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

Hyper Co., Ltd. (3054) reported strong FY2025 Q3 (cumulative) results under JGAAP on a consolidated basis, with clear top-line growth and significant operating leverage. Revenue rose 16.6% year over year to ¥10,754 million, indicating robust demand and/or effective execution in core solution and product sales. Gross profit reached ¥2,518.6 million, yielding a gross margin of 23.4%, which is healthy for an IT solutions/value-added reseller profile and suggests stable pricing and mix. Operating income increased 85.0% YoY to ¥340 million, lifting the operating margin to 3.16%, reflecting sizable SG&A efficiency and scale benefits. Ordinary income was ¥345 million (margin ~3.21%), supported by low interest expense of ¥4.7 million and strong interest coverage of 72.7x. Net income surged 226.7% YoY to ¥281 million, producing a net margin of 2.61% and confirming margin expansion through the income statement. DuPont analysis indicates ROE of 9.03% driven by net margin of 2.61%, asset turnover of 1.403x, and financial leverage of 2.46x—evidence of improved profitability overlaying efficient asset utilization. Liquidity appears solid: current assets of ¥6,768.4 million against current liabilities of ¥4,097.5 million result in a current ratio of 165%, and working capital stands at ¥2,670.9 million. The capital structure is moderate with total liabilities of ¥4,542.9 million versus equity of ¥3,112.0 million (debt-to-equity 1.46x); by our calculation, the equity ratio is about 40.6% (equity/total assets), notwithstanding the 0.0% equity ratio placeholder in the data. Cash flow disclosures (OCF/ICF/FCF) are not provided in the XBRL feed here, so cash generation quality cannot be quantitatively validated; the reported zeros should be treated as unreported, not actual zeros. Similarly, depreciation and amortization is unreported, leading to an EBITDA value of 0 in the feed; true EBITDA is likely close to operating income plus non-zero D&A. Despite these data gaps, the earnings profile suggests improving operating efficiency with manageable financial risk. The effective tax burden appears roughly ~20% based on income tax of ¥70.0 million against ordinary income of ¥345 million, despite the “0.0%” placeholder in the calculated metrics. Dividend information is not disclosed here (DPS shows as 0.00), so payout policy assessment relies on earnings capacity rather than cash distributions. Overall, the company demonstrates healthy revenue momentum, margin improvement, and comfortable liquidity, though confirmation through cash flow data and working capital metrics is needed to assess sustainability. Outlook considerations include ongoing IT refresh cycles and potential tailwinds from corporate OS/hardware migration, but execution and supply chain management will be key to maintaining margins. We acknowledge material data limitations (notably cash flow, depreciation, inventories, and share data), and our conclusions emphasize only the available non-zero disclosures.

Profitability Analysis

• ROE decomposition (DuPont): Net Profit Margin 2.61% x Asset Turnover 1.403x x Financial Leverage 2.46x = ROE ~9.03% (matches reported).
• Margins: Gross margin 23.4% (¥2,518.6m/¥10,754.0m) indicates solid value-add for a solutions/integration model; operating margin 3.16% (¥340.0m/¥10,754.0m) improved materially YoY given +85% operating income on +16.6% revenue; ordinary margin ~3.21%; net margin 2.61%.
• Operating leverage: The disproportionate increase in operating income versus revenue implies SG&A fixed-cost leverage and/or improved project execution. Continued scale could support mid-single-digit operating margin potential if gross margin holds.
• Expense structure: Interest expense is modest at ¥4.7m, producing interest coverage of ~72.7x, so financial costs are not a profitability drag.
• Taxation: Effective tax appears around 20% (¥70.0m/¥345.0m ordinary income proxy), despite the placeholder “0.0%” in the provided metrics.
• EBITDA: D&A is unreported (0 in feed). True EBITDA likely exceeds operating income by the level of D&A; given the business model, D&A is typically not large relative to revenue but is non-zero.
• Quality of margin: The combination of higher gross profits and low interest burden suggests core operational improvement rather than financial engineering. Confirmation via cash conversion is pending due to unreported OCF.

Growth Assessment

• Revenue growth: +16.6% YoY to ¥10,754m reflects robust demand for IT equipment/solutions and likely healthy project flow; this is strong relative to typical mid-single-digit growth in IT distribution.
• Profit growth: Operating income +85% YoY and net income +226.7% YoY point to significant margin expansion and cost discipline; mix and scale effects likely contributors.
• Sustainability: Continuation depends on maintaining gross margin (pricing, mix of services vs. hardware) and managing SG&A as growth normalizes. Industry drivers such as OS/hardware refresh cycles can support near-term demand.
• Outlook signals: With asset turnover at 1.40x, the company is utilizing assets efficiently; further growth may require working capital investment, which could temporarily weigh on cash flows.
• Data limitations: Q3 cumulative figures constrain seasonality analysis; lack of order backlog and cash flow data limits visibility on the durability of growth.
• Near-term view: Assuming stable macro IT budgets and supply availability, mid-teens revenue growth is ambitious to sustain, but high-single-digit growth alongside preserved margins would still support ROE near current levels.

Financial Health

• Liquidity: Current assets ¥6,768.4m vs. current liabilities ¥4,097.5m; current ratio 165%, quick ratio 165% (inventories unreported). Working capital is ¥2,670.9m, providing a comfortable buffer for operations.
• Solvency: Total liabilities ¥4,542.9m vs. equity ¥3,112.0m; debt-to-equity 1.46x. Calculated equity ratio ~40.6% (equity/total assets), indicating a balanced capital structure despite the 0.0% placeholder provided.
• Interest burden: Interest expense is low at ¥4.7m with 72.7x coverage from operating income, implying minimal refinancing risk under current conditions.
• Cash position: Cash and equivalents are unreported in the feed (shown as 0). Without cash and interest-bearing debt detail, net debt cannot be assessed.
• Working capital dynamics: With growth, receivables and payables likely expanded; absent inventory disclosure, we assume a low inventory model typical of solution resellers, but verification is needed when data becomes available.

Cash Flow Quality

• Earnings quality: Strong income statement momentum, but cash flow from operations (OCF) is unreported; OCF/Net income ratio shown as 0.00 reflects missing data, not true cash conversion.
• Free cash flow: Not disclosed here (FCF shown as 0 due to unreported OCF and capex). We cannot corroborate earnings with cash generation for FY2025 Q3.
• Working capital: Revenue growth suggests higher receivables and payables are plausible. The positive working capital base is sizable, but without turnover metrics (DSO/DPO/DIO), cash conversion cannot be judged.
• Non-cash charges: Depreciation and amortization are unreported, which understates EBITDA in the feed and precludes analysis of non-cash earnings contributions.
• Overall: Cash flow quality remains an open question pending actual OCF and capex disclosures; monitoring of OCF/NI and FCF yield is essential in subsequent filings.

Dividend Sustainability

• Reported DPS is 0.00 and payout ratio 0.0% in this dataset, which likely reflects non-disclosure rather than an explicit zero dividend.
• Capacity: With 9M net income of ¥281m and modest interest burden, the company appears to have capacity for distributions, subject to cash generation and working capital needs.
• FCF coverage: Not assessable due to unreported OCF/FCF; any payout analysis would be speculative without cash data.
• Policy outlook: Absent explicit guidance, we infer a prudent stance with preference for reinvestment in growth and working capital. Confirmation requires management policy statements and year-end cash flow data.

Risk Assessment

Business Risks:

• Demand cyclicality in corporate IT spending and project timing
• Margin pressure from competitive pricing in hardware-heavy deals
• Supplier concentration and procurement terms affecting gross margin
• Execution risk in large projects and services delivery
• Technological shifts (e.g., OS/hardware cycles) altering mix and profitability

Financial Risks:

• Potential working capital build to support growth, weighing on OCF
• Limited visibility on cash and net debt due to unreported cash flow data
• Exposure to interest rate changes on any floating-rate borrowings (quantum unknown)
• Customer credit risk impacting receivables collection during downturns

Key Concerns:

• Cash flow conversion unverified; OCF and FCF not disclosed in this dataset
• Inventory and depreciation unreported, hindering margin and asset-quality analysis
• Equity ratio shown as 0.0% in feed conflicts with calculated ~40.6% (data placeholder issue)
• Dividend policy unclear in the absence of DPS disclosure

Investment Implications

Key Takeaways:

• Strong top-line growth (+16.6% YoY) with outsized operating profit growth (+85% YoY) signals effective operating leverage
• Healthy gross margin (23.4%) and improved operating margin (3.16%) underpin ROE of ~9.0%
• Solid liquidity (current ratio 165%) and manageable leverage (D/E 1.46x) support financial flexibility
• Low interest burden (interest coverage ~72.7x) limits financial drag on earnings
• Validation of earnings quality awaits cash flow disclosure; monitoring OCF/NI is critical

Metrics to Watch:

• OCF, FCF, and OCF/Net income ratio
• Gross margin trajectory and SG&A ratio
• Receivables/payables days and overall cash conversion cycle
• Order intake/backlog and pipeline visibility
• Equity ratio and any changes in interest-bearing debt
• Full-year EPS versus Q3 run-rate to assess seasonality

Relative Positioning: Within Japan’s IT solutions/reseller space, Hyper exhibits efficient asset turnover and improving margins, though absolute operating margins remain in the low single digits typical of the segment; sustaining gross margin while controlling SG&A will be key to closing the gap with higher-margin peers offering a larger services mix.

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