Oriental Consultants Holdings Company Limited FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥95.36B
• Operating Income: ¥5.62B
• Net Income: ¥1.07B
• EPS: ¥318.41

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

Oriental Consultants Holdings delivered solid top-line and earnings growth in FY2025, with revenue up 10.5% to ¥95.4bn and operating income up 20.5% to ¥5.62bn, indicating positive operating leverage. Net income grew 47.0% to ¥3.82bn, helped by stronger operations and likely favorable below-the-line items versus the prior year. DuPont ROE was 13.31%, supported by a 4.00% net margin, 1.22x asset turnover, and 2.73x financial leverage, representing a balanced mix of profitability and efficient asset use. Gross margin stood at 20.4%, and operating margin at approximately 5.9%, both reasonable for engineering consulting where subcontracting and personnel costs are material. EBITDA of ¥6.54bn implies a 6.9% EBITDA margin, suggesting modest operating efficiency but improving with scale. Interest burden is low with 50.2x interest coverage, underpinning earnings resilience. Despite healthy P&L metrics, operating cash flow was negative at -¥1.71bn, driving free cash flow to -¥3.52bn after ¥1.81bn investing outflows, indicating working capital absorption typical of project-based businesses. The company funded cash outflows via financing inflows of ¥3.29bn, which stabilized liquidity but increased reliance on external funding. The balance sheet shows total assets of ¥78.18bn and equity of ¥28.69bn, implying an approximate equity ratio of about 36.7% (the disclosed 0.0% equity ratio is not available data rather than an actual zero). Current assets of ¥51.79bn against current liabilities of ¥39.41bn yield a 131% current ratio and positive working capital of ¥12.38bn, supporting short-term solvency. Ordinary income of ¥5.78bn exceeded operating income, suggesting modest non-operating gains net of interest. Reported effective tax rate was not disclosed; using provided tax expense and net income, the implied tax rate is approximately mid‑20s percent. EPS was ¥318.41, implying roughly 12.0 million shares outstanding based on reported net income. Dividend data were not disclosed (DPS and payout shown as zero signify non-disclosure), so capital return policy cannot be assessed from this dataset. Overall, fundamentals indicate healthy profitability and ROE with strengthening margins, but cash conversion was weak in the period due to working capital dynamics, warranting monitoring. Data limitations (equity ratio, cash balance, inventories, and dividend details not disclosed) constrain precision, but available metrics point to improving earnings quality offset by near-term cash flow pressure.

Profitability Analysis

ROE_decomposition: - Net margin: 4.00% x Asset turnover: 1.220 x Financial leverage: 2.73 = ROE 13.31% (matches reported).

• Operating margin: ~5.9% (¥5,622m / ¥95,365m).
• Gross margin: 20.4% indicates adequate value-add after subcontractor and personnel costs.
• Ordinary income above operating income suggests small non-operating gains (e.g., JV income, FX, or other non-operating items) net of interest. margin_quality: - EBITDA margin: 6.9% and operating margin expansion YoY (OI +20.5% vs revenue +10.5%) reflect positive operating leverage and some cost discipline.
• Net margin uplift partly due to improved operations and a normalizing tax burden; implied effective tax rate ~24% based on tax expense vs pre-tax profit (calculated), while the reported 0% figure is a non-disclosure placeholder. operating_leverage: - Revenue +10.5% vs operating income +20.5% implies operating leverage >1, driven by fixed cost dilution and scale efficiencies.
• Interest expense is modest (¥112m), so financial leverage contributes to ROE without meaningfully pressuring coverage (50.2x).

Growth Assessment

revenue_sustainability: - Top-line growth of 10.5% is robust for engineering consulting and likely reflects healthy domestic public works demand and overseas project wins.

• Asset turnover at 1.22x indicates effective utilization; sustaining growth will hinge on backlog conversion and capacity (utilization rates). profit_quality: - YoY operating income growth outpaced sales, suggesting mix and execution improvement; however, cash conversion lagged (OCF/NI -0.45), tempering quality of earnings in the period.
• Ordinary income exceeding operating income suggests limited non-operating tailwinds; core operations remain the key driver. outlook: - Near-term outlook constructive given margin momentum and ROE at 13.3%, but working capital intensity could persist with growth.
• Monitoring order backlog, book-to-bill, and staffing/utilization will be critical to assess sustainability; data not disclosed here.

Financial Health

liquidity: - Current assets ¥51.79bn vs current liabilities ¥39.41bn; current ratio 131.4%, quick ratio same due to undisclosed inventories.

• Working capital of ¥12.38bn supports project execution, though negative OCF indicates timing pressure from receivables/unbilled costs. solvency: - Total liabilities ¥40.71bn vs equity ¥28.69bn; liabilities-to-equity 1.42x; financial leverage 2.73x is moderate for the sector.
• Interest coverage 50.2x indicates ample buffer against rate or earnings shocks. capital_structure: - Approximate equity ratio ~36.7% (computed from totals). Financing cash inflow of ¥3.29bn funded FCF shortfall, increasing dependence on external funding in the period.

Cash Flow Quality

earnings_quality: - OCF/NI at -0.45 indicates poor cash conversion in FY2025, likely from higher trade receivables, unbilled project assets, or advances to subcontractors typical in engineering services.

• Non-cash items (D&A ¥917m) are relatively small versus EBIT; accruals and working capital dominate earnings-to-cash divergence. FCF_analysis: - OCF -¥1.71bn and investing CF -¥1.81bn result in FCF of -¥3.52bn; capex/investments appear elevated relative to D&A, implying capacity expansion or strategic investments.
• Financing inflows of ¥3.29bn covered the deficit; sustainability depends on normalization of working capital and capex cadence. working_capital: - Current asset build vs liabilities suggests revenue growth absorbed cash; collection discipline and milestone billing will be key to improve OCF.
• Inventories and cash balances were not disclosed; interpretation relies on current ratio and WC levels rather than specific line items.

Dividend Sustainability

payout_ratio_assessment: - DPS and payout ratio are not disclosed in this dataset (zeros indicate non-disclosure). Based on EPS of ¥318.41 and NI of ¥3.82bn, capacity exists for distributions in principle, subject to policy. FCF_coverage: - FCF was -¥3.52bn; even a modest dividend would not be covered by current-year FCF. Any payout would be reliant on cash on hand or financing until cash conversion improves. policy_outlook: - Without disclosed policy or historical DPS, visibility is limited. Given sector norms in Japan, a stable payout or progressive policy is common, but actual stance here is unknown from the provided data.

Risk Assessment

Business Risks:

• Project execution risk and cost overruns impacting margins
• Concentration in public-sector demand and budget cycles in Japan
• Overseas project risks including political, regulatory, and FX exposure
• Utilization and talent retention pressures amid wage inflation
• Subcontractor availability and pricing affecting gross margin

Financial Risks:

• Working capital intensity driving negative operating cash flow
• Reliance on short-term financing to bridge FCF deficits
• Potential interest rate increases elevating funding costs from a low base
• Counterparty credit risk on receivables and unbilled revenues

Key Concerns:

• OCF/NI of -0.45 highlighting weak cash conversion
• FCF of -¥3.52bn necessitating financing inflows
• Visibility on order backlog and billing milestones not disclosed
• Dividend policy and cash balance not disclosed, limiting capital return assessment

Investment Implications

Key Takeaways:

• Strong revenue growth (+10.5%) with operating income up 20.5% indicates positive operating leverage
• ROE at 13.31% is healthy, supported by moderate leverage and solid asset turnover
• Margins improved but remain modest for the sector (EBITDA 6.9%, operating ~5.9%)
• Cash conversion was weak (OCF -¥1.71bn), pressuring FCF and increasing financing reliance
• Balance sheet appears sound with an implied equity ratio ~36.7% and interest coverage 50.2x

Metrics to Watch:

• OCF/Net income and days sales outstanding/unbilled balances
• Backlog, book-to-bill, and win rates (domestic vs overseas)
• Operating margin trajectory and staff utilization
• Capex vs D&A and investment returns
• Leverage (liabilities-to-equity) and equity ratio
• Dividend policy disclosures and cash balance

Relative Positioning: Within Japan’s engineering consulting peers, revenue growth is solid and ROE competitive; margins are in a typical range but cash conversion currently lags best-in-class operators. Maintaining growth while normalizing working capital will be key to narrowing the gap with top-tier peers.

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