ASMO CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥10.37B
• Operating Income: ¥323M
• Net Income: ¥60M
• EPS: ¥15.95

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

For FY2026 Q2, 株式会社アスモ reported revenue of ¥10,372 million (+0.9% YoY), demonstrating stable but modest top-line expansion. Operating income surged to ¥323 million (+133.7% YoY), indicating significant operating leverage despite limited revenue growth. Ordinary income was ¥334 million and net income reached ¥214 million (+185.0% YoY), with an EPS of ¥15.95. Gross profit of ¥1,885.7 million translates to an 18.2% gross margin, while the operating margin improved to approximately 3.1%. DuPont analysis shows a net margin of 2.06%, asset turnover of 1.085, and financial leverage of 1.42, yielding an ROE of 3.18%. The balance sheet appears conservative with total assets of ¥9,558 million, liabilities of ¥2,685 million, and equity of ¥6,719 million (debt-to-equity 0.40x), and very strong liquidity (current ratio ~344%). However, operating cash flow was negative at -¥116.9 million, resulting in an OCF/Net Income ratio of -0.55, suggesting earnings did not translate into cash this period, likely due to working capital movements. EBITDA was ¥363.7 million (3.5% margin) and interest expense was minimal at ¥1.0 million, producing an exceptionally high interest coverage ratio of ~323x. The reported effective tax rate metric is shown as 0.0%, but based on disclosed income tax of ¥67.5 million and ordinary income of ¥334 million, the implied tax burden appears closer to roughly 20%, indicating the 0.0% figure likely reflects calculation or disclosure constraints. Dividend per share is shown as ¥0.00 and payout ratio at 0.0%, implying retained earnings focus; however, dividend policy details are not disclosed in the dataset. Liquidity appears ample with working capital of ¥5,786 million and quick ratio equal to current ratio due to undisclosed inventories. Several items, including inventories, investing cash flows, cash balances, and share counts, are shown as zero and should be interpreted as not disclosed rather than actual zeros. The combination of stronger profitability, low financial leverage, and strong liquidity is positive, but the negative OCF and limited top-line growth temper the overall quality of earnings. Sustainability of the margin gains will hinge on cost discipline and working capital normalization in the second half.

Profitability Analysis

ROE of 3.18% is driven by a 2.06% net margin, 1.085x asset turnover, and 1.42x financial leverage, reflecting a low-to-moderate return profile primarily constrained by modest margins. Operating margin is approximately 3.1% (¥323m / ¥10,372m), a significant YoY improvement given operating income growth of +133.7% against revenue growth of +0.9%, evidencing operating leverage through SG&A efficiency or mix improvements. Gross margin at 18.2% (¥1,885.7m / ¥10,372m) provides headroom for further margin expansion if scale effects continue. EBITDA of ¥363.7m implies an EBITDA margin of 3.5%, slightly above the operating margin due to relatively light D&A (¥40.7m), consistent with an asset-light or low-capex model. Ordinary income margin is roughly 3.2%, benefitting from very low interest burden (interest expense ~¥1.0m; coverage ~323x). Net margin at 2.06% remains thin, highlighting sensitivity to small changes in gross margin or overhead. The magnitude of profit growth relative to revenue suggests tightening of cost structure and potentially better pricing or mix, though the sustainability requires confirmation in subsequent quarters. Tax burden appears non-zero in practice (income tax ¥67.5m), so net margin expansion is primarily operating in nature rather than tax-driven.

Growth Assessment

Revenue growth of +0.9% YoY suggests stable demand but limited market share gains or pricing power in the period. In contrast, operating income growth of +133.7% and net income growth of +185.0% reflect substantial margin improvement and cost control, indicating positive operating leverage. The quality of profit growth is mixed: while income statement margins improved, operating cash flow was negative (-¥116.9m), implying working capital absorption offset accrual earnings. Absent disclosure of inventories and detailed receivables/payables, the negative OCF likely stems from timing of collections and payments; normalization in H2 will be a key determinant of full-year growth quality. Given EBITDA margin of 3.5% and minimal interest expense, further operating gains could translate efficiently to the bottom line if gross margin and SG&A discipline hold. Outlook hinges on sustaining gross profit per unit and managing working capital; with modest top-line growth, incremental profit expansion will rely on efficiency rather than volume. No guidance or order indicators are provided; thus, revenue sustainability is assumed to be steady near current levels barring macro shifts.

Financial Health

Liquidity is strong with current assets of ¥8,158 million and current liabilities of ¥2,373 million, yielding a current (and quick) ratio of ~344%, reflecting ample near-term coverage. Working capital stands at ¥5,786 million, providing a solid buffer for operations and seasonal swings. Solvency is conservative: total liabilities of ¥2,685 million vs equity of ¥6,719 million equate to a debt-to-equity ratio of 0.40x and financial leverage (assets/equity) of ~1.42x. Interest burden is negligible with interest expense of ~¥1.0 million and interest coverage of ~323x, indicating low refinancing risk. Total assets are ¥9,558 million against total equity of ¥6,719 million, indicating a robust equity cushion. The reported equity ratio metric is shown as 0.0%, but balance sheet figures imply a substantial equity base; this metric should be treated as undisclosed in this dataset. Cash and equivalents are shown as zero (undisclosed), so on-balance-sheet liquidity composition cannot be verified, though the large current asset base provides comfort.

Cash Flow Quality

Operating cash flow of -¥116.9 million versus net income of ¥214.0 million yields an OCF/NI ratio of -0.55, signaling weak cash conversion this half and likely a working capital build (e.g., receivables increase or payables decrease). EBITDA of ¥363.7 million and low D&A (¥40.7 million) indicate earnings power exists, but cash realization lagged. Investing cash flow is undisclosed (shown as zero), so Free Cash Flow cannot be reliably computed; the reported FCF of 0 should be interpreted as not determinable. Working capital is sizable (¥5,786 million), which can amplify cash flow volatility with small shifts in collection or payment terms. Given minimal interest expense and conservative leverage, the cash flow risk is more operational/working-capital related than financial. Monitoring the alignment between accrual earnings and cash in H2 will be crucial to assess earnings quality.

Dividend Sustainability

Dividend per share is shown as ¥0.00, with a payout ratio of 0.0%, indicating retained earnings for now; however, this should be treated as non-disclosure rather than confirmation of no dividends. With negative OCF in H1 and undisclosed FCF, assessing coverage is not possible from this dataset; the reported FCF coverage of 0.00x is not meaningful. Balance sheet capacity (low leverage, high liquidity) suggests potential flexibility for dividends when cash generation stabilizes. Dividend sustainability will depend on consistent positive OCF and visibility on maintenance capex (not disclosed) rather than on earnings alone. Policy outlook cannot be inferred without management guidance; current data suggest prudence until cash conversion improves.

Risk Assessment

Business Risks:

• Low revenue growth (+0.9% YoY) increases reliance on cost control for earnings expansion.
• Thin margins (operating ~3.1%, net ~2.1%) heighten sensitivity to input costs and pricing.
• Negative operating cash flow indicates working capital risk and potential collection timing issues.
• Potential seasonality or timing effects could cause volatility between halves.
• Limited disclosure on inventories and investing cash flows reduces visibility into operations and capex needs.

Financial Risks:

• Cash and equivalents not disclosed, constraining assessment of immediate liquidity composition.
• OCF/NI at -0.55 suggests earnings quality concerns if not reversed in H2.
• Equity ratio metric shown as 0.0% (undisclosed), complicating quick solvency screening despite strong underlying balance sheet.
• If receivables are elevated, there could be counterparty credit risk (not disclosed).

Key Concerns:

• Sustainability of margin improvements with limited top-line growth.
• Normalization of working capital to restore positive operating cash flow.
• Visibility on capex and investment needs (investing CF undisclosed).

Investment Implications

Key Takeaways:

• Strong profit rebound with operating income +133.7% and net income +185.0% on modest +0.9% revenue growth demonstrates operating leverage.
• ROE at 3.18% remains modest; further gains require sustained margin expansion and better asset utilization.
• Balance sheet is conservative (D/E 0.40x; current ratio ~344%), offering resilience.
• OCF negative (-¥116.9m) raises earnings quality and working capital management questions.
• Interest burden is minimal (coverage ~323x), limiting financial risk.
• Dividend stance appears conservative/undisclosed; cash conversion will dictate future distributions.

Metrics to Watch:

• Operating cash flow and OCF/NI ratio in H2
• Working capital components (receivables, payables, and any inventory disclosures)
• Gross margin and SG&A-to-sales ratio
• Revenue growth trajectory and pricing/mix indicators
• Capex levels and investing cash flows when disclosed
• ROE progression via margin and asset turnover
• Tax rate normalization versus implied ~20% burden

Relative Positioning: Within small-cap Japan peers, the company shows improving profitability and strong liquidity with low leverage, but trails on cash conversion and still exhibits modest ROE; maintaining margin gains while normalizing working capital would improve its 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