ALCONIX CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥102.05B
• Operating Income: ¥4.41B
• Net Income: ¥2.69B
• EPS: ¥85.87

Income Statement

Balance Sheet

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

Alconix (3036) reported FY2026 Q2 consolidated results under JGAAP showing top-line growth with stronger operating profitability but softer bottom-line due to non-operating/tax effects. Revenue rose to ¥102.0bn (+6.7% YoY), with gross profit of ¥12.59bn and gross margin of 12.3%, indicating stable spread management despite a materials-heavy portfolio. Operating income increased 27.8% YoY to ¥4.41bn, lifting operating margin to roughly 4.3%, reflecting improved operating efficiency and possibly favorable product mix or disciplined SG&A. Ordinary income was ¥3.96bn, implying some non-operating drag relative to operating income, including interest expense of ¥0.47bn. Net income decreased 3.3% YoY to ¥2.57bn, indicating a larger burden below operating line—likely a combination of higher financing costs, valuation effects, and a normalizing tax burden. Based on net income and income tax disclosed, the implied effective tax rate is approximately 37–38% (vs. the reported 0.0% placeholder), suggesting taxation was a material factor in the net income decline. DuPont decomposition highlights thin but acceptable net margin (2.52%), moderate asset turnover (0.515x), and meaningful financial leverage (2.82x), driving a calculated ROE of 3.66%. Liquidity appears sound with a current ratio of 139.9% and quick ratio of 95.0%, supported by sizeable working capital (¥41.18bn), though inventory intensity remains notable (inventories ¥46.29bn, about 32% of current assets). Capital structure is moderate with debt-to-equity of 1.80x; computed equity ratio is approximately 35.5% (equity ¥70.35bn over assets ¥198.11bn), despite the equity ratio field showing 0.0% (undisclosed). Interest coverage is adequate at 9.3x, indicating headroom against interest rate volatility. Cash flow statements were not disclosed; hence operating and free cash flow quality cannot be assessed from this release. Dividend data were not disclosed; EPS is ¥85.87 for the period, but payout metrics and coverage cannot be evaluated. Overall, the quarter shows improving operating fundamentals but a disconnect at the net level due to below-OP items and taxes, with a balance sheet that can support working capital needs and cyclical volatility. Key sensitivities include commodity prices, FX, interest rates, and inventory valuation dynamics common to non-ferrous and electronics materials trading. Given the data limitations (notably CF and DPS), conclusions hinge on income statement and balance sheet trends, which are overall stable to improving at the operating level.

Profitability Analysis

ROE is 3.66% via DuPont: Net margin 2.52% × Asset turnover 0.515× × Financial leverage 2.82×. Operating margin improved to about 4.3% (¥4.41bn/¥102.05bn), outpacing revenue growth (+6.7% YoY vs. OP +27.8% YoY), signaling positive operating leverage and SG&A discipline. Gross margin of 12.3% is consistent with a trading/processing model; margin stability implies spreads are being maintained despite commodity/FX volatility. The gap between operating income (¥4.41bn) and ordinary income (¥3.96bn) reflects non-operating costs, notably interest expense of ¥0.47bn, which compressed ordinary margin to ~3.9%. Net income margin at 2.52% contracted YoY despite stronger OP, driven by below-OP items and a normalized tax burden (implied ~37–38%). Interest coverage at 9.3x remains comfortable, supporting ongoing operations. Absence of depreciation disclosure prevents EBITDA analysis; therefore, assessment of fixed-cost absorption and D&A leverage cannot be completed.

Growth Assessment

Top-line growth of 6.7% YoY to ¥102.0bn suggests steady demand in core trading segments and/or pass-through pricing from metals/electronics materials. Operating income growth of 27.8% YoY indicates improved margin capture and cost control, a positive signal for near-term profitability. However, net income declined 3.3% YoY to ¥2.57bn due to higher non-operating/tax burdens, diluting the operating gains at the bottom line. Sustainability of revenue growth will hinge on commodity price trends, FX (USD/JPY), and downstream demand in electronics/auto-related supply chains. The operating margin expansion suggests structural efficiencies or favorable mix, but durability will depend on inventory management and pricing power. Given the trading nature, quarter-to-quarter volatility is likely; spreads and turnover will be key drivers rather than volume alone. With no cash flow data, we cannot confirm whether working capital supported or constrained growth. Outlook qualitatively improved at the operating level; bottom-line normalization requires mitigation of financial costs and better non-operating performance.

Financial Health

Total assets are ¥198.11bn, equity ¥70.35bn, and liabilities ¥126.32bn, implying a computed equity ratio of ~35.5% and debt-to-equity of 1.80x—moderate for a trading company with working-capital intensity. Liquidity is solid: current ratio 139.9%, quick ratio 95.0%; working capital stands at ¥41.18bn. Inventories of ¥46.29bn constitute about 32% of current assets, highlighting inventory risk and the importance of turnover. Interest coverage is 9.3x (OP ¥4.41bn / interest ¥0.47bn), providing cushion against rate increases, though financing costs remain meaningful. Asset turnover at 0.515x aligns with a trading balance sheet carrying sizable receivables and inventories. Overall solvency risk appears contained with a substantial equity buffer, but continued attention to funding costs and WC discipline is warranted.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed in this dataset, so OCF/NI, FCF, and coverage metrics cannot be evaluated. Earnings quality must therefore be inferred from the P&L and balance sheet: margin expansion at the operating level is positive, but the reliance on below-OP items (notably interest costs) and a higher tax burden reduced net conversion. Inventory intensity (¥46.29bn) and the quick ratio at ~95% suggest working capital is a major swing factor for cash generation; without OCF, we cannot assess whether receivables/inventories absorbed or released cash. Absent D&A disclosure also limits accrual analysis (e.g., EBITDA-to-OCF). Net-net, earnings quality is directionally improved at the operating level, but cash realization remains unassessed due to missing CF statements.

Dividend Sustainability

Dividend per share, payout ratio, and FCF coverage were not disclosed; therefore, dividend sustainability cannot be quantitatively assessed from this release. EPS for the period is ¥85.87, but without annual guidance, cash flow, or stated policy, we cannot determine coverage. Balance sheet flexibility (equity ratio ~35.5%, interest coverage 9.3x) provides capacity for distributions in principle, yet working capital needs and earnings volatility typical of trading companies can constrain distributable cash in certain periods. Monitoring policy disclosures, full-year EPS/OCF, and net debt trajectory will be essential for dividend visibility.

Risk Assessment

Business Risks:

• Commodity price volatility in non-ferrous metals and specialty materials affecting spreads and inventory valuations
• FX fluctuations (notably USD/JPY) impacting import costs, sales pricing, and translation effects
• Demand cyclicality in end markets (electronics, automotive, industrial machinery)
• Inventory obsolescence and price risk due to large inventory position (¥46.29bn)
• Customer credit risk and receivables collection in a high-volume trading model
• Supply chain disruptions affecting procurement and delivery timing
• Competitive pressure compressing gross margins in commoditized products

Financial Risks:

• Interest rate risk impacting financing costs (¥0.47bn interest expense; 9.3x coverage)
• Working capital funding needs increasing leverage during growth or price upcycles
• Potential non-operating losses or valuation effects reducing ordinary income
• Tax rate volatility; implied effective tax burden ~37–38% this period
• Liquidity sensitivity if quick ratio falls below 100% amid inventory build

Key Concerns:

• Net income decline (-3.3% YoY) despite strong operating profit growth
• Dependence on below-OP line items (interest and other) that diluted operating gains
• Absence of cash flow disclosure limits assessment of earnings-to-cash conversion

Investment Implications

Key Takeaways:

• Operating profitability improved meaningfully: OP +27.8% YoY; operating margin ~4.3%
• Top-line growth steady at +6.7% YoY with stable gross margin (12.3%)
• Bottom-line softened: net income -3.3% YoY, driven by non-operating and tax effects
• Balance sheet exhibits moderate leverage (D/E 1.80x) and solid liquidity (CR 139.9%)
• Interest coverage 9.3x provides cushion, but interest costs remain a drag
• Inventory-heavy working capital structure is a key performance swing factor

Metrics to Watch:

• Gross and operating margins (spread capture and SG&A discipline)
• Ordinary income vs. operating income gap (non-operating gains/losses, interest)
• Inventory and receivables turnover days; working capital as % of sales
• OCF and FCF once disclosed; OCF/NI conversion ratio
• Leverage metrics (net debt/EBITDA when available) and interest coverage
• FX sensitivity and hedging effectiveness
• Effective tax rate trajectory

Relative Positioning: Within Japan’s mid-cap metals/electronics materials trading peers, Alconix shows typical thin margins with improving operating efficiency, moderate leverage, solid liquidity, and standard working-capital intensity; bottom-line volatility remains higher due to non-operating and tax sensitivities.

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