SHIKIBO LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥19.78B
• Operating Income: ¥628M
• Net Income: ¥307M
• EPS: ¥27.23

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Shikibo Co., Ltd. (3109) reported FY2026 Q2 cumulative results showing steady topline growth and improved operating leverage. Revenue rose 4.6% YoY to ¥19.78bn, with gross profit of ¥3.48bn and a gross margin of 17.6%, indicating improved cost pass-through and/or mix resilience amid input cost pressures. Operating income increased 14.6% YoY to ¥0.63bn, lifting the operating margin to roughly 3.2%, a positive sign of cost discipline and incremental operating leverage on modest sales growth. Ordinary income of ¥0.51bn was below operating income due to net non-operating expenses, primarily interest expense of ¥0.12bn, partly offset by other non-operating items. Net income rose 11.9% YoY to ¥0.35bn, with EPS of ¥27.23, underscoring profitability improvement despite a still low net margin of 1.74%. On a DuPont basis, ROE stands at 0.98% for the half, driven by modest net margin (1.74%), low asset turnover (0.233x), and moderate financial leverage (assets/equity 2.42x). Liquidity appears solid with a current ratio of 150% and a quick ratio of 117%, while solvency is supported by an estimated equity ratio near 41% (calculated from disclosed assets and equity), and debt-to-equity of 1.44x. Cash flow quality looks healthy: operating cash flow (OCF) of ¥1.41bn is 4.1x net income, aided by sizeable non-cash depreciation (¥0.96bn) and likely working capital tailwinds. Financing cash outflow of ¥0.79bn indicates debt service and/or other shareholder-related cash uses; no dividends are reported for the period. Capex/Investing CF is not disclosed in this dataset (reported as 0), limiting free cash flow assessment; the same applies to cash and cash equivalents and equity ratio, which are reported as zero placeholders rather than actual values. Inventory totaled ¥5.66bn; using period COGS implies an inventory days proxy in the high-60s, broadly reasonable for textiles/industrial materials. Overall, the company demonstrates incremental margin improvement, acceptable interest coverage (about 5.3x on EBIT), and adequate liquidity, but ROE remains subdued given low margins and slow asset turnover. Outlook hinges on sustaining gross margin gains, disciplined SG&A, and managing input costs and FX. Data limitations (notably cash balance, investing CF, and equity ratio disclosures) constrain some analyses, and figures represent first-half cumulative performance rather than a full-year run-rate.

Profitability Analysis

roe_decomposition: ROE 0.98% = Net margin 1.74% × Asset turnover 0.233× × Leverage 2.42×. The key drag remains low net margin, while asset intensity also caps returns. margin_quality: Gross margin 17.6% and operating margin ~3.2% (¥628m/¥19,781m) indicate improved cost control and mix versus last year given operating income grew faster than revenue. Ordinary margin ~2.6% reflects interest burden (¥119m). Net margin 1.74% remains thin, typical for legacy textile segments. operating_leverage: Operating income +14.6% on +4.6% sales evidences positive operating leverage. D&A (¥955m) supports EBITDA margin ~8.0% (¥1,583m), suggesting room for further fixed cost absorption if volumes sustain.

Growth Assessment

revenue_sustainability: Topline +4.6% YoY suggests steady demand and/or pricing. Sustainability will depend on price-cost dynamics in textiles/industrial materials and FX. No segment detail provided here to assess mix durability. profit_quality: Operating margin expansion and OCF/NI of 4.08x indicate improving quality. Interest expense weighs on ordinary profit; continued deleveraging could support future profit quality. outlook: Assuming stable input costs and FX, modest revenue growth with incremental margin gains is achievable in H2. Watch for inventory normalization and energy/raw material costs; any softening could bolster margins, while adverse FX or cotton/chemicals inflation could compress them.

Financial Health

liquidity: Current ratio 149.9% and quick ratio 117.0% indicate adequate near-term liquidity. Working capital stands at ¥8.58bn. solvency: Debt-to-equity 1.44x suggests moderate leverage. Calculated equity ratio is approximately 41.3% (¥35.09bn/¥84.91bn), supportive of balance sheet resilience. Interest coverage ~5.3x (EBIT/interest) is acceptable but should improve to buffer rate risk. capital_structure: Total assets ¥84.91bn, liabilities ¥50.37bn, equity ¥35.09bn. Ordinary income below operating income points to non-operating costs (notably interest) absorbing part of operating gains.

Cash Flow Quality

earnings_quality: OCF of ¥1.41bn versus net income of ¥0.35bn (OCF/NI 4.08x) is strong, supported by non-cash D&A (¥955m) and likely working capital releases. This suggests earnings are well-backed by cash. fcf_analysis: Free cash flow cannot be reliably computed as investing cash flow is undisclosed in this dataset (reported as 0 is a placeholder). On a proxy basis, OCF is positive and ample versus interest expense (≈12x coverage on OCF), but capex needs are unknown. working_capital: Inventories ¥5.66bn; using period COGS implies ~67 inventory days (approximate, given lack of average balances). Receivables/payables not disclosed, limiting full WC analysis. No apparent stress signals from liquidity ratios.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is undisclosed (reported as 0.00), and payout ratio is shown as 0.0% (placeholder). With EPS ¥27.23 in H1 and positive OCF, capacity exists, but actual policy and full-year earnings trajectory are determinative. fcf_coverage: FCF coverage cannot be assessed due to undisclosed investing cash flows. OCF of ¥1.41bn suggests room for distribution after maintenance capex, but capex scale is unknown. policy_outlook: Given modest profitability and ongoing financing outflows (¥785m), management may prioritize balance-sheet strengthening. Any dividend policy update would depend on H2 performance, leverage goals, and capex pipeline.

Risk Assessment

Business Risks:

• Input cost volatility (cotton, synthetic fibers, chemicals, energy).
• Foreign exchange fluctuations affecting import costs and export competitiveness.
• Demand cyclicality in apparel/industrial materials end-markets.
• Inventory obsolescence risk amid demand shifts.
• Customer concentration or price pressure in OEM/ODM channels.
• Supply chain disruptions in overseas procurement/production.

Financial Risks:

• Interest rate risk given interest expense of ¥119m and moderate leverage.
• Working capital swings impacting OCF in weaker quarters.
• Potential impairment risks in asset-heavy businesses if utilization weakens.
• Refinancing and covenant risk if credit conditions tighten.

Key Concerns:

• Thin net margin (1.74%) keeps ROE low despite leverage.
• Ordinary income below operating income highlights sensitivity to financing costs.
• Limited disclosure on cash, investing CF, and per-share equity hinders full assessment.

Investment Implications

Key Takeaways:

• Topline growth (+4.6% YoY) with stronger operating leverage (+14.6% OI) signals improving execution.
• Gross margin at 17.6% and operating margin ~3.2% remain modest but are trending up.
• ROE at 0.98% (H1) is subdued given low margin and asset turnover; further efficiency gains are needed.
• Liquidity is solid (current 150%, quick 117%), and solvency is supported by an estimated ~41% equity ratio.
• Cash conversion appears strong (OCF/NI 4.08x), but capex visibility is lacking.
• Interest burden (¥119m) tempers ordinary profit; deleveraging could enhance earnings resilience.

Metrics to Watch:

• Gross and operating margins (pricing vs. input costs, FX).
• Interest coverage and net debt trajectory.
• Working capital metrics, especially inventory turnover.
• Capex and investing cash flows (timing and scale).
• H2 revenue momentum and SG&A discipline.
• ROE progression via margin and asset turnover improvements.

Relative Positioning: Within Japan’s textiles/industrial materials peers, Shikibo exhibits mid-single-digit EBITDA margin and acceptable liquidity with moderate leverage; however, ROE trails higher-return peers due to thin net margins and low asset turnover. Continued cost control and balance-sheet optimization are key to narrowing the gap.

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