INTERMESTIC INC. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥38.33B
• Operating Income: ¥6.22B
• Net Income: ¥3.73B
• EPS: ¥138.82

Income Statement

Balance Sheet

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

Intermestic Co., Ltd. (262A0) delivered solid FY2025 Q3 year-to-date performance with revenue of ¥38.33bn, up 14.0% YoY, indicating healthy top-line momentum. Operating income rose 14.6% YoY to ¥6.22bn, demonstrating slight positive operating leverage as profit growth outpaced sales. Net income increased 13.8% YoY to ¥4.25bn, broadly in line with operating trends after accounting for taxes and minimal interest expense. Profitability remains robust: gross margin stands at 65.6%, and operating margin is approximately 16.2%, underscoring strong pricing power and disciplined cost control. Ordinary income of ¥6.23bn is close to operating income, implying limited non-operating drag and low financing burden. The DuPont profile shows a net margin of 11.08%, asset turnover of 1.11x, and financial leverage of 1.32x, yielding an ROE of 16.28%, which is attractive for a domestic specialty retailer. Liquidity appears strong with a current ratio of about 246% and working capital of ¥16.57bn, suggesting ample buffer for seasonality and store operations. Leverage is conservative: total liabilities/ equity of 0.45x and interest expense of only ¥25m support an interest coverage near 249x. While the disclosed equity ratio is shown as 0.0%, this item was not reported; based on available figures, equity/asset ratio is approximately 75.6%, indicating a very solid balance sheet. The effective tax outflow of ¥1.68bn implies a tax rate around the high‑20s percent range, consistent with Japan’s statutory levels. Cash flow statements and several per-share and inventory metrics were not disclosed, limiting evaluation of cash conversion and working capital turns. EBITDA is also not determinable given undisclosed depreciation and amortization under JGAAP tagging. Dividend information indicates DPS not reported and a payout ratio shown as 0%, so distribution policy for the period cannot be assessed from the data. Overall, the company exhibits high margins, healthy ROE, and strong liquidity with modest leverage, consistent with a quality retail/consumer model. The slight outperformance of operating income growth vs revenue suggests operating discipline amid expansion. Key uncertainties remain around cash generation, capex intensity, lease obligations, and inventory dynamics due to unreported line items. Near-term outlook appears constructive given momentum and profitability, but verification via cash flow and working capital disclosures is needed to confirm sustainability.

Profitability Analysis

ROE (DuPont) = Net margin (11.08%) × Asset turnover (1.11x) × Financial leverage (1.32x) = ~16.28%. Gross margin is 65.6% (¥25.14bn/¥38.33bn), indicating strong pricing/merchandise economics. Operating margin is ~16.2% (¥6.22bn/¥38.33bn), with ordinary margin ~16.3% (¥6.23bn/¥38.33bn), evidencing minimal non-operating friction. Net margin is 11.08%, reflecting normal taxation and low interest burden. Operating leverage is modestly positive: revenue +14.0% YoY versus operating income +14.6% YoY. Interest coverage is ~248.8x (operating income/interest expense), confirming earnings resilience to rate or credit shocks. EBITDA cannot be assessed due to undisclosed D&A under JGAAP tagging; treat EBITDA margin as not available rather than zero. Overall profitability quality is high with robust unit economics and controlled overhead.

Growth Assessment

Revenue grew 14.0% YoY to ¥38.33bn, suggesting strong demand and/or network expansion. Operating income grew 14.6% YoY to ¥6.22bn, slightly ahead of sales, pointing to scale benefits or SG&A productivity. Net income advanced 13.8% YoY to ¥4.25bn, broadly tracking operating performance after tax. Gross margin at 65.6% and operating margin at ~16.2% indicate that growth has not been bought via discounting; price/mix appears supportive. Ordinary income essentially equals operating income, implying growth is driven by core operations rather than non-recurring items. Without OCF and capex disclosures, sustainability of growth in cash terms cannot be verified; inventory and store-opening data are also not available. Outlook hinges on continued traffic, ticket size, and store rollout productivity; current margins provide cushion against demand volatility. Key to sustaining growth will be maintaining gross margin while controlling labor and occupancy costs.

Financial Health

Liquidity is strong: current assets ¥27.95bn vs current liabilities ¥11.37bn yields a current ratio of ~245.7% and working capital of ¥16.57bn. Quick ratio is shown equal to current ratio due to undisclosed inventory; true quick ratio may be lower once inventories are included. Solvency is solid: total liabilities ¥11.78bn vs equity ¥26.10bn implies liabilities/equity of ~0.45x. Calculated equity ratio is ~75.6% (equity/total assets), although the reported equity ratio field is unreported. Interest expense of ¥25m and coverage of ~249x indicate minimal refinancing risk. Cash and equivalents were not disclosed; therefore, immediate liquidity buffers (cash on hand) cannot be confirmed from the provided data. Potential lease liabilities (common in retail) may be embedded in other accounts under JGAAP; not separately disclosed here.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed in this dataset; zeros reflect unreported items rather than actual values. As a result, OCF/Net Income and free cash flow metrics are not assessable from the provided figures. Earnings quality appears sound from the income statement (stable margins, low non-operating items), but without OCF and working capital detail (especially inventories and payables), we cannot validate cash conversion. With strong working capital at period end, it will be important to monitor whether growth is requiring incremental inventory or receivables investment that could weigh on OCF. Capex levels are also unknown, limiting assessment of maintenance vs growth investment and true FCF.

Dividend Sustainability

DPS and payout ratio are shown as 0.00, indicating non-disclosure rather than confirmed zero. With net income of ¥4.25bn and strong balance sheet metrics, capacity for distributions may exist, but policy and actual cash generation are unknown from the provided data. FCF coverage cannot be assessed without OCF and capex. Until cash flows and explicit dividend guidance are available, dividend sustainability and trajectory remain indeterminate.

Risk Assessment

Business Risks:

• Consumer demand volatility affecting eyewear retail traffic and average ticket.
• Competitive intensity from domestic peers and fast-fashion eyewear chains impacting pricing and margins.
• Input cost and supply chain risks (frames, lenses, logistics), including FX exposure on imported materials.
• Store expansion execution risk (site selection, cannibalization, ramp-up productivity).
• Labor and occupancy cost inflation pressuring SG&A and operating margin.
• Product mix and promotional risk potentially diluting gross margin.

Financial Risks:

• Limited visibility on cash and cash equivalents due to non-disclosure in this dataset.
• Unreported cash flow statements prevent assessment of cash conversion and FCF.
• Potential off-balance or under-disclosed lease obligations common in retail under JGAAP presentation.
• Interest rate risk is low given small interest expense, but refinancing terms on leases or other liabilities are unknown.
• Working capital intensity risk if inventory levels rise with growth (inventory not disclosed).

Key Concerns:

• Absence of OCF, capex, and inventory data limits validation of earnings quality and FCF.
• Equity ratio field not reported; reliance on calculated solvency metrics.
• Dividend policy and shareholder return framework not discernible from the provided figures.

Investment Implications

Key Takeaways:

• Top-line growth of 14.0% YoY with operating income up 14.6% indicates healthy operating leverage.
• High profitability profile: GM 65.6%, OPM ~16.2%, NPM 11.08%.
• Attractive ROE of 16.28% driven more by margins and asset turnover than leverage (financial leverage 1.32x).
• Strong liquidity (current ratio ~246%) and modest leverage (liabilities/equity ~0.45x) underpin balance sheet resilience.
• Cash flow, inventory, and capex disclosure gaps constrain assessment of cash conversion and FCF sustainability.

Metrics to Watch:

• Same-store sales growth, store count and openings/closures.
• Gross margin and SG&A ratio to sales (monitor for discounting or cost inflation).
• Operating cash flow, capex, and free cash flow once disclosed.
• Inventory levels and turnover; days payables and receivables.
• Ordinary income versus operating income (non-operating gains/losses).
• Effective tax rate normalization and any one-off tax effects.
• Lease liabilities and interest-bearing debt trend.

Relative Positioning: Within Japanese specialty retail, Intermestic exhibits above-average margins and a robust ROE with conservative leverage, suggesting a quality operational franchise; however, incomplete cash flow and working capital disclosures prevent a full comparison on cash conversion and capital efficiency.

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