WORLD HOLDINGS CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥200.60B
• Operating Income: ¥7.57B
• Net Income: ¥2.13B
• EPS: ¥247.16

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

World Holdings (TSE:2429) delivered solid topline growth and a sharp rebound in profitability in FY2025 Q3 (JGAAP, consolidated). Revenue rose 16.9% YoY to ¥200.6bn, while operating income surged 72.4% YoY to ¥7.57bn, indicating strong positive operating leverage. Net income increased 125.8% YoY to ¥4.42bn, lifting the net margin to 2.20%. Gross profit of ¥26.24bn implies a gross margin of 13.1%, and the operating margin improved to 3.8% despite a relatively low gross margin business. The DuPont breakdown shows ROE at 8.65%, driven by a 2.20% net margin, 1.146x asset turnover, and 3.42x financial leverage. Balance sheet strength is reasonable: current ratio stands at 174.5% and quick ratio at 173.2%, with working capital of ¥63.43bn, suggesting ample short-term liquidity. Total assets are ¥175.06bn and total equity ¥51.12bn; this implies an equity ratio of roughly 29.2% (vs. the reported metric showing 0.0%, which appears undisclosed rather than truly zero). Leverage is moderate with total liabilities/equity at 2.48x, consistent with the DuPont leverage. Interest coverage is comfortable at about 22.5x (operating income/interest expense), indicating manageable financing costs. The effective tax burden, based on income tax of ¥2.16bn and ordinary income of ¥7.54bn, appears around the high‑20s percent, despite the 0.0% placeholder shown in the summary metrics. EPS of ¥247.16 and net income of ¥4.42bn imply roughly 17.9 million shares outstanding, though share data was not disclosed in the provided set. Cash flow data (OCF, FCF) and D&A were not reported, limiting our ability to assess earnings-to-cash conversion and EBITDA. Dividend information is also undisclosed here; historically the company pays dividends, but we cannot validate current payout or coverage from this dataset. Overall, results point to improving profitability on solid revenue growth, with healthy liquidity and manageable leverage, but a fuller view of earnings quality awaits cash flow and D&A details. Outlook considerations hinge on sustaining revenue momentum and maintaining cost discipline to preserve operating leverage gains.

Profitability Analysis

ROE_decomposition: ROE 8.65% = Net margin 2.20% × Asset turnover 1.146 × Financial leverage 3.42 (DuPont). This indicates modest margins, decent asset efficiency, and moderate leverage collectively driving mid‑single‑digit ROE. margin_quality: Gross margin 13.1% and operating margin ~3.8% suggest a labor/outsourcing and staffing-heavy mix with constrained gross margin but improving operating efficiency. Operating income +72.4% on revenue +16.9% signals better pricing, utilization, or SG&A discipline. operating_leverage: Strong positive operating leverage evidenced by revenue +16.9% vs operating income +72.4%. Interest burden is low (¥337m), supporting ordinary income near operating income (¥7.54bn vs ¥7.57bn).

Growth Assessment

revenue_sustainability: Revenue reached ¥200.6bn (+16.9% YoY). Sustainability will depend on continued demand in staffing/contracting segments, client activity in manufacturing/tech/logistics, and macro employment conditions. profit_quality: Net income rose 125.8% YoY to ¥4.42bn with margin expansion to 2.20%. Absent D&A and OCF data, quality-of-earnings cannot be confirmed; however, interest coverage at ~22.5x and stable ordinary margin indicate improved core performance. outlook: If current utilization and pricing hold, mid‑single‑digit ROE could trend higher with further mix and efficiency gains. Watch for wage inflation, placement volumes, and churn, which can compress margins in labor-intensive models.

Financial Health

liquidity: Current assets ¥148.63bn vs current liabilities ¥85.20bn → current ratio 174.5%; quick ratio 173.2% (inventory ¥1.06bn is a small component). Working capital is ¥63.43bn, indicating solid liquidity headroom. solvency: Total liabilities ¥126.91bn and equity ¥51.12bn → debt-to-equity 2.48x; assets/equity 3.42x. Implied equity ratio ~29.2% (vs reported 0.0% placeholder), acceptable for the business model. capital_structure: Leverage is moderate and well-covered; interest expense ¥337m against ¥7.57bn operating income (22.5x coverage). Balance sheet can support operations and selective investment, subject to cash flow confirmation.

Cash Flow Quality

earnings_quality: OCF not disclosed; thus OCF/NI and cash conversion cannot be assessed from the provided data. Effective tax paid vs accruals also cannot be reconciled. FCF_analysis: Investing cash flows and capex/D&A are undisclosed, preventing EBITDA and FCF estimation. Given the staffing-heavy model, capex intensity is typically low to moderate, but working capital swings can be material. working_capital: High current asset base and limited inventories suggest receivables and cash dominate. Monitoring DSO and client concentration is key; large receivables can inflate assets and depress cash conversion in upcycles.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed in the dataset (0 values treated as undisclosed). EPS is ¥247.16, implying capacity for distributions, but we cannot calculate payout without DPS. FCF_coverage: FCF is undisclosed; thus dividend coverage by free cash flow cannot be assessed. Historically, sustainability hinges on OCF stability and low capex needs in this business model. policy_outlook: Absent disclosure, we assume a stable-to-progressive policy contingent on earnings and cash flow. Confirmation requires management guidance and cash flow statements.

Risk Assessment

Business Risks:

• Cyclical demand in staffing/dispatch and contracting tied to macro and industrial activity
• Wage inflation and tight labor markets compressing gross margins
• Client concentration and renegotiation risk on large contracts
• Regulatory changes in labor dispatch laws and compliance requirements
• Execution risk in scaling new segments or M&A integration

Financial Risks:

• Working capital intensity and potential receivables buildup in growth periods
• Refinancing or interest rate risk despite currently strong coverage
• Profit sensitivity to utilization and billing rate fluctuations
• Potential impairment risk if acquisitions are part of growth strategy (D&A/impairments undisclosed here)

Key Concerns:

• Lack of OCF/FCF and D&A disclosure in this dataset limits earnings quality assessment
• Margin durability amid cost pressures (labor, compliance, benefits)
• Dependence on continued revenue momentum to sustain operating leverage

Investment Implications

Key Takeaways:

• Topline growth of 16.9% YoY translated into a 72.4% YoY jump in operating income, evidencing strong operating leverage
• ROE at 8.65% is driven by modest margins, decent asset turnover, and moderate leverage
• Liquidity is strong (current ratio 174.5%, quick ratio 173.2%) with manageable leverage (D/E 2.48x) and high interest coverage (~22.5x)
• Cash flow and D&A are undisclosed, preventing EBITDA/FCF evaluation and dividend coverage analysis
• Net margin improved to 2.20%, but sustaining gains requires continued cost control and utilization

Metrics to Watch:

• Operating cash flow, FCF, and working capital metrics (DSO, receivables turnover)
• EBITDA and D&A to validate operating profitability and capex needs
• Utilization rates, billing rates, and gross margin trajectory
• Client concentration and churn, new order intake/backlog in staffing/contracting
• Leverage trends and interest coverage amid interest rate movements
• Dividend declarations and payout policy communication

Relative Positioning: Within Japanese staffing/outsourcing peers, World Holdings appears to be executing well on revenue growth and cost control, showing above-peer operating leverage in the period and maintaining solid liquidity with moderate leverage; however, absent cash flow disclosure, its earnings quality and dividend capacity cannot be benchmarked conclusively.

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