Quick View
| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥261.1B | ¥248.6B | +5.0% |
| Operating Income | ¥57.3B | ¥50.5B | +13.6% |
| Ordinary Income | ¥58.3B | ¥51.6B | +13.0% |
| Net Income | ¥39.5B | ¥34.9B | +13.0% |
| ROE | 21.6% | 21.4% | - |
Executive Summary
FY2026 Q3 consolidated results show revenue of 26.11 billion yen (YoY +5.0%), operating income of 5.73 billion yen (YoY +13.6%), ordinary income of 5.83 billion yen (YoY +13.0%), and net income of 3.95 billion yen (YoY +13.0%). Operating margin reached approximately 21.9%, demonstrating strong profitability with gross margin maintained at 35.7%. The company continues to achieve revenue growth and profit expansion, with full-year guidance projecting revenue of 35.82 billion yen (+7.4% YoY) and operating income of 7.15 billion yen (+10.0% YoY). Balance sheet strength remains solid with cash and deposits of 15.77 billion yen and equity ratio of 66.4%. The company is in an active investment phase, with property, plant and equipment increasing 108.3% YoY to 3.02 billion yen, primarily driven by construction in progress of 1.58 billion yen.
Key Metrics
[Profitability] ROE stands at 21.6%, derived from net profit margin of 15.1%, asset turnover of 0.947, and financial leverage of 1.51 times, reflecting strong shareholder value creation capability. Operating margin of 21.9% and gross profit margin of 35.7% demonstrate robust pricing power and cost control. The effective tax rate of 32.4% remains stable, with tax burden coefficient at 0.676. Interest burden coefficient of 1.019 indicates minimal financial cost impact, with interest coverage ratio reaching approximately 271 times. Segment performance shows Energy Solutions generating revenue of 11.92 billion yen with operating income of 4.17 billion yen, while Retail Electricity Project recorded revenue of 14.19 billion yen with operating income of 2.17 billion yen. [Cash Quality] Cash and deposits total 15.77 billion yen, representing 57.2% of total assets and providing short-term debt coverage of 5.9 times. Working capital amounts to 16.29 billion yen with current assets of 22.57 billion yen. Days sales outstanding increased to 61 days, flagging potential collection delays requiring monitoring. [Investment Efficiency] Asset turnover of 0.947 reflects moderate efficiency, though the substantial increase in property, plant and equipment (+108.3% YoY) suggests a transition to growth investment phase that may temporarily pressure turnover ratios. Construction in progress represents 52.3% of total fixed assets, indicating ongoing capital deployment awaiting activation. Investment securities decreased 55.1% YoY to 8.91 billion yen, suggesting portfolio restructuring activities. [Financial Health] Equity ratio of 66.4% reflects strong capitalization with total equity of 18.32 billion yen. Current ratio of 359.1% and quick ratio of 326.1% demonstrate ample short-term liquidity. Interest-bearing debt totals 2.66 billion yen with debt-to-capital ratio of 12.7% and debt-to-equity ratio of 0.146, indicating conservative leverage. Retained earnings increased 12.9% YoY to 17.57 billion yen, supporting internal capital accumulation.
Cash Flow Analysis
Cash and deposits increased 11.4% YoY to 15.77 billion yen, supported by strong profitability with net income of 3.95 billion yen contributing to cash accumulation. The balance sheet reflects significant investment activity, with property, plant and equipment rising 15.70 billion yen primarily through construction in progress of 1.58 billion yen, suggesting active capital expenditure deployment for future growth capacity. Investment securities decreased 1.10 billion yen, indicating potential asset sales or portfolio reallocation that may have generated cash inflows or reflected valuation adjustments. Working capital shows mixed signals with accounts receivable management requiring attention as DSO reached 61 days, while inventory decreased 41.3% YoY to 0.79 billion yen, reflecting improved inventory efficiency. Interest-bearing debt increased modestly by 0.14 billion yen to 2.66 billion yen, maintaining conservative financial leverage. The company's cash coverage of short-term liabilities stands at 5.9 times, providing substantial liquidity buffer. With current assets of 22.57 billion yen against current liabilities of 6.28 billion yen, the company maintains strong financial flexibility to support ongoing investments and dividend payments.
Earnings Quality
Ordinary income of 5.83 billion yen versus operating income of 5.73 billion yen indicates net non-operating contribution of approximately 0.10 billion yen, representing 0.4% of revenue and demonstrating earnings are predominantly driven by core operations. Non-operating income composition includes interest and dividend income, with interest expenses minimal at 0.02 billion yen, confirming low financial burden. The interest burden coefficient of 1.019 shows negligible impact from financing costs. Profit before tax of 5.84 billion yen translates to net income of 3.95 billion yen, yielding an effective tax rate of 32.4% and tax burden coefficient of 0.676, both within normal ranges. The high gross margin of 35.7% and operating margin of 21.9% indicate pricing power and operational efficiency in core business activities. However, accounts receivable increased to DSO of 61 days, which raises concerns about cash conversion quality and suggests certain sales may have extended payment terms. The substantial decrease in investment securities by 55.1% YoY may have generated disposal gains or losses not fully visible in the current data, warranting verification of one-time items. Construction in progress accounting for 52.3% of fixed assets indicates significant capitalized costs awaiting activation, which could affect future depreciation and profitability once assets become operational. Overall earnings quality appears solid based on strong operating margins and minimal reliance on non-operating income, though receivables management and the transition of construction in progress to productive assets require ongoing monitoring.
Risk Factors
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Accounts receivable collection risk with DSO at 61 days indicating potential payment delays that could pressure cash conversion and working capital efficiency, particularly if customer credit quality deteriorates or payment terms extend further.
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Construction in progress execution risk with 1.58 billion yen representing 52.3% of total fixed assets, exposing the company to potential project delays, cost overruns, or impairment if investments fail to generate expected returns upon activation.
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Investment securities portfolio risk with a 55.1% YoY decrease to 0.89 billion yen suggesting significant restructuring activity that may generate valuation losses or impact future investment income, though limited disclosure prevents full assessment of underlying causes and implications.
Industry Benchmark (Reference - Proprietary Data)
[Industry Position] (Reference - Proprietary Analysis) Grims demonstrates significantly superior profitability metrics compared to industry peers in the utilities sector. Operating margin of 21.9% substantially exceeds the industry median of 8.6% for 2025-Q3, positioning the company in the top quartile (above the 75th percentile of 36.5%). Net profit margin of 15.1% similarly outperforms the industry median of 6.6%, more than doubling the typical profitability level and exceeding the interquartile range of 5.2%-23.7%. Revenue growth of 5.0% YoY indicates steady expansion in a sector where growth rates can vary significantly based on regulatory environment and market structure. The company's strong profitability metrics suggest differentiated business model characteristics, potentially benefiting from higher-margin service offerings in Energy Solutions and Retail Electricity Project segments compared to traditional utility operations. Financial health indicators including equity ratio of 66.4% and minimal leverage with debt-to-capital of 12.7% align with conservative capital structures common in the utilities sector, though specific industry benchmarks for these metrics are not available in the current comparison set. (Source: Proprietary analysis based on utilities sector, N=3 companies for 2025-Q3 comparison)
Key Takeaways from Earnings
First, the company exhibits exceptional profitability characteristics with operating margin of 21.9% and net profit margin of 15.1%, both significantly exceeding utilities industry medians of 8.6% and 6.6% respectively, suggesting a differentiated business model with strong competitive positioning in Energy Solutions and Retail Electricity Project segments that warrants continued monitoring for sustainability. Second, the company is clearly in a growth investment phase as evidenced by property, plant and equipment increasing 108.3% YoY with construction in progress of 1.58 billion yen representing 52.3% of fixed assets, indicating substantial capital deployment that could drive future revenue expansion but also carries execution risk requiring close tracking of project activation timelines and return realization. Third, financial health remains robust with equity ratio of 66.4%, cash and deposits of 15.77 billion yen providing 5.9 times coverage of short-term debt, and minimal interest burden with coverage ratio of 271 times, creating strong financial flexibility to support ongoing investments and maintain dividend policy with payout ratio of approximately 47.7% appearing sustainable at current earnings levels, though accounts receivable management with DSO at 61 days and the 55.1% decrease in investment securities warrant attention regarding working capital efficiency and portfolio restructuring impacts.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.
AI Financial Analysis
Executive Summary
Grims delivered a strong FY2026 Q3 cumulative earnings performance, with profit growth materially exceeding revenue growth. Revenue increased 5.0% year on year to ¥26.11bn. Operating income rose 13.6% to ¥5.73bn. Net income attributable to owners increased 13.0% to ¥3.95bn. The operating margin expanded by 166bp year on year to 21.9%, from 20.3%. Gross margin improved by 206bp to 35.7%, indicating a favorable sales mix and/or improved gross-profit capture. SG&A expenses rose 8.9% to ¥3.60bn, faster than revenue, and the SG&A-to-sales ratio increased 42bp to 13.8%. Nevertheless, gross-margin expansion more than offset the higher SG&A intensity, producing positive operating leverage at the operating-profit level. Net margin expanded by approximately 105bp to 15.1%, from approximately 14.0% in the prior-year period. Ordinary income of ¥5.83bn was 13.0% higher year on year and remained close to operating income, supporting the view that earnings were predominantly generated from operations. Non-operating income was modest at ¥0.13bn, including ¥0.10bn of dividend income, and did not materially drive the earnings increase. Extraordinary gains and losses were also immaterial, with profit before tax of ¥5.84bn only slightly above ordinary income. The effective tax rate was 32.4%, resulting in a tax burden factor of 0.676. The balance sheet remains highly liquid, with cash and deposits of ¥15.77bn and a current ratio of 359.1%. FY2026 Q3 revenue progress was 72.9% of the full-year plan, modestly below the standard 75% seasonal benchmark, while operating-income progress was stronger at 80.1%. Net-income progress reached 81.1% of the full-year forecast, leaving the company positioned to achieve its profit plan provided Q4 trading remains broadly stable. The principal execution item is the sharp increase in construction in progress, which represents 52.3% of PPE and requires conversion into productive operating assets without cost overruns or delays.
Profitability Analysis
Annualized DuPont ROE is 28.7%, comprising a 15.1% net profit margin, 1.263x asset turnover, and 1.51x financial leverage. The strongest contributor to the high return profile is profitability rather than balance-sheet leverage: the 15.1% net margin is well above the 10% benchmark for an excellent margin profile, while financial leverage remains moderate. Operating margin increased to 21.9% from 20.3% in the prior-year period, a 166bp improvement. Gross margin rose to 35.7% from approximately 33.7%, a 206bp expansion and the principal source of operating-profit outgrowth versus sales. SG&A grew to ¥3.60bn from ¥3.32bn, or approximately 8.9% year on year, exceeding the 5.0% revenue increase. Consequently, SG&A intensity rose to 13.8% of revenue from 13.4%; this is a cost trend to monitor even though it was more than offset by gross-margin improvement in Q3. Interest burden was 1.019, reflecting that non-operating income exceeded net interest expense, while interest coverage was an exceptionally strong 271.47x. The tax burden of 0.676 is somewhat below the 0.70 reference level, consistent with a 32.4% effective tax rate, but does not detract materially from the quality of operating profitability. Net income grew more slowly than operating income, mainly because the tax expense increased to ¥1.89bn from ¥1.66bn. The current profitability profile appears operationally sound, but sustaining it depends on preserving gross-margin gains while containing the growth rate of SG&A.
Growth Assessment
Revenue growth of 5.0% to ¥26.11bn was moderate, but operating income growth of 13.6% and net-income growth of 13.0% demonstrate earnings-led growth. Gross profit increased 11.5% to ¥9.33bn, substantially ahead of sales growth, confirming that the profit improvement was not dependent on higher volume alone. The full-year forecast calls for revenue of ¥35.82bn, operating income of ¥7.15bn, and net income attributable to owners of ¥4.87bn. Q3 cumulative progress is 72.9% for revenue, 80.1% for operating income, 81.1% for ordinary income, and 81.1% for net income. Revenue progress is 2.1 percentage points below the standard Q3 75% pace, while operating-income progress is 5.1 percentage points ahead and net-income progress is 6.1 percentage points ahead; none of these deviations exceeds the 10 percentage-point threshold. Meeting the full-year plan implies Q4 revenue of ¥9.71bn and operating income of ¥1.42bn, equivalent to a Q4 operating margin of approximately 14.6%, below the Q3 cumulative 21.9% margin. This forecast shape indicates that the company has a meaningful cushion against the operating-profit plan, although the Q4 margin profile may normalize. Dividend income of ¥0.99bn is a recurring-looking but non-core contribution to ordinary income; it remains small relative to revenue and does not alter the conclusion that operating earnings drive performance.
Financial Health
Financial health is robust. Current assets of ¥22.57bn exceeded current liabilities of ¥6.28bn by ¥16.29bn, producing working capital of ¥16.29bn and a current ratio of 359.1%. The quick ratio was also very strong at 326.1%, indicating that liquidity is not dependent on inventory liquidation. Cash and deposits of ¥15.77bn alone were 2.51x current liabilities and substantially exceeded interest-bearing debt of ¥2.66bn. Interest-bearing debt represented approximately 14.5% of total equity, while debt to capital was a conservative 12.7%. The reported debt-to-equity ratio of 0.51x remains well below the 2.0x risk threshold. Current portions of long-term loans totaled ¥1.38bn, but cash holdings provide substantial coverage of these near-term maturities. Total liabilities declined by ¥0.47bn year on year to ¥9.25bn, while total equity increased by ¥2.01bn to ¥18.32bn, lifting the equity ratio to 66.1% from 62.3%. PPE increased by ¥1.57bn, or 108.3%, to ¥3.02bn, driven predominantly by construction in progress. The investment program is being funded from a balance sheet with ample liquidity and moderate leverage, limiting immediate refinancing risk. The principal balance-sheet execution risk is not solvency but the need to complete and monetize assets under construction efficiently.
Notable B/S Changes
Property, plant and equipment: +¥1.57bn (+108.3%) to ¥3.02bn - a substantial expansion in fixed-asset deployment that raises the importance of project execution and future asset productivity. Construction in progress: +¥1.56bn to ¥1.58bn - construction in progress comprises 52.3% of PPE, indicating that much of the recent capital deployment has not yet entered productive service; completion timing and cost control are key. Investment securities: -¥1.15bn (-55.1%) to ¥0.93bn - the portfolio was materially reduced, changing the composition of non-current assets while cash liquidity remained strong. Cash and deposits: +¥1.92bn to ¥15.77bn - increased liquidity provides substantial funding capacity for current maturities, dividends, and capital deployment. Total equity: +¥2.01bn (+12.3%) to ¥18.32bn - retained earnings increased to ¥17.61bn and the equity ratio improved to 66.1%, reinforcing balance-sheet resilience.
Cash Flow Quality
Operating cash flow, investing cash flow, free cash flow, and cash conversion metrics are not presented in the supplied financial information. Earnings quality is nevertheless supported by the close relationship between operating income of ¥5.73bn, ordinary income of ¥5.83bn, and profit before tax of ¥5.84bn. Non-operating income was only ¥0.13bn, equivalent to approximately 0.5% of revenue, and extraordinary items had a negligible net effect. Accordingly, the period's profit growth appears primarily attributable to recurring operating performance rather than material one-off gains. The increase in retained earnings of ¥2.01bn year on year to ¥17.61bn further supports internal capital accumulation. The rise in construction in progress means that subsequent cash generation should be assessed against the timing and economic return of the ongoing asset deployment.
Dividend Sustainability
The company paid an FY2026 Q2 dividend of ¥25.00 per share. The full-year forecast dividend is ¥85.00 per share, compared with forecast EPS of ¥210.60, implying a forecast dividend payout ratio of approximately 40.4%. This is comfortably below the 60% sustainability benchmark and leaves significant earnings retention capacity. Based on Q3 cumulative EPS of ¥170.88, the paid Q2 dividend represents a modest proportion of cumulative earnings. Retained earnings totaled ¥17.61bn, equivalent to the overwhelming majority of total equity, providing a substantial capital buffer. The strong liquidity position, including ¥15.77bn of cash and deposits, also supports the planned shareholder distribution. Dividend sustainability ultimately depends on cash realization from earnings and the funding demands of the expanded construction program, but the forecast payout level is conservative relative to current profitability and capitalization.
Risk Assessment
Business risks include Electricity and energy-service markets are exposed to procurement-cost volatility, including changes in LNG, power-market, and wholesale electricity prices. A mismatch between procurement costs and customer pricing could pressure the currently elevated gross margin., Revenue grew 5.0% while SG&A rose approximately 8.9%. If gross-margin improvement moderates, continued SG&A growth above sales growth could compress operating margin., Competition in energy retail and related energy solutions can increase customer acquisition costs, raise churn, and limit the ability to pass through higher costs..
Financial risks include Construction in progress reached ¥1.58bn, representing 52.3% of PPE. This concentration creates project-completion, budget-overrun, commissioning-delay, and return-on-investment risks., PPE increased 108.3% year on year to ¥3.02bn. The enlarged fixed-asset base will need to generate adequate operating returns and may increase depreciation after assets are placed in service., Investment securities declined ¥1.15bn, or 55.1%, to ¥0.93bn. This reduces the balance-sheet allocation to marketable investments, although cash liquidity remains substantial..
Key concerns include High construction-in-progress intensity is the most material financial-data alert. Its root cause is the concentration of the ¥3.02bn PPE balance in ¥1.58bn of uncompleted projects; its impact is execution risk rather than near-term liquidity stress because the company holds ¥15.77bn in cash and maintains a 359.1% current ratio., The CIP ratio is elevated relative to the 20% reference threshold and requires monitoring until projects are transferred to operating assets. Delayed conversion would defer revenue or efficiency benefits while capital remains unproductive., The investment thesis is increasingly dependent on sustaining gross margin: the 206bp gross-margin expansion funded both the 166bp operating-margin improvement and the higher SG&A ratio..
Investment Implications
Key takeaways include Q3 cumulative operating income rose 13.6%, materially faster than the 5.0% revenue increase, driven by a 206bp improvement in gross margin., Annualized ROE of 28.7% is supported primarily by a high 15.1% net margin and 1.263x asset turnover rather than aggressive leverage., The balance sheet provides substantial flexibility, with ¥15.77bn of cash, a 359.1% current ratio, and debt to capital of 12.7%., Operating-income progress of 80.1% versus the full-year forecast provides a cushion, although Q4 revenue execution remains relevant because revenue progress is 72.9%., Capital deployment has become a central monitoring issue because construction in progress accounts for 52.3% of PPE..
Metrics to watch include Gross margin and operating margin, particularly whether the 35.7% gross margin and 21.9% operating margin can be sustained., Revenue growth and Q4 revenue delivery versus the ¥35.82bn full-year forecast., SG&A growth relative to revenue growth and the SG&A-to-sales ratio., Construction-in-progress balance, project completion timing, and the subsequent contribution of completed assets to earnings., Cash balance, interest-bearing debt, and the relationship between capital expenditure and internally generated funds., Dividend execution against the ¥85.00 per-share full-year forecast..
Regarding relative positioning, The company exhibits an above-benchmark profitability and capital-strength profile, combining a 21.9% operating margin, annualized 28.7% ROE, strong interest coverage, and conservative debt capitalization. Relative performance is therefore likely to be determined less by financing capacity and more by the durability of gross-margin gains, energy-market conditions, competitive customer economics, and the return generated on assets currently under construction.