SHINOZAKIYA,INC. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.94B
• Operating Income: ¥59M
• Net Income: ¥38M
• EPS: ¥2.69

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: FY2025 Q4 was modestly profitable with improved topline and positive cash generation, but the P/L line items do not fully reconcile, suggesting material extraordinary items or mapping inconsistencies under JGAAP. Revenue reached 29.40 (100M JPY), up 5.5% YoY. Operating income was 0.59, implying an operating margin of about 2.0%. Ordinary income was 0.64 (2.2% ordinary margin) supported by net non-operating income of roughly 0.03. Net income came in at 0.38, for a net margin of 1.3% and EPS of 2.69 JPY. Operating cash flow was strong relative to earnings at 0.75, with OCF/NI at 1.97x, indicating solid earnings quality. Free cash flow was reported at 0.90, helped by positive investing cash flow, despite modest capex of -0.10. Liquidity remains robust: cash and deposits of 5.19 exceed current liabilities of 2.72, driving a current ratio of 251.5% and quick ratio of 237.5%. Leverage is conservative (D/E 0.26x) with negligible interest expense and very high interest coverage. ROE was 3.6% via DuPont (NPM 1.3%, asset turnover 2.155x, leverage 1.30x), indicating low-return but positive profitability. Notably, several income statement lines are internally inconsistent (revenue and cost of sales imply a different gross profit than the reported figure; SG&A and gross profit do not reconcile with operating income), and profit before tax (-0.15) conflicts with positive net income, implying unreported extraordinary items or classification differences. Given these caveats, near-term implications are cautiously constructive: liquidity is ample, cash generation covers maintenance capex, and low financial risk provides flexibility to navigate input inflation and pricing. However, low margins, negative retained earnings (-0.69), and reliance on small non-operating contributions cap return profile. Forward-looking, management focus on sustaining gross margin, rationalizing SG&A, and stabilizing extraordinary items will be key to lifting ROE above mid-single digits. Absent dividend disclosures, capital allocation visibility is limited. Monitoring pricing power versus raw material costs (soybeans), energy, and logistics will be central to FY2026 earnings durability.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 1.3% × 2.155 × 1.30 ≈ 3.6% (matches reported). Biggest driver: asset turnover (2.155x) is the primary positive contributor given lean asset base; margin remains thin and leverage modest. Business reason: a cash-heavy balance sheet with limited fixed assets supports high turnover, while cost pressures and limited pricing power constrain net margins. Sustainability: high asset turnover is likely sustainable near-term, but net margin improvement hinges on gross margin management and SG&A control; leverage is already low, leaving limited scope to boost ROE via gearing. Concerning trends: we cannot verify YoY SG&A growth versus revenue (unreported), but the low operating margin (~2.0%) leaves limited cushion against cost inflation. Note: Income statement lines (gross profit, SG&A, operating income) do not reconcile; analysis relies on the reported operating and net income figures rather than reconstructed margins.

Growth Assessment

Revenue grew 5.5% YoY to 29.40, indicating steady demand recovery. Operating profit of 0.59 suggests incremental operating leverage, but absolute margin remains thin (~2.0%). Non-operating income netted roughly +0.03, with interest income at 0.04; the contribution is small but supportive. Net income margin of 1.3% reflects constrained profitability; the reported effective tax rate (-84.3%) and a negative profit before tax indicate significant extraordinary items or classification effects, limiting visibility on core growth. With OCF at 0.75 and FCF at 0.90, growth investments appear modest and internally funded. Outlook: revenue momentum is modestly positive, but sustaining growth will require stable input costs (soybeans), improved product mix, and operational efficiency. Absent segment detail, we assume growth is volume-led with limited pricing contribution; margin expansion will depend on cost pass-through and scale.

Financial Health

Liquidity is strong: current ratio 251.5% and quick ratio 237.5%, with cash (5.19) comfortably exceeding current liabilities (2.72). No warning on current ratio (<1.0) or D/E (>2.0); D/E stands at 0.26x. Solvency is solid with minimal interest expense and very high interest coverage (1053.6x). Maturity mismatch risk is low given cash and receivables (5.76) well above current liabilities (2.72). Retained earnings are negative (-0.69), indicating accumulated deficits despite positive equity (10.48), which may constrain dividend policy. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

OCF/Net Income is 1.97x (>1.0), signaling high earnings quality for the period. Reported FCF is 0.90; positive investing CF (+0.15) alongside capex (-0.10) suggests asset disposals or returns of deposits, enhancing FCF. Given low capex and positive OCF, current FCF appears sufficient to cover maintenance investment and potentially small shareholder returns, though dividends are unreported. Working capital: with AP (1.73) larger than AR (0.57) and inventories (0.38), the firm benefits from supplier financing, which supports OCF; no clear signs of aggressive WC manipulation are evident from available aggregates.

Dividend Sustainability

Dividend disclosures are unreported (DPS, payout, total dividends). With NI at 0.38 and FCF at 0.90, capacity exists for a modest payout in principle; however, accumulated deficits (retained earnings -0.69) may limit dividend distributions under corporate policy and legal constraints. Without explicit policy guidance or historical payout data, sustainability cannot be assessed quantitatively. Near-term, maintaining balance sheet strength and rebuilding retained earnings likely takes precedence over distributions.

Risk Assessment

Business Risks:

• Raw material price volatility (soybeans) impacting gross margin
• Energy and logistics cost inflation compressing margins
• Retailer pricing pressure and private label competition
• Short shelf-life and potential product returns in fresh foods
• Concentration risk to key retail channels and regional exposure
• Food safety and quality control risks

Financial Risks:

• Thin operating margin (~2.0%) leaves limited buffer against shocks
• Accumulated deficit (retained earnings -0.69) constrains capital allocation flexibility
• Earnings volatility due to extraordinary items or classification swings (PBT negative, NI positive)
• Dependence on supplier credit (AP > AR + inventory) could pressure OCF if terms tighten

Key Concerns:

• Inconsistencies in reported gross profit, SG&A, operating income, and profit before tax
• Negative reported PBT (-0.15) alongside positive NI (0.38) and tax expense (0.13) indicates unreported extraordinary items
• Limited disclosure of SG&A breakdown and YoY comparisons reduces transparency
• Dividend policy and payouts unreported, limiting visibility on shareholder returns

Investment Implications

Key Takeaways:

• Topline grew 5.5% YoY with positive operating and net profits despite thin margins
• Cash-rich, low leverage balance sheet with strong liquidity metrics
• Earnings quality solid this period (OCF/NI ~2x) and positive FCF even after capex
• ROE at 3.6% constrained by low margins and conservative leverage
• Data inconsistencies and extraordinary-item effects limit confidence in margin trends

Metrics to Watch:

• Gross margin trajectory and reconciliation versus reported cost of sales
• SG&A ratio and cost control versus revenue growth
• Operating margin and ordinary margin stability
• OCF/NI and working capital shifts (AP, AR, inventory)
• Raw material (soybean) and energy price trends
• Disclosure of extraordinary items and dividend policy

Relative Positioning: Within small-cap Japanese food manufacturers, the company exhibits stronger liquidity and lower financial risk than peers but lags on profitability, with ROE constrained by thin operating margins; transparency on extraordinary items and a clearer cost structure would improve comparability.

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