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

Shinozakiya (2926) delivered modest top-line growth in FY2025 (non-consolidated, JGAAP), with revenue up 5.5% YoY to ¥2,940 million, while operating income was flat at ¥59 million, indicating margin pressure despite better sales. Gross profit of ¥789 million implies a gross margin of 26.8%, broadly healthy for a fresh food manufacturer, but SG&A intensity remains high at roughly 24.8% of sales (SG&A ≈ ¥730 million), capping operating leverage. Net income was ¥38 million (net margin 1.29%), resulting in an ROE of 3.63% via DuPont (margin 1.29% × asset turnover 2.155 × leverage 1.30). Asset turnover is solid for the sector, reflecting efficient use of a relatively small asset base. Leverage is low, with total liabilities of ¥274 million against equity of ¥1,048 million, translating into a liabilities-to-equity ratio of 0.26x. Based on balance sheet totals, the implied equity ratio is approximately 76.8% (vs. the 0.0% reported metric, which appears unreported/placeholder), underscoring balance sheet strength. Liquidity is robust with a current ratio of 251.5% and a quick ratio of 237.5%, supported by low inventories of ¥38 million (about seven days of inventory on COGS), consistent with a fast-turn fresh food model. Cash generation quality is favorable: operating cash flow (OCF) of ¥75 million is nearly 2x net income, and free cash flow (FCF) of ¥90 million benefited from net investing inflows (likely non-recurring asset sales). Interest burden is negligible (¥56 thousand), yielding an extraordinary interest coverage ratio, and financial risk from debt is minimal. The company paid no dividend (DPS ¥0), retaining earnings and preserving cash, which aligns with the need to reinforce profitability before reinstating distributions. Operating income stagnation despite higher revenue suggests cost inflation (raw materials, energy, logistics, or labor) and/or limited price pass-through. With depreciation not disclosed in XBRL (shown as zero), EBITDA figures are not available, limiting deeper operating cash cost analysis. The effective tax rate shown in the metrics is 0.0% but statutory tax expense of ¥12.98 million vs. pretax income of ¥64 million implies roughly 20%, so management is incurring ordinary tax burdens. Overall, the franchise shows efficient asset utilization and strong liquidity/solvency but thin margins and constrained operating leverage. Short-term outlook hinges on margin recovery through pricing, mix, and productivity gains, while maintaining volume. Data limitations (notably D&A, cash balances, and share-related metrics) should be considered when interpreting per-share and cash metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 1.29% (¥38m net income on ¥2,940m revenue)
• asset_turnover: 2.155x (¥2,940m / ¥1,364m assets)
• financial_leverage: 1.30x (assets/equity: ¥1,364m/¥1,048m)
• calculated_ROE: 3.63% (matches provided DuPont result) margin_quality: Gross margin at 26.8% suggests reasonable product economics, but SG&A at 24.8% of sales compresses operating margin to 2.0% (¥59m OI). Net margin is 1.29%, reflecting minimal non-operating lift (¥5m ordinary over operating) and a tax burden of ~20% implied by income tax charges. operating_leverage: Revenue grew 5.5% YoY while operating income was flat, indicating negative operating leverage in the period—cost inflation or higher fixed costs offset volume/pricing gains. Improving operating leverage will require SG&A discipline, automation/productivity initiatives, or stronger price/mix.

Growth Assessment

revenue_sustainability: Top-line growth of 5.5% is respectable for a mature food category; sustainability depends on price pass-through, product mix upgrades, and channel execution (e.g., CVS/SM/private label). profit_quality: Net income quality is supported by OCF/NI of 1.97x, suggesting earnings are backed by cash. However, thin operating margin (2.0%) leaves limited cushion against input or wage inflation. outlook: Near-term profit trajectory hinges on margin restoration via procurement (soybeans/inputs), energy cost management, pricing, and process efficiency. With low leverage and strong liquidity, the company has room to invest in productivity, but structural margin improvement is needed to drive ROE above mid-single digits.

Financial Health

liquidity: Current ratio 251.5% and quick ratio 237.5% indicate strong short-term coverage. Working capital stands at ¥411.7m, aided by low inventories (~7 days of COGS). Cash balance is not disclosed in XBRL. solvency: Total liabilities of ¥274.4m vs. equity of ¥1,048m imply low gearing (liabilities/equity 0.26x). Interest expense is de minimis (¥56k), yielding extremely high coverage. Implied equity ratio from the balance sheet is ~76.8%. capital_structure: Balance sheet is equity-heavy with minimal financial debt. Most liabilities are current (¥271.7m of ¥274.4m), suggesting limited long-term obligations.

Cash Flow Quality

earnings_quality: OCF of ¥75m covers net income of ¥38m by ~1.97x, indicating low accrual reliance. This supports the credibility of earnings. FCF_analysis: FCF of ¥90m reflects OCF plus net investing inflow of ¥15m (likely asset sales or reduced capex). Such inflows may not be recurring; sustainable FCF should be evaluated excluding one-offs. working_capital: Lean inventories (¥38m) support cash conversion. Specific WC drivers (receivables/payables) are not disclosed, limiting granularity of analysis.

Dividend Sustainability

payout_ratio_assessment: No dividend was paid (DPS ¥0; payout 0%). With net income modest and margins thin, retaining earnings is prudent for resilience and reinvestment. FCF_coverage: With no dividends, FCF coverage is a non-issue. However, given that FCF benefited from investing inflows, recurring FCF capacity should be confirmed before any payout resumption. policy_outlook: Given low leverage, strong liquidity, but subdued ROE and operating margin, the company may prioritize profitability improvement and selective capex over shareholder returns in the near term.

Risk Assessment

Business Risks:

• Raw material price volatility (soybeans and other inputs) impacting gross margin
• Energy and logistics cost inflation pressuring cost of sales and distribution
• Intense price competition and private label pressure in domestic tofu/soy products
• Demand sensitivity to demographics and consumer health trends
• Food safety and quality control risks in fresh manufacturing
• Labor availability and wage inflation in manufacturing and logistics
• Channel concentration risks with major retailers/CVS

Financial Risks:

• Thin operating margin (2.0%) leaves limited buffer against shocks
• Potential non-recurring nature of investing cash inflows that boosted FCF
• Limited disclosure on depreciation and cash balances constrains cash runway analysis
• Small scale limits operating leverage and bargaining power with suppliers/customers

Key Concerns:

• Stagnant operating income despite revenue growth indicates margin compression
• Sustained inflationary pressures could further erode profitability
• Dependence on maintaining rapid inventory turns to support liquidity

Investment Implications

Key Takeaways:

• Top-line growth of 5.5% but flat operating income signals cost pressure
• Solid asset turnover (2.16x) and low leverage underpin a healthy balance sheet
• ROE at 3.63% constrained by thin net margins (1.29%)
• OCF/NI at 1.97x indicates decent earnings quality
• FCF uplift driven by investing inflow may be non-recurring
• Strong liquidity (current ratio 2.52x; quick ratio 2.38x) mitigates near-term risk

Metrics to Watch:

• Gross margin trend and procurement/energy cost pass-through
• SG&A ratio and productivity initiatives (labor efficiency, automation)
• Operating margin progression versus revenue growth (operating leverage)
• OCF to net income ratio excluding WC volatility
• Capex versus asset sale proceeds (sustainable FCF)
• Inventory days and overall cash conversion cycle

Relative Positioning: Financially conservative with strong liquidity and low leverage relative to small-cap food peers, but profitability and ROE trail more efficient operators; near-term performance hinges on restoring margin amid cost pressures.

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