cash flow and backlog disclosures.

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