Asukanet Company,Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.32B
• Operating Income: ¥31M
• Net Income: ¥2M
• EPS: ¥1.50

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

Asukanet (TSE: 24380) reported FY2026 Q2 consolidated results under JGAAP with revenue of 33.17 and operating income of 0.31. Top line declined 2.5% year over year, but operating income increased 97.8% from a low base, reflecting tighter cost control and modest operating leverage despite flat gross profit. Gross profit margin was healthy at 43.5%, yet SG&A nearly absorbed the gross profit (14.28 vs. 14.44), leaving an operating margin of roughly 0.9%. Ordinary income of 0.51 exceeded operating income, aided by net non-operating income of 0.03 and other recurring items not fully broken out in the disclosed breakdown. Net income was 0.23 with basic EPS of 1.50 yen on 15.64 million average shares. The effective tax rate appears elevated at 88.3% against the reported profit before tax of 0.19, suggesting tax/non-operating special factors and/or timing differences; partial disclosures limit precision. Balance sheet quality remains strong: total assets were 62.54, equity 52.54, and liabilities 9.63, implying an equity ratio around the mid‑80% range and very low leverage. Liquidity is robust, with cash and deposits of 16.87, current assets of 30.74, and current liabilities of 9.57, translating to a current ratio of 321% and a quick ratio of 281%. Operating cash flow was solid at 2.41, more than 10x net income, driven by non-cash charges (D&A 1.81) and working capital effects; capital expenditures were 1.24, implying positive underlying free cash generation for the half. Financing cash flow was -3.16, mainly from share repurchases of -2.01, indicating shareholder returns in excess of internally generated free cash over the period. Reported DuPont metrics show low interim ROE of 0.4%, reflecting thin profitability and modest asset turnover (0.53) despite low financial leverage (1.19x). Inventory (3.80) and receivables (8.25) look manageable relative to sales, supporting working capital discipline. Several line items are unreported (e.g., R&D, interest expense, debt details, dividend amounts), so conclusions rely on available non-zero data and derived relationships. Overall, the company presents a cash-rich, low-leverage profile with stable gross margins, improving but still low profitability, and active capital returns via buybacks. Sustainability will hinge on revenue reacceleration in core businesses, further SG&A efficiency, and maintaining positive operating cash conversion.

Profitability Analysis

ROE_decomposition: - Net profit margin: 0.7%. Asset turnover: 0.530x. Financial leverage: 1.19x. Calculated ROE: ~0.4% for the period (non-annualized). The low ROE is driven primarily by a very slim net margin, while leverage is conservative and asset turnover is moderate. margin_quality: - Gross margin: 43.5% (14.44/33.17), indicating pricing/mix remains supportive. - Operating margin: ~0.9% (0.31/33.17), compressed by SG&A almost matching gross profit. - EBITDA margin: 6.4% (EBITDA 2.12), implying D&A (1.81) constitutes most of the gap between EBITDA and EBIT; capital intensity and depreciation burden are non-trivial relative to sales. - Net margin: 0.7% influenced by elevated effective tax and non-operating items. operating_leverage: - Revenue fell 2.5% YoY while operating income rose 97.8% YoY, suggesting cost discipline and operating leverage from SG&A optimization off a low earnings base. However, with SG&A ≈ gross profit, incremental margins remain fragile; small revenue/mix changes can swing EBIT materially.

Growth Assessment

revenue_sustainability: - Revenue: 33.17 (-2.5% YoY), indicating softness. Inventory (3.80) and receivables (8.25) appear controlled; no sign of overstocking from the limited data, supporting steady near-term fulfillment capacity. profit_quality: - Ordinary income (0.51) above operating income (0.31) due to net non-operating income (+0.03) and other recurring items not fully disclosed; profit quality is acceptable but not purely operating-driven. - Effective tax rate (88.3%) depresses net profit; this may normalize if driven by timing or item classification. - EBITDA of 2.12 provides some buffer; D&A burden remains high relative to EBIT. outlook: - With gross margin stable and SG&A close to breakeven, incremental sales recovery could translate to outsized EBIT improvement. Conversely, further revenue pressure risks returning to loss. Focus areas: sales traction in core segments, pricing/mix, and continued SG&A discipline.

Financial Health

liquidity: - Current assets: 30.74 vs. current liabilities: 9.57; current ratio 321.1%, quick ratio 281.4%. Cash and deposits: 16.87, covering 176% of current liabilities. Working capital: 21.16. Liquidity is strong. solvency: - Total liabilities: 9.63 vs. equity: 52.54; debt-to-equity proxy (total liabilities/equity) ~0.18x. Equity ratio derived ≈ 84.1% (52.54/62.54). Interest-bearing debt not disclosed; given large cash and low liabilities, the company likely holds a net cash position. capital_structure: - Equity-heavy balance sheet with modest liabilities, providing flexibility for investment and shareholder returns. Treasury shares of 1,918,346 indicate ongoing capital management.

Cash Flow Quality

earnings_quality: - Operating CF: 2.41 vs. net income: 0.23 yields OCF/NI of 10.47x, reflecting strong cash conversion aided by D&A (1.81) and working capital inflows. This suggests earnings are supported by cash, not purely accounting accruals. FCF_analysis: - Capex: 1.24. Implied free cash flow (OCF - Capex) ≈ 1.17 for the half, positive despite lower revenue. Investing CF details are unreported, so FCF is estimated from available capex only. working_capital: - Receivables: 8.25 and inventories: 3.80 appear proportional to sales scale; no evidence of abnormal buildup from disclosed figures. Payables: 1.72, indicating conservative supplier leverage.

Dividend Sustainability

payout_ratio_assessment: - Reported annual DPS is unreported. The provided calculated payout ratio of 531.5% likely reflects timing/estimation and should be treated cautiously given missing DPS data. With net income at 0.23 for the half and strong OCF, distribution capacity exists but coverage depends on actual DPS. FCF_coverage: - Implied half-year FCF ≈ 1.17 vs. share repurchases of 2.01 indicates buybacks exceeded internally generated FCF and were likely funded by cash on hand. Dividend cash amounts are unreported; FCF coverage of total shareholder returns cannot be fully assessed. policy_outlook: - Given net cash and ample liquidity, shareholder returns can be maintained near term, but sustainability hinges on stabilizing earnings and maintaining positive OCF. Clarification of dividend policy and cadence would improve visibility.

Risk Assessment

Business Risks:

• Revenue contraction (-2.5% YoY) with EBIT near breakeven heightens sensitivity to demand fluctuations.
• High D&A relative to EBIT suggests ongoing capital intensity; underutilization could pressure margins.
• Dependence on non-operating contributions to bridge to ordinary income introduces volatility.
• Potential pricing/mix risk if competitive dynamics weaken gross margin (43.5%).

Financial Risks:

• Elevated effective tax rate (88.3%) distorting bottom-line; normalization uncertain without disclosure detail.
• Buybacks (2.01) exceeding implied FCF (~1.17) rely on cash reserves; continued excess returns could erode cash if earnings do not improve.
• Limited disclosure on interest-bearing debt and interest expense impedes precise leverage and coverage assessment, though overall leverage appears low.

Key Concerns:

• Thin operating margin (~0.9%) with SG&A ≈ gross profit leaves little buffer.
• Data gaps (R&D, detailed SG&A, debt/interest, dividend amounts) constrain visibility.
• Ordinary income and PBT/NI line items show classification/timing effects; reported tax burden appears inconsistent with PBT, complicating run-rate modeling.

Investment Implications

Key Takeaways:

• Strong balance sheet with equity ratio ~84% and ample liquidity (cash 16.87) provides resilience.
• Gross margin remains solid at 43.5%, but SG&A intensity keeps EBIT low; further cost discipline or revenue growth is needed to lift ROE above 0.4%.
• Cash generation is healthy (OCF 2.41) relative to earnings, supporting selective shareholder returns.
• Share repurchases exceeded implied FCF, indicating proactive capital return funded by cash; sustainability depends on improved profitability.
• Monitoring tax rate normalization and the mix of operating vs. non-operating income is important for earnings quality.

Metrics to Watch:

• Revenue growth trajectory and order trends to assess operating leverage potential.
• Operating margin and SG&A-to-sales ratio for evidence of structural cost improvement.
• OCF and FCF (OCF - capex) sustainability versus cash returns (dividends + buybacks).
• Gross margin stability amid mix/pricing changes.
• Effective tax rate and reconciliation between operating, ordinary, PBT, and net income.
• Receivables and inventory turns as indicators of demand health and working capital efficiency.

Relative Positioning: Relative to small-cap peers on the TSE with similar manufacturing/service mixes, Asukanet exhibits above-average balance sheet strength (low leverage, high liquidity) but below-average profitability (low ROE/operating margin). Execution on revenue growth and SG&A efficiency could close the profitability gap while preserving financial resilience.

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