Takamiya Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.28B
• Operating Income: ¥1.11B
• Net Income: ¥587M
• EPS: ¥12.62

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

Verdict: A solid profitability rebound in FY2026 Q2 with operating leverage despite flat topline, but returns remain subpar and leverage is elevated. Revenue was 212.83bn JPY (+0.2% YoY), while operating income rose 38.3% to 11.09bn JPY, driving an operating margin of 5.2%. Ordinary income increased 49.2% YoY to 9.55bn JPY, with net income at 5.77bn JPY (+16.0% YoY). Gross profit reached 72.69bn JPY, yielding a gross margin of 34.2%. Operating margin expanded by roughly 144 bps YoY (from ~3.8% to ~5.2%), reflecting tight cost control against nearly flat sales. Net profit margin improved about 37 bps YoY to 2.7%, restrained by higher non-operating expenses (notably interest) and a high effective tax rate of 41%. Earnings quality was decent with OCF of 7.13bn JPY exceeding net income (OCF/NI = 1.24x), and OCF comfortably covering capex of 4.96bn JPY. However, financial leverage is high (D/E 2.27x; interest coverage 4.4x), keeping financial risk above peers. Liquidity is adequate but tight (current ratio 1.21x; quick ratio 0.91x), indicating reliance on inventory conversion and short-term borrowing. ROE is modest at 2.6%, driven by thin margins and low asset turnover (0.29x) despite high leverage (3.27x). ROIC at 1.6% remains well below a 5% warning threshold, underscoring capital efficiency challenges. Non-operating items were a net drag despite reported non-operating income of 2.49bn JPY, as non-operating expenses totaled 4.03bn JPY with interest expense at 2.52bn JPY. The calculated payout ratio of 129.2% suggests potential dividend strain, though dividend disclosures are incomplete. Free cash flow appears positive on an OCF minus capex basis (~2.2bn JPY), but full investing CF is unreported. Forward-looking, sustaining the improved operating margin while deleveraging and lifting asset turnover will be critical to move ROE and ROIC toward acceptable levels. With construction-related cycles and financing costs still key variables, the near-term focus should be on margin durability, working capital discipline, and interest burden reduction.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 2.7% × 0.290 × 3.27 ≈ 2.6%. The most notable change versus last year is the margin component: operating income rose 38.3% on +0.2% revenue, indicating significant operating margin expansion. Operating margin improved ~144 bps YoY (from ~3.8% to ~5.2%), while net margin improved ~37 bps to 2.7%, as non-operating expenses and a 41% tax rate capped the net flow-through. Business drivers: SG&A growth appears contained relative to gross profit expansion, suggesting positive operating leverage and possibly better rental utilization/mix and cost control. Asset turnover remains low at 0.29x, consistent with an asset-intensive model (significant PP&E; depreciation 29.32bn JPY). Leverage at 3.27x is high and a key support to ROE, but it elevates risk and interest costs (interest expense 2.52bn JPY; coverage 4.4x). Sustainability: Margin gains seem partly structural (cost discipline) but may be sensitive to demand/utilization; sustained improvement will require continued SG&A control and volume recovery. Concerning trends: leverage-supported ROE with sub-3% NPM and low ROIC (1.6%) is unfavorable; interest costs and tax rate limit net margin expansion; quick ratio below 1.0 underscores limited buffer.

Growth Assessment

Topline growth was flat (+0.2% YoY), implying the earnings beat was quality-driven via margin gains rather than volume. Gross margin at 34.2% indicates decent pricing/mix or better utilization. Operating income strength (+38.3%) signals effective cost control; however, ordinary income growth (+49.2%) was offset by non-operating expenses, tempering the flow to net (+16.0%). EBITDA margin at 19.0% provides cushion, but high D&A (29.32bn JPY) reflects the capital intensity of the model. Revenue sustainability hinges on construction activity and rental utilization; absent a demand upturn, further margin gains may be incremental. Outlook: If current margin discipline holds and interest burden is reduced, net margin can improve; otherwise, net growth will lag operating growth. Near-term catalysts would include order intake/utilization trends, pricing on rental/scaffold solutions, and evidence of lower financing costs.

Financial Health

Liquidity: Current ratio 1.21x (adequate but below 1.5x benchmark); quick ratio 0.91x (below 1.0, indicates reliance on inventory). Working capital is 48.95bn JPY; quick assets (cash + receivables ≈ 191.29bn JPY) are below current liabilities (236.61bn JPY), a sign of tight liquidity. Solvency: D/E is 2.27x (warning >2.0); total interest-bearing loans disclosed (short 60.29bn, long 202.83bn) point to elevated leverage; interest coverage 4.4x is acceptable but below the >5x comfort threshold. Maturity mismatch: Short-term loans of 60.29bn JPY versus cash of 83.04bn JPY reduces immediate rollover risk, but aggregate current liabilities of 236.61bn JPY exceed quick assets, implying reliance on inventory turnover and continued access to credit. No off-balance sheet obligations were reported in the provided data. Explicit warnings: D/E > 2.0 (high leverage). Current ratio is above 1.0 (no immediate red flag) but below 1.5 (monitor).

Cash Flow Quality

OCF/Net Income is 1.24x, indicating acceptable earnings quality with cash conversion above the 1.0x benchmark. OCF of 7.13bn JPY covered capex of 4.96bn JPY, implying positive OCF–capex of ~2.17bn JPY; full FCF cannot be confirmed as investing CF is unreported. Financing CF was -7.58bn JPY, including share repurchases of 1.91bn JPY and likely debt service/dividends (dividends unreported). Working capital: With inventories at 70.17bn JPY and receivables at 108.25bn JPY, cash generation depends on collection and inventory turnover; the quarter’s positive OCF suggests no immediate manipulation signals, but continued monitoring is warranted given the tight quick ratio. No clear signs of aggressive working capital release or one-off cash inflows are evident from the disclosed items.

Dividend Sustainability

The calculated payout ratio is 129.2%, which would be unsustainably high if accurate; however, DPS and total dividends are unreported, so this metric should be treated cautiously. With OCF exceeding capex by ~2.17bn JPY, there is some room for shareholder returns, but high leverage and interest costs constrain capacity. FCF coverage of dividends is not calculable from provided data. Policy outlook: Prioritizing deleveraging over elevated cash returns would be prudent until ROIC improves above the cost of capital and leverage moderates. Monitor forthcoming DPS guidance and any shift toward balance-sheet strengthening.

Risk Assessment

Business Risks:

• Exposure to construction/rental demand cycles affecting utilization and pricing
• Margin sensitivity to raw material and equipment maintenance costs
• Operational leverage due to high fixed asset base and D&A (29.32bn JPY)

Financial Risks:

• High leverage (D/E 2.27x) and interest burden (interest expense 2.52bn JPY; coverage 4.4x)
• Tight liquidity (quick ratio 0.91x) relying on inventory conversion and bank lines
• Elevated effective tax rate (41%) dampening net earnings
• Refinancing risk on short-term loans (60.29bn JPY) amid rate volatility

Key Concerns:

• Subpar ROIC at 1.6% signals capital efficiency issues
• Net operating improvements not fully translating to net income due to non-operating expenses
• Data gaps on investing CF and dividends hinder full FCF/dividend sustainability assessment

Investment Implications

Key Takeaways:

• Material operating margin expansion (~144 bps YoY) on flat sales indicates effective cost control
• Net margin improved modestly (~37 bps) due to interest and tax drag
• Earnings quality is acceptable (OCF/NI 1.24x), and OCF covers capex
• Leverage is high (D/E 2.27x) with sub-5x interest coverage, elevating financial risk
• ROE (2.6%) and ROIC (1.6%) remain below desirable levels, highlighting need for asset efficiency and deleveraging

Metrics to Watch:

• Operating margin trajectory and SG&A-to-sales ratio
• Interest coverage and effective interest rate trends
• Working capital turnover (DSO/DIO) and quick ratio
• Capex discipline versus utilization and returns
• Dividend guidance and payout relative to OCF

Relative Positioning: Within construction equipment/rental-oriented peers, profitability momentum has improved, but capital efficiency and leverage are weaker than conservative peers; balance sheet repair and sustained margin gains are needed to close the gap.

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
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