GLTECHNO HOLDINGS,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.38B
• Operating Income: ¥2.85B
• Net Income: ¥2.16B
• EPS: ¥165.54

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

GL Techno Holdings (255A0) reported FY2026 Q2 consolidated results under JGAAP showing steady topline growth and stronger profit conversion. Revenue rose 3.3% YoY to ¥21.38bn, while operating income increased 5.3% YoY to ¥2.85bn, indicating positive operating leverage. Gross profit was ¥7.33bn with a solid gross margin of 34.3%, and operating margin stood at approximately 13.3%. Ordinary income reached ¥3.23bn, outpacing operating income, suggesting meaningful non-operating gains or income (e.g., interest income or other financial gains) given modest interest expense of ¥27.5m. Net income increased 18.3% YoY to ¥2.16bn, with an implied net margin of 10.1%, reflecting favorable mix, cost discipline, and non-operating tailwinds. The DuPont framework indicates ROE of 4.78%, driven by a 10.10% net margin, low asset turnover of 0.353x, and modest leverage (assets/equity 1.34x). Liquidity is very strong with a current ratio of 347.2% and quick ratio of 319.5%, underpinned by working capital of ¥24.45bn. Solvency metrics are conservative: debt-to-equity of 0.31x and interest coverage of 103.6x point to ample headroom. Operating cash flow was ¥3.22bn, exceeding net income by 49%, signaling good earnings quality; however, investing cash flow is unreported, preventing a precise free cash flow estimate. The reported “Equity Ratio: 0.0%” appears unreported rather than zero; using stated totals, equity/asset is about 74.7% (¥45.17bn/¥60.50bn), underscoring balance sheet strength. The reported effective tax rate of 0.0% is also a placeholder; using disclosed income tax of ¥1.05bn and net income of ¥2.16bn implies a pre-tax of about ¥3.21bn and an effective tax rate near 32.7%. No dividend is indicated (DPS ¥0, payout 0%), which, alongside low leverage and high equity, suggests retained earnings are being prioritized for growth or resilience. Asset turnover at 0.353x is comparatively low, which may reflect an asset-heavy or working-capital-intensive model; improving turnover is a potential lever for ROE expansion. Overall, profitability is healthy, cash conversion is strong, and the balance sheet is conservative, though the low ROE versus high equity base highlights capital efficiency as a medium-term focus area. Data gaps (cash & equivalents, investing CF, shares outstanding, per-share book value) limit precision on FCF and per-share metrics, but the available figures support a view of disciplined operations and robust financial resilience.

Profitability Analysis

ROE is 4.78% via DuPont: net margin 10.10% × asset turnover 0.353 × financial leverage 1.34. Operating margin is about 13.3% (¥2.846bn / ¥21.383bn), with EBITDA margin at 17.3% on EBITDA of ¥3.693bn, indicating a reasonable cost structure and manageable D&A (¥846.7m). Gross margin of 34.3% suggests pricing power and/or favorable mix, with cost of sales at ¥14.05bn. Operating leverage is positive: revenue grew 3.3% YoY while operating income rose 5.3% YoY, implying fixed-cost absorption benefits. Ordinary income (¥3.225bn) exceeded operating income by roughly ¥379m, pointing to non-operating gains; with interest expense only ¥27.5m, the delta likely stems from interest/dividend income or FX/other gains. Interest coverage is very strong at 103.6x, reflecting low financial costs. The implied effective tax rate is about 32.7% (¥1.049bn tax on ~¥3.209bn pre-tax), despite the reported 0% placeholder. Overall margin quality is solid, with a clean bridge from gross to operating profit and limited drag from financing costs; the main profitability constraint is low asset turnover, which holds back ROE.

Growth Assessment

Top-line growth of 3.3% YoY to ¥21.38bn is modest but stable. Operating income growth of 5.3% YoY outpaced sales, demonstrating cost control and operating leverage. Net income growth of 18.3% YoY benefited from operational improvement and non-operating items, as ordinary income exceeded operating income by ~¥379m. The sustainability of profit growth will depend on the persistence of non-operating gains and continued discipline in COGS and SG&A. With gross margin at 34.3% and operating margin at 13.3%, the model supports incremental margin expansion if volumes improve. Asset turnover at 0.353x suggests room to unlock growth in returns via better asset utilization or portfolio optimization. Revenue quality appears reasonable given the positive OCF/NI ratio (1.49x), implying earnings are backed by cash. Without segment or order/backlog data, visibility on revenue sustainability is limited; monitoring order intake and churn (if applicable) is key. Near-term outlook is cautiously constructive given balance sheet strength and cost control, but normalized non-operating income and tax rate could temper bottom-line growth.

Financial Health

Total assets are ¥60.50bn and total equity ¥45.17bn, implying an equity ratio of approximately 74.7% (reported 0.0% is unreported). Total liabilities are ¥13.97bn, with current liabilities ¥9.89bn. Liquidity is robust: current ratio 347.2% and quick ratio 319.5%, supported by current assets of ¥34.34bn and working capital of ¥24.45bn. Inventories are modest at ¥2.74bn relative to sales, suggesting limited inventory risk. Leverage is conservative with debt-to-equity of 0.31x and very high interest coverage (103.6x), indicating low refinancing risk. The capital structure is equity-heavy, which reduces financial risk but depresses ROE; optimization (e.g., prudent leverage or buybacks/dividends) could be a future consideration depending on strategy and investment pipeline.

Cash Flow Quality

Operating cash flow was ¥3.222bn versus net income of ¥2.160bn, yielding an OCF/NI ratio of 1.49x and indicating strong cash realization of earnings. D&A of ¥846.7m supports cash profits (EBITDA ¥3.693bn). Working capital appears well-managed given strong liquidity metrics, though specific receivables/payables movements are not disclosed. Investing cash flow is unreported (0 placeholder), so free cash flow cannot be reliably calculated; the headline FCF of 0 should not be interpreted as actual zero. Absent capex data, we cannot assess reinvestment intensity or maintenance vs. growth spend. Financing cash flow was a net outflow of ¥102.1m, modest relative to cash generation, suggesting limited dependence on external funding. Overall, earnings quality is good, but confirmation requires capex detail and cash balance disclosure.

Dividend Sustainability

No dividend is reported for the period (DPS ¥0, payout 0%). With OCF of ¥3.22bn and low leverage, the balance sheet could likely support a payout, but policy appears to favor reinvestment or cash accumulation. Because investing CF is unreported, free cash flow and FCF coverage of any prospective dividend cannot be assessed. Sustainability of future dividends would hinge on: (1) recurring OCF relative to maintenance capex, (2) stability of margins, and (3) capital allocation priorities. In the current state, dividend capacity appears ample from an earnings and OCF standpoint, but visibility is limited without capex and cash balance data.

Risk Assessment

Business Risks:

• Low asset turnover (0.353x) constraining ROE and return on capital.
• Dependence on non-operating gains to bridge ordinary income above operating income; potential volatility if these normalize.
• Margin sensitivity to input costs and pricing in competitive markets.
• Potential demand cyclicality affecting utilization and operating leverage.
• Talent retention and wage inflation pressures impacting SG&A (if service/tech-oriented).
• Limited visibility due to lack of segment/backlog disclosure in the dataset.

Financial Risks:

• Capital efficiency risk: high equity base (~74.7% equity ratio) depresses ROE.
• Information gaps (cash balance, investing CF) hinder assessment of liquidity buffers and capex intensity.
• Tax rate variability; implied ~32.7% could fluctuate with geography/one-offs.
• Counterparty credit risk embedded in large working capital base (receivables not disclosed here).

Key Concerns:

• Sustainability of non-operating income contributions.
• Unreported investing cash flows preventing FCF assessment.
• Low ROE relative to margin strength due to low asset turnover and conservative leverage.

Investment Implications

Key Takeaways:

• Steady topline (+3.3% YoY) with stronger operating leverage (+5.3% YoY OI).
• Healthy margins: GM 34.3%, OPM ~13.3%, EBITDA margin 17.3%.
• Strong earnings quality: OCF/NI 1.49x and interest coverage 103.6x.
• Very strong balance sheet with implied equity ratio ~74.7% and D/E 0.31x.
• ROE of 4.78% constrained by low asset turnover (0.353x) and conservative leverage.
• Non-operating gains boosted ordinary income above operating income; watch for normalization.
• Dividend currently absent; capacity likely exists but capex data is missing.

Metrics to Watch:

• Order intake/backlog and revenue visibility.
• Asset turnover and working capital turns (DSO/DPO/DIO).
• Capex and investing cash flow to derive true FCF and reinvestment rate.
• Operating margin progression and cost structure mix.
• Non-operating income components and sustainability.
• Effective tax rate normalization vs. implied ~32.7% in this period.
• Cash and equivalents level and net cash position.

Relative Positioning: Versus typical TSE mid-cap peers, the company shows above-average balance sheet strength and solid double-digit operating margin, but delivers a lower ROE due to low asset turnover and minimal leverage; the absence of dividends contrasts with many peers that maintain payout policies.

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