ASUA Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥362M
• Operating Income: ¥23M
• Net Income: ¥16M
• EPS: ¥6.29

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

Verdict: Soft top-line with sharp operating margin compression, but reported net profit surged due to below-the-line and/or tax effects; overall a mixed quality quarter. Revenue was 3.62 (100M JPY), down 0.4% YoY, while operating income fell 49.0% YoY to 0.23 (100M JPY). Gross profit was 1.53 (100M JPY), implying a gross margin of 42.2%, and SG&A was 1.07 (100M JPY). Operating margin is approximately 6.4% this quarter (0.23/3.62), versus an estimated ~12.4% in the prior-year quarter, signaling roughly 600 bps margin compression. Ordinary income printed at 0.23 (100M JPY), only -2.6% YoY, indicating non-operating effects partly offset operating weakness. Profit before tax was 0.25 (100M JPY), and reported net income was 0.16 (100M JPY), up 181.5% YoY. The reported net margin therefore improved to 4.4% from an estimated ~1.6% YoY (≈ +280 bps), despite operating margin pressure. Notably, the reported income tax of 0.19 (100M JPY) implies an effective tax rate of 75.8% on the stated pre-tax income, which is inconsistent with the reported net income of 0.16 (100M JPY); treat the below-the-line items with caution. Liquidity is strong with a current ratio of 303% and cash of 8.13 (100M JPY), and leverage is conservative at D/E of 0.39x. Interest coverage is robust at 45.73x, indicating low near-term financial risk. ROE is calculated at 1.6% with DuPont components: NPM 4.4%, asset turnover 0.259, and leverage 1.39x. ROIC stands at 4.2%, below the 5% warning threshold, highlighting capital efficiency concerns. With OCF, capex, and DPS unreported, cash flow-based earnings quality and dividend sustainability cannot be fully assessed; the calculated payout ratio of 181.6% suggests potential risk if accurate. The quarter’s profile suggests core operations under pressure, offset by non-operating and/or extraordinary/tax effects. Forward-looking, restoring operating margin and improving ROIC above 5% will be key to rerating, while maintaining strong liquidity provides flexibility for execution.

Profitability Analysis

ROE decomposition (DuPont): ROE 1.6% = Net Profit Margin (4.4%) × Asset Turnover (0.259) × Financial Leverage (1.39x). The largest change driver versus last year appears to be the net profit margin: operating margin compressed by ~600 bps (from ~12.4% to ~6.4%), yet reported net margin expanded to 4.4% due to below-the-line and/or tax effects. Business reason: non-operating expenses were sizable at 0.22 (100M JPY) with limited non-operating income (0.01), and extraordinary items/tax effects likely influenced the bottom line; ordinary income was more resilient (-2.6% YoY) than operating income (-49% YoY). Sustainability: the improvement in net margin looks one-time or non-recurring, given core operating pressure and the inconsistency between PBT, tax, and net income. Asset turnover at 0.259 is modest, reflecting a cash-heavy balance sheet (cash 8.13 out of assets 14.00), which depresses turnover; improving utilization of cash or revenue growth would help. Financial leverage of 1.39x is conservative and not the ROE driver. Concerning trends: SG&A of 1.07 against gross profit of 1.53 leaves a thin operating buffer, and the implied SG&A intensity likely rose with flat revenue; operating deleverage is evident as revenue declined slightly but operating profit dropped sharply. Priority should be on cost control and recovering operating margin quality rather than relying on non-operating/extraordinary items.

Growth Assessment

Revenue declined 0.4% YoY to 3.62 (100M JPY), indicating flat to slightly negative demand momentum. Operating income fell 49.0% YoY to 0.23, showing negative operating leverage as costs did not flex with the small revenue decline. Ordinary income was relatively stable (-2.6% YoY), implying offsetting below-the-line factors. Reported net income surged 181.5% YoY to 0.16, but the tax/PBT inconsistency suggests the jump is not purely operational. Gross margin at 42.2% is healthy, but SG&A absorption remains a headwind at current scale. Outlook: without evidence of cost realignment or mix improvement, sustaining net margin gains will be difficult. Revenue sustainability will depend on pipeline conversion and client activity; however, no segment detail is disclosed. The calculated ROIC of 4.2% underscores that current returns are below cost-of-capital benchmarks; improving capital turns or operating margins is necessary for medium-term growth quality.

Financial Health

Liquidity is strong: current ratio 303% and quick ratio 303%, with cash and deposits of 8.13 vs current liabilities of 3.52 (100M JPY). There is no warning on current ratio (<1.0) or D/E (>2.0); D/E is a conservative 0.39x. Maturity mismatch risk is low: short-term loans 0.55 and accounts payable 0.41 are well covered by cash 8.13 and current assets 10.65. Long-term loans are modest at 0.25. Working capital is ample at 7.14 (100M JPY). Off-balance sheet obligations are not disclosed; absence of data prevents assessment of leases/guarantees. Overall solvency and liquidity profiles are solid, providing room to navigate operating volatility.

Cash Flow Quality

Operating cash flow, capex, and FCF are unreported, so OCF/Net Income and FCF coverage cannot be calculated. This limits assessment of earnings quality and cash conversion. Receivables are 2.16 against quarterly revenue of 3.62, implying DSO of roughly ~54 days (2.16/3.62×90), which appears reasonable but should be monitored for elongation. With non-operating expenses of 0.22 and interest expense of 0.01, cash interest burden is low, but recurring non-operating outflows could pressure cash if persistent. Given the sharp operating profit decline, there is a risk that accrual earnings outpace cash if working capital expanded; data is insufficient to confirm. No clear signs of working capital manipulation can be concluded due to missing OCF detail.

Dividend Sustainability

Dividend data (DPS, total dividends, FCF) are unreported. The calculated payout ratio of 181.6% indicates potential unsustainability if it reflects actual distributions against earnings; however, without DPS/FCF disclosure, confidence is low. Strong liquidity (cash 8.13) could support near-term distributions, but with ROIC at 4.2% and operating margin pressure, sustaining high payout would likely compete with reinvestment needs. A prudent policy would align dividends with FCF after maintenance capex; FCF is not disclosed. Monitor upcoming filings for DPS guidance and cash flow statements.

Risk Assessment

Business Risks:

• Operating margin compression (~600 bps YoY) indicates cost rigidity and negative operating leverage.
• Potential reliance on non-operating/extraordinary factors to support net income, not core operations.
• Customer collection risk: DSO ~54 days; any elongation would pressure cash conversion.
• Execution risk in restoring ROIC above 5% amid modest growth.

Financial Risks:

• ROIC at 4.2% below warning threshold (<5%) signals capital efficiency risk.
• Non-operating expenses (0.22) are sizable vs operating income (0.23); if recurring, they can erode earnings.
• Data inconsistency between PBT, tax, and net income raises uncertainty around below-the-line items.
• Interest rate risk is limited near term given low leverage, but refinancing of short-term loans (0.55) should be monitored.

Key Concerns:

• Earnings quality uncertainty due to missing cash flow data (OCF/FCF unreported).
• Sustainability of calculated payout ratio (181.6%) without FCF disclosure.
• Thin operating margin (6.4%) leaves limited buffer for shocks.
• Lack of segment detail obscures sources of volatility and profitability.

Investment Implications

Key Takeaways:

• Core operations weakened: operating income -49% YoY on flat revenue (-0.4%), with ~600 bps operating margin compression.
• Reported net income +181.5% YoY to 0.16 appears driven by below-the-line and/or tax effects rather than core recovery.
• Liquidity and leverage profiles are strong (current ratio 303%, D/E 0.39x), mitigating near-term financial risk.
• ROIC 4.2% flags capital efficiency concerns; improvement in margin and/or asset turns is needed.
• Data inconsistencies around tax and net income warrant caution in interpreting bottom-line strength.

Metrics to Watch:

• Operating cash flow and free cash flow once disclosed (OCF/NI >1.0 as a quality sign).
• Operating margin trajectory and SG&A efficiency (SG&A growth vs revenue).
• ROIC progression toward >5% and ideally >7–8% over time.
• Non-operating items and extraordinary gains/losses; reconciliation of PBT, tax, and NI.
• DSO/working capital trends and receivables quality.
• Dividend guidance and FCF coverage of distributions.

Relative Positioning: Versus small-cap peers, liquidity and leverage are conservative, but profitability quality is currently weaker given operating margin compression and sub-5% ROIC; clarity on cash flows and normalization of below-the-line items is required to improve relative standing.

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