JTP CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.94B
• Operating Income: ¥436M
• Net Income: ¥298M
• EPS: ¥52.43

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: Strong Q2 with double-digit top-line growth and faster profit expansion, supported by margin gains and solid cash conversion. Revenue rose 12.7% YoY to 49.39, while operating income increased 26.3% YoY to 4.36, delivering operating leverage. Net income climbed 32.1% YoY to 2.98, lifting net margin to 6.0%. Operating margin improved to 8.8% (4.36/49.39), and gross profit margin stood at 16.9%. Based on growth rates, we estimate operating margin expanded by roughly 95 bps YoY (from ~7.9% to 8.8%), while net margin expanded by about 87 bps (from ~5.2% to 6.0%). Ordinary income of 4.43 exceeded operating income despite net non-operating expense, suggesting other ordinary items offset the small non-operating loss; profit before tax of 3.41 implies material extraordinary losses (~1.0), not detailed in disclosures. Earnings quality is solid with OCF of 3.34 exceeding net income (OCF/NI 1.12x), though OCF/EBITDA of ~0.71 indicates working capital or tax outflows. Liquidity is very strong: current ratio 346%, cash 32.96 vs current liabilities 15.07, and working capital 37.15. Leverage remains conservative with financial leverage 1.60x and D/E of 0.59x (interest-bearing debt details not disclosed). DuPont ROE is 7.8% (Net margin 6.0% × Asset turnover 0.806 × Leverage 1.60), consistent with the reported figure. SG&A ratio is contained at ~9.9% of revenue, supporting operating leverage. Dividend payout ratio is reported at 82.8%, which looks high relative to typical sustainability thresholds, but cash generation this quarter would cover a sizeable interim distribution; full-year context is needed. The quarter’s results position the company for achieving higher full-year profitability if demand and cost control persist. Key forward looks: monitor extraordinary items, wage inflation, staffing capacity, and receivables discipline given accelerating growth. Data gaps (e.g., investing CF, dividend cash amount, detailed non-operating/extraordinary breakdown) limit deeper attribution.

Profitability Analysis

ROE decomposition: 7.8% = Net Profit Margin (6.0%) × Asset Turnover (0.806) × Financial Leverage (1.60x). The main driver of improvement appears to be margin expansion: operating income grew 26.3% vs revenue 12.7%, pointing to operating leverage and SG&A discipline (SG&A/revenue ~9.9%). Net margin lifted to ~6.0% from an estimated ~5.2% YoY. Asset turnover sits at 0.806; without prior balance sheet averages, we cannot quantify YoY change, but higher revenue on a relatively stable balance sheet likely provided a modest lift. Financial leverage at 1.60x is conservative and stable, contributing little to ROE change. Business reason: better mix/pricing and fixed-cost absorption drove operating margin gains; non-operating items netted slightly negative, while extraordinary losses reduced PBT. Sustainability: core operating margin gains from scale and cost control are more sustainable than extraordinary effects; however, wage inflation and hiring to support growth could temper future operating leverage. Watch for any trend where SG&A growth outpaces revenue; for now, operating leverage is favorable.

Growth Assessment

Revenue growth of 12.7% YoY indicates healthy demand momentum. Operating income growth of 26.3% YoY outpaced revenue, underscoring improving efficiency and/or mix. Net income up 32.1% YoY despite a drag from extraordinary items suggests underlying strength. Gross margin of 16.9% and operating margin of 8.8% indicate a positive mix/scale effect; continued scale could further lift margins if SG&A remains controlled. Profit quality is supported by OCF > NI (1.12x), though OCF/EBITDA at ~0.71 hints at working capital outflows or tax timing; receivables at 14.81 equate to roughly mid-50s DSO (indicative), which is reasonable for IT services but bears monitoring as growth accelerates. Outlook: If demand in core services remains solid and staffing costs are contained, full-year operating profit should trend above last year, though extraordinary losses this quarter highlight potential volatility from one-off items.

Financial Health

Liquidity is robust: current ratio 346.5% and quick ratio 346.5% (no inventories reported), with cash and deposits of 32.96 comfortably exceeding current liabilities of 15.07. No warning triggers: Current Ratio >> 1.0 and D/E 0.59x well below 2.0. Maturity mismatch risk appears low given abundant cash and working capital of 37.15. Total liabilities are 22.56 vs equity 38.21; interest-bearing debt specifics are unreported, limiting precision on leverage and coverage. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

OCF of 3.34 exceeds net income of 2.98 (OCF/NI 1.12x), indicating acceptable earnings quality. OCF/EBITDA ~0.71 suggests working capital absorption or tax payments; given revenue growth, some receivables build is plausible and not necessarily concerning. Capex is modest at 0.13; indicative FCF (OCF − Capex) would be ~3.21 if capex is the primary investing outflow, but official FCF is unreported and may differ if other investing flows exist. No clear signs of working capital manipulation; DSO appears within a normal range for services. Financing CF was -1.75, consistent with distributions or debt reduction; details unreported.

Dividend Sustainability

The calculated payout ratio is 82.8%, above the typical sustainable threshold (<60%), implying a relatively aggressive stance if applied to full-year earnings. With OCF of 3.34 this quarter, cash generation currently supports dividends; however, without full-year cash flow and the actual dividend amount/timing, coverage cannot be confirmed. Indicative FCF of ~3.21 (OCF − Capex) would cover a sizable interim dividend, but investing CF and total dividend paid are unreported. Policy outlook: If management targets stability, future payouts may track earnings growth but could be recalibrated if growth capex or wage inflation rises.

Risk Assessment

Business Risks:

• Wage inflation and talent retention pressure in IT services could compress margins.
• Project timing and utilization risk affecting revenue recognition and profitability.
• Client concentration risk (typical in mid-cap IT services; actual concentration unreported).
• Execution risk in scaling delivery capacity to meet demand.

Financial Risks:

• Potential volatility from extraordinary items (PBT materially below ordinary income this quarter).
• Working capital exposure as growth accelerates (receivables management/DSO).
• Limited visibility on interest-bearing debt and interest expense due to unreported details.

Key Concerns:

• High calculated payout ratio (82.8%) may constrain reinvestment if maintained.
• Non-operating and extraordinary item transparency is limited, creating earnings volatility risk.
• Data gaps in investing cash flows and dividend cash amounts obscure FCF coverage analysis.

Investment Implications

Key Takeaways:

• Strong top-line growth (+12.7% YoY) with faster operating profit growth (+26.3%).
• Margin expansion: operating margin ~8.8% and net margin ~6.0%, both higher YoY.
• Solid cash conversion (OCF/NI 1.12x) and ample liquidity (cash 32.96 vs CL 15.07).
• ROE of 7.8% driven primarily by margin improvement; leverage remains conservative at 1.60x.
• Extraordinary losses weighed on PBT; underlying operations remain healthy.

Metrics to Watch:

• Operating margin trajectory and SG&A/revenue ratio (~9.9%).
• OCF/EBITDA and DSO for signs of working capital strain as growth continues.
• Extraordinary/one-off items bridging ordinary income to PBT.
• Actual dividend cash outflow vs OCF (payout sustainability).
• Headcount growth and personnel cost trends vs revenue growth.

Relative Positioning: Within Japanese mid-cap IT/services peers, the company shows above-peer liquidity, healthy operating leverage, and reasonable ROE, though payout aggressiveness and limited disclosure on extraordinary items and investing cash flows temper visibility.

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