HYPER Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥10.75B
• Operating Income: ¥340M
• Net Income: ¥86M
• EPS: ¥29.20

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

FY2025 Q3 was a solid beat on profitability with healthy topline growth and clear operating leverage. Revenue rose 16.6% YoY to 107.54, while operating income jumped 85.0% YoY to 3.40, and ordinary income surged 121.7% YoY to 3.45. Net income increased 226.7% YoY to 2.81, lifting calculated ROE to 9.0%. Gross margin printed at 23.4%, SG&A ratio at 21.7%, and operating margin at 3.16%. Based on the growth math, operating margin expanded by roughly 117 bps YoY (to 3.16% from about 1.99%). Net margin improved by about 168 bps YoY (to 2.61% from ~0.93%). Ordinary income margin rose by about 152 bps YoY (to 3.21% from ~1.69%). Interest coverage is strong at 72.73x, indicating low near‑term interest burden risk. Asset turnover at 1.40x and financial leverage at 2.46x together supported a respectable 9.0% ROE. Liquidity remains sound with a current ratio of 169% and cash of 22.10 against accounts payable of 33.56 and short‑term loans of 2.80. Debt to equity (total liabilities/equity) stands at 1.46x, a manageable level, while ROIC at 14.2% exceeds typical cost of capital benchmarks. Earnings quality assessment is constrained because operating cash flow was not disclosed; hence we cannot validate cash conversion against net income. There is a notable classification/timing element below the operating line: non‑operating items disclosed do not fully reconcile to the jump in ordinary income, and profit before tax (1.56) versus net income (2.81) suggests tax/extraordinary effects that boosted bottom‑line figures. These below‑the‑line effects should be monitored for recurrence versus one‑off nature. Overall, the quarter demonstrates improving margin structure and disciplined SG&A, with forward implications of sustained ROE if revenue momentum and cost control persist. Key watchpoints are cash conversion (OCF), working capital discipline (AR/AP), and normalization of the effective tax rate and extraordinary items. Absent cash flow disclosure, dividend sustainability looks comfortable on a low payout ratio (24.6%) but requires confirmation via FCF in coming quarters.

Profitability Analysis

ROE (9.0%) = Net Profit Margin (2.6%) × Asset Turnover (1.403x) × Financial Leverage (2.46x). The largest improvement YoY appears in net profit margin, inferred from net income growth (+226.7% YoY) outpacing revenue growth (+16.6%), followed by operating margin expansion that indicates better operating leverage. Business drivers likely include improved gross profit conversion and tighter SG&A ratio (21.7%), supported by scale effects from higher revenue. Some below‑the‑line items also helped, as ordinary income rose faster than operating income and PBT/NI show unusual movements, implying non‑recurring or tax‑related effects contributed to net margin. Sustainability: operating leverage from SG&A discipline is more sustainable than below‑the‑line gains; watch that extraordinary/tax effects do not reverse. Concerning trend check: SG&A growth cannot be precisely compared due to lack of prior period SG&A disclosure, but the lower SG&A ratio versus gross margin indicates positive operating leverage this quarter.

Growth Assessment

Topline growth of 16.6% YoY to 107.54 indicates robust demand. Operating income up 85.0% and ordinary income up 121.7% demonstrate strong operating leverage. Margin expansion was broad-based: operating margin +~117 bps and net margin +~168 bps YoY. Non-operating contribution (net) was directionally supportive given ordinary income growth outpacing operating income; however, disclosed non-operating line items do not fully reconcile, suggesting additional items not broken out in the summary. Given a thin but improving operating margin (3.16%), incremental gross margin improvement or continued SG&A efficiency will be key to sustaining growth in profits. Absent segment data, we cannot attribute growth to product mix or volume versus pricing. Outlook: if revenue momentum persists and SG&A discipline holds, profit growth should outpace sales; however, normalization of tax/extraordinary effects could temper bottom-line growth.

Financial Health

Liquidity is healthy: current ratio 169.1% and quick ratio 169.1%, with cash and deposits of 22.10 and accounts receivable of 37.16 comfortably exceeding short-term loans of 2.80. No warning on current ratio (<1.0) or D/E (>2.0); total liabilities/equity is 1.46x, near the conservative threshold but manageable. Interest-bearing debt (short + long) totals 4.16 against equity of 31.12, indicating modest direct leverage, and interest coverage is strong at 72.73x. Maturity mismatch risk is low: current assets of 70.83 comfortably exceed current liabilities of 41.88; accounts payable of 33.56 is largely financed by receivables and cash. No off-balance sheet obligations were disclosed in the provided data. Equity base is 31.12 with retained earnings at 20.18, providing capacity for moderate investment or shareholder returns.

Cash Flow Quality

Operating cash flow was not disclosed, so OCF/net income and FCF cannot be assessed; we cannot confirm earnings-to-cash conversion. Given the working capital-intensive nature of the business (AR 37.16 and AP 33.56), cash generation likely hinges on receivable collection and vendor payment terms. No signs of working capital manipulation can be inferred from the limited data; however, monitoring AR days and AP days is essential. Dividend and capex coverage by FCF cannot be evaluated this quarter due to missing cash flow and capex disclosures.

Dividend Sustainability

The calculated payout ratio is 24.6%, which is conservative relative to typical thresholds (<60%). With cash of 22.10 and modest interest burden, near-term dividend capacity appears comfortable. However, FCF coverage cannot be assessed due to unreported OCF and capex. Policy outlook: if ROE remains around 9% and ROIC above WACC (ROIC reported at 14.2%), there is room for stable to modestly higher dividends, contingent on maintaining positive cash conversion and working capital discipline.

Risk Assessment

Business Risks:

• Thin operating margins (3.16%) expose earnings to small changes in gross margin or SG&A.
• Customer concentration or large project timing risk (typical in IT procurement/distribution) could add volatility.
• Vendor rebate/program changes may impact gross margin.
• Supply chain and product availability swings can affect revenue recognition and pricing.

Financial Risks:

• Working capital swings (AR 37.16 vs AP 33.56) can stress OCF in growth phases.
• Tax/extraordinary item volatility, given the unusual PBT to NI relationship this quarter.
• Exposure to short-term funding (ST loans 2.80) albeit modest; interest rate increases would have limited impact currently.
• Near-threshold total liabilities/equity (1.46x) warrants monitoring if liabilities grow faster than equity.

Key Concerns:

• OCF unreported—cash conversion risk cannot be assessed.
• Below-the-line items and tax effects boosted net income; sustainability uncertain.
• Limited disclosure on SG&A breakdown and non-operating items constrains margin driver analysis.

Investment Implications

Key Takeaways:

• Profits scaled faster than sales, with operating margin expanding ~117 bps YoY.
• ROE at 9.0% and ROIC at 14.2% indicate value creation above typical cost of capital.
• Balance sheet liquidity is solid; interest coverage very strong at 72.73x.
• Net margin improvement benefits include non-operating/tax elements that may not recur.
• Cash flow disclosure gap is the main uncertainty for confirming earnings quality and dividend capacity.

Metrics to Watch:

• Operating cash flow and free cash flow conversion versus net income
• Gross margin trend and SG&A ratio
• AR and AP days (working capital intensity)
• Effective tax rate normalization and details on extraordinary/non-operating items
• Order backlog/pipeline indicators (if disclosed) to gauge revenue sustainability

Relative Positioning: Within Japan’s IT distribution/integration peer set, Hyper’s ROE (9%) is competitive, operating margins remain thin but are improving, leverage is moderate, and liquidity is strong; sustained operating leverage and stable working capital management will be key for maintaining an edge.

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