ALSOK CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥291.34B
• Operating Income: ¥22.52B
• Net Income: ¥10.62B
• EPS: ¥30.10

Income Statement

Balance Sheet

Cash Flow Statement

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

ALSOK (23310) delivered a strong FY2026 Q2 with broad-based improvements in profitability and solid operating cash flow. Revenue grew 10.7% year on year to 291.3bn, indicating healthy demand across core security services and related solutions. Operating income surged 47.6% to 22.5bn, lifting operating margin to roughly 7.7% from a lower base last year, driven by favorable mix and cost discipline. Net income rose 48.3% to 14.6bn as operating gains flowed through and non-operating factors remained benign. Gross profit of 60.7bn translated into a gross margin of 20.9%, consistent with a labor-intensive service model but evidencing improved productivity. EBITDA reached 32.5bn and interest coverage improved to 24.5x on an EBIT basis, highlighting ample debt-servicing capacity. DuPont decomposition shows a net margin of 5.01%, asset turnover of 0.502x, and financial leverage of 1.50x, yielding an ROE of 3.76%; profitability is improving but returns remain modest relative to capital. The balance sheet is conservative: implied equity-to-asset ratio is approximately 66.8% (equity 388.2bn vs assets 580.8bn), even though the reported equity ratio field is unreported. Liquidity is strong with a current ratio of 236% and sizable working capital of 147.8bn, providing resilience against near-term shocks. Operating cash flow was 19.8bn, exceeding net income (OCF/NI 1.36x), which supports earnings quality. Financing cash flow was an outflow of 25.3bn, suggesting ongoing shareholder returns or debt repayment, though dividend data were not disclosed in the provided fields. Investing cash flow was not disclosed, so free cash flow cannot be precisely determined from this dataset. The implied effective tax rate, using ordinary income as a proxy for pre-tax, is about 26%, indicating normalizing taxation despite the headline effective tax metric being unreported. Overall, ALSOK’s Q2 performance reflects operating leverage and disciplined cost control, translating revenue growth into outsized profit expansion. The company’s low leverage and strong liquidity provide strategic flexibility for investment in technology, workforce, and M&A. Data limitations (e.g., investing CF, cash balance, share count, dividends) restrict certain analyses, but the available metrics portray improving fundamentals and solid financial health.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.01%
• asset_turnover: 0.502x
• financial_leverage: 1.50x (Assets/Equity ≈ 580.8bn / 388.2bn)
• calculated_ROE: 3.76%
• commentary: ROE improvement is led primarily by margin expansion; asset turnover is stable for a services model and leverage is conservative. Further ROE upside likely requires continued operating margin gains and/or more efficient asset utilization. margin_quality: Gross margin at 20.9% and operating margin at ~7.7% indicate improved cost control and operating efficiency. EBITDA margin of 11.1% shows healthy contribution from core operations. Ordinary income exceeded operating income, implying net non-operating gains despite 0.92bn interest expense, supporting bottom-line quality. operating_leverage: Revenue +10.7% YoY vs operating income +47.6% YoY demonstrates positive operating leverage, likely from scale benefits, better staffing utilization, and higher-margin solution mix. Sustaining this will depend on wage inflation management and service mix shift to higher value-added offerings.

Growth Assessment

revenue_sustainability: Double-digit growth to 291.3bn reflects robust demand in security services and solutions. Given ALSOK’s recurring contract base, revenue growth appears sustainable near term, subject to corporate capex cycles and public sector demand. profit_quality: Net income +48.3% YoY on the back of operating strength and manageable financing costs points to improving profit quality. Implied tax burden (~26%) suggests normalized taxation, supporting the durability of net earnings. outlook: Assuming continued client retention, pipeline for electronic security/monitoring, and disciplined cost management, mid-single to low-double digit revenue growth with moderate incremental margins is plausible. Wage pressure and contract renewals are key swing factors for 2H.

Financial Health

liquidity: Current assets of 256.7bn vs current liabilities of 108.9bn yield a current ratio of 235.8% and quick ratio equivalent given unreported inventories. Working capital stands at 147.8bn, indicating ample short-term coverage. solvency: Total liabilities of 196.4bn vs equity of 388.2bn imply a liabilities-to-equity ratio of ~0.51x and an implied equity ratio of ~66.8%. Interest coverage is 24.5x (EBIT basis), indicating strong debt-servicing capacity. capital_structure: Leverage is modest with financial leverage at 1.50x. Negative financing cash flow (−25.3bn) suggests shareholder returns and/or debt repayment, consistent with a conservative balance sheet.

Cash Flow Quality

earnings_quality: OCF/Net income at 1.36x indicates solid cash conversion and limited accrual build in the period. FCF_analysis: Investing cash flow is unreported; therefore, free cash flow cannot be reliably calculated from provided data. On a proxy basis, OCF of 19.8bn provides a cushion for capex and distributions, but visibility is limited without capex detail. working_capital: Positive OCF alongside strong working capital suggests effective receivables and payables management. Continued monitoring of client billing cycles and staffing-related payables is warranted given the service-heavy model.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are unreported in this dataset. EPS is 30.10, but without DPS we cannot compute payout from earnings. FCF_coverage: FCF is not computable due to unreported investing CF; thus, cash coverage of dividends cannot be assessed here. policy_outlook: Given conservative leverage and strong liquidity, the balance sheet could support ordinary dividends; however, actual policy and cash returns should be confirmed from company disclosures beyond this dataset.

Risk Assessment

Business Risks:

• Labor cost inflation and staffing shortages impacting margins in a labor-intensive model
• Contract pricing pressure and renewal risk in corporate and public sector clients
• Technology displacement risk requiring ongoing investment in electronic/remote monitoring
• Project execution risk in systems integration and large solution deployments
• Competition from domestic peers and new entrants offering tech-enabled security

Financial Risks:

• Potential rise in interest rates increasing financing costs over time
• Working capital swings from receivables collection cycles
• Capex intensity for technology upgrades potentially pressuring near-term cash flow
• Limited disclosure of investing cash flows and cash balances in the period reduces visibility

Key Concerns:

• Sustainability of operating leverage amid wage and inflation pressures
• Visibility on capex and FCF given unreported investing cash flow
• Dividend policy and shareholder return framework not ascertainable from provided data

Investment Implications

Key Takeaways:

• Robust top-line growth (+10.7% YoY) translated into outsized profit gains (OP +47.6% YoY).
• Operating margin improved to ~7.7% with EBITDA margin at 11.1%, indicating better cost efficiency.
• ROE at 3.76% remains modest; further improvement hinges on margin expansion and asset efficiency.
• Strong liquidity (current ratio ~2.36x) and low leverage (liabilities/equity ~0.51x) provide resilience.
• OCF comfortably exceeds net income (1.36x), supporting earnings quality.
• Data gaps (cash balance, investing CF, dividend details) limit FCF and payout analysis.

Metrics to Watch:

• Operating margin trajectory and wage-to-sales ratio
• Order intake and retention rates in guarding and electronic security
• Capex and investing cash flows to gauge FCF and technology investment
• Receivables days and billing cycle trends
• Non-operating items affecting ordinary vs operating income
• ROE progress via margin and turnover improvements

Relative Positioning: ALSOK appears financially conservative with strong liquidity and low leverage versus typical service-sector peers, with improving profitability but still moderate ROE; execution on margin initiatives and tech-enabled services will be key to narrowing the gap with higher-return comparables.

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