Repriority Co., Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.63B
• Operating Income: ¥314M
• Net Income: ¥214M
• EPS: ¥205.93

Income Statement

Balance Sheet

Cash Flow Statement

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

Replyority Co., Ltd. (242A0) reported FY2025 Q4 consolidated results under JGAAP showing resilient profitability despite a modest top-line decline. Revenue fell 2.7% YoY to ¥2,631m, while operating income dipped only 0.7% to ¥314m, indicating disciplined cost control and operating efficiency. Net income rose 7.1% to ¥229m, supported by non-operating contributions and/or tax effects, as ordinary income (¥328m) exceeded operating income. Gross margin remained strong at 51.6%, and operating margin was 11.9%, underscoring a healthy value-add model. DuPont analysis indicates ROE of 18.06% driven by an 8.70% net margin, 1.53x asset turnover, and modest financial leverage of 1.36x. Balance sheet strength is notable: total assets of ¥1,723m against total liabilities of ¥556m implies low leverage and ample solvency capacity. Liquidity appears robust with current assets of ¥1,578m and current liabilities of ¥461m, yielding a current ratio of 3.43x. Operating cash flow of ¥143m undershot net income (OCF/NI 0.62x), suggesting working capital absorption or timing effects; this bears monitoring for earnings quality. EBITDA was ¥321m (12.2% margin), and interest coverage was exceptionally high at 472x, reflecting minimal interest burden. The company reported no dividend (DPS ¥0; payout 0%), preserving cash amid unclear capex needs (investing CF not disclosed). Reported equity ratio is shown as 0.0%, but based on disclosed equity of ¥1,268m and assets of ¥1,723m, the implied equity ratio is approximately 73.6%, indicating a conservative capital structure. Effective tax rate shown as 0.0% appears inconsistent with disclosed tax expense (¥104.7m) and net income; our estimate implies roughly 31% if pre-tax profit is around ¥334m. Several items, including cash and cash equivalents, inventories, investing CF, and share data, are shown as zero and should be treated as unreported rather than true zeros. Overall, the company demonstrates solid profitability, high ROE, and strong balance sheet health, tempered by softer revenue and a weaker conversion of earnings to operating cash in the period.

Profitability Analysis

ROE of 18.06% is decomposed into net margin 8.70%, asset turnover 1.527x, and financial leverage 1.36x. The primary driver is healthy profitability rather than leverage, with asset efficiency also contributing. Gross margin of 51.6% supports a robust value proposition and pricing power; operating margin of ~11.9% indicates disciplined SG&A management. Ordinary income exceeds operating income (¥328m vs ¥314m), implying positive non-operating factors (e.g., financial income or other gains) with negligible interest burden (¥0.665m). EBITDA of ¥321m (12.2% margin) versus EBIT of ¥314m highlights a light D&A load (¥7.0m), indicating low capital intensity. Operating leverage appears controlled: revenue decreased 2.7% while operating income declined only 0.7%, implying cost flexibility and stable margin structure. Interest coverage is extremely high at ~472x (EBIT/interest), indicating earnings are largely insensitive to financing costs.

Growth Assessment

Top-line contracted by 2.7% YoY to ¥2,631m, signaling near-term demand softness or mix shifts. Despite this, operating income declined only 0.7%, suggesting resilience through cost management or higher-margin mix. Net income grew 7.1% to ¥229m, aided by non-operating items and/or a normalized tax burden. The margin profile (gross 51.6%, operating ~11.9%, net 8.7%) remains healthy, which supports medium-term earnings stability if revenue recovers. Asset turnover at 1.53x indicates good utilization, which can sustain ROE even in a low-growth environment. Given OCF/NI at 0.62x, the quality of earnings from a cash conversion perspective should be monitored, as sustained working capital outflows could constrain growth investments. With investing cash flows not disclosed, visibility on capex-driven growth is limited. Outlook hinges on stabilizing revenue trends and maintaining the current margin structure; if demand normalizes, operating leverage could support earnings growth.

Financial Health

Total assets are ¥1,723m, liabilities ¥556m, and equity ¥1,268m, implying low leverage (liabilities/equity ~0.44x). The implied equity ratio is approximately 73.6% (equity/assets), despite the reported 0.0% figure, pointing to a conservative balance sheet. Liquidity appears strong with current assets of ¥1,578m vs current liabilities of ¥461m (current ratio 3.43x; quick ratio reported equal due to inventories being unreported). Working capital stands at ¥1,117.6m, providing ample buffer for operations. Interest expense is minimal (¥0.665m), and interest coverage is ~472x, indicating negligible refinancing risk. Capital structure is equity-heavy, leaving capacity for debt if needed. Note: cash and equivalents are shown as 0 (unreported), so absolute cash liquidity cannot be confirmed, but high current assets relative to current liabilities suggest sufficient near-term solvency.

Cash Flow Quality

Operating cash flow of ¥143m is 0.62x net income (¥229m), indicating weaker cash conversion in the period, likely due to working capital build or timing effects; details are not disclosed. Free cash flow is presented as ¥143m because investing cash flows are unreported; true FCF could be lower if capex exists. Low D&A (¥7.0m) and EBITDA/EBIT proximity suggest limited non-cash earnings inflation; however, the OCF shortfall warrants monitoring for potential receivables growth or other WC pressures. Without disclosed cash balance and investing details, a full assessment of liquidity runway from internal cash generation is constrained. Sustained OCF improvement toward or above net income would strengthen confidence in earnings quality.

Dividend Sustainability

The company reported no dividend (DPS ¥0; payout ratio 0%). With OCF of ¥143m and strong balance sheet metrics, capacity for shareholder returns exists, but current policy indicates retention. FCF coverage cannot be meaningfully assessed because investing CF is unreported and no dividend was paid. Absent a stated policy, future distributions will depend on visibility into growth investments, working capital needs, and management’s capital allocation stance. Given low leverage and positive OCF, the balance sheet could support dividends if initiated, but confirmation requires disclosure of capex and cash levels.

Risk Assessment

Business Risks:

• Top-line contraction (-2.7% YoY) indicating potential demand softness or competitive pressure
• Dependence on maintaining high gross margins (51.6%) to support profitability
• Operating cash flow underperformance versus net income (0.62x) signaling working capital risk
• Limited visibility on capex and investment needs due to unreported investing cash flows
• Potential exposure to non-operating income to support bottom line (ordinary income > operating income)

Financial Risks:

• Unreported cash and equivalents complicate near-term liquidity assessment
• Quick ratio may be overstated if inventories exist but are unreported
• Effective tax rate uncertainty; provided metric (0.0%) appears inconsistent with disclosed tax expense
• Share count and per-share metrics unreported, limiting equity valuation analysis

Key Concerns:

• Sustained working capital outflows could continue to depress cash conversion
• Revenue softness persisting could pressure operating leverage and margins
• Lack of disclosure on investing activities limits visibility on future growth and FCF

Investment Implications

Key Takeaways:

• Strong ROE at 18.1% driven by high margins and solid asset turnover with low leverage
• Resilient operating profit despite revenue decline, indicating cost discipline
• Very low interest burden and robust solvency (liabilities/equity ~0.44x; implied equity ratio ~73.6%)
• OCF lagging net income (0.62x) highlights earnings-to-cash conversion risk
• Several key data points are unreported (cash, inventories, investing CF, share data), limiting precision

Metrics to Watch:

• Revenue trajectory and order trends to confirm stabilization post -2.7% YoY
• OCF/Net income ratio and working capital movements (AR/AP days) for cash conversion
• Operating margin sustainability around ~12% amid demand and cost changes
• Capex and investing cash flows to assess true FCF and capital intensity
• Non-operating income components influencing the gap between ordinary and operating income

Relative Positioning: Operationally efficient with strong margins and balance sheet conservatism versus typical small-cap peers, but with inferior near-term cash conversion and lower disclosure granularity on cash and capex.

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