Cominix Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥18.76B
• Operating Income: ¥284M
• Net Income: ¥61M
• EPS: ¥9.39

Income Statement

Balance Sheet

Cash Flow Statement

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

Verdict: Top-line growth was strong but profitability deteriorated, leaving FY2026 Q2 as a volume-led quarter with thin margins and weak ROE. Revenue rose 33.6% YoY to 187.6, while operating income increased 18.7% YoY to 2.84, indicating operating leverage but with margin compression. Gross profit was 40.75 (gross margin 21.7%), and SG&A was 37.90, leaving a slim operating margin of 1.5%. Ordinary income fell 28.0% YoY to 2.29, as non-operating expenses (1.42) exceeded non-operating income (0.87), with interest expense at 0.58 weighing on earnings. Net income plunged 60.9% YoY to 0.64, driving an anemic net margin of 0.3% and ROE of 0.8%. EBITDA came in at 3.78 (EBITDA margin 2.0%), highlighting a narrow profitability buffer against financing costs. Operating cash flow was 2.93, comfortably exceeding net income (OCF/NI 4.6x), which partially mitigates the weak bottom line from an earnings quality perspective. The effective tax rate was an unusually high 74.8%, amplifying the gap between pre-tax profit (2.46) and net income (0.64) and suggesting one-off items or timing differences. Balance sheet leverage is elevated with D/E at 2.22x and equity at 77.1 (equity ratio roughly 31%), increasing sensitivity to interest rates and credit conditions. Liquidity is adequate (current ratio 169%, quick ratio 114%), and working capital is positive at 74.7, supporting near-term obligations despite sizable short-term loans (38.0). ROIC is 1.2%, well below a typical cost of capital and peer targets (>7–8%), indicating subpar capital efficiency. Financing cash flow was -7.11, implying debt repayments and/or shareholder returns, which constrain deleveraging capacity given modest EBITDA. The payout ratio (calculated) is 354%, raising questions about dividend sustainability if earnings remain depressed; however, detailed dividend data are unreported. Intangibles (24.36) and goodwill (8.26) are notable for the company’s size, introducing impairment risk should end-market conditions soften. Forward-looking, sustaining double-digit revenue growth will not translate to higher ROE unless the company addresses interest burden, tax normalization, and margin expansion.

Profitability Analysis

ROE decomposition: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 0.3% × 0.755 × 3.22 ≈ 0.8%. The weakest link is the net profit margin (0.3%), overwhelmed by high non-operating costs and a 74.8% effective tax rate. Asset turnover at 0.755 is reasonable for a distributor-like business but not strong enough to offset margin pressure. Financial leverage at 3.22x is high, magnifying small margins into a still-low ROE. The most material change vs. revenue growth is the deterioration in net margin (net income -60.9% YoY while revenue +33.6%), driven by higher non-operating expenses (notably interest) and a punitive tax rate. Operating margin compressed to 1.51% from an estimated 1.70% a year ago (~19 bps compression), as SG&A absorption could not fully keep pace with gross profit gains. Business drivers likely include mix effects, competitive pricing, and higher financing costs. Sustainability: operating margin can recover with mix/pricing and SG&A discipline, but leverage-induced interest expense is a structural headwind unless debt is reduced. Watch for concerning trends such as SG&A ratio at 20.2% of sales and interest expense consuming a large share of EBIT (coverage 4.9x, near the lower end of comfort).

Growth Assessment

Revenue growth of +33.6% YoY (to 187.6) is robust and suggests strong demand or share gains, likely in tooling and industrial distribution channels. Operating income +18.7% lagged revenue, reflecting weaker incremental margins. Ordinary income (-28.0% YoY) and net income (-60.9% YoY) show that growth did not translate into bottom-line improvement due to non-operating headwinds and taxes. Gross margin at 21.7% is serviceable but leaves little room after SG&A (20.2%), compressing operating margin to 1.5%. EBITDA margin at 2.0% indicates limited capacity to absorb shocks from interest or FX. The outlook hinges on normalizing the tax rate, reducing interest costs through deleveraging, and improving product mix/pricing. Without these, continued sales growth may not lift ROE/ROIC. Near term, OCF strength relative to NI provides some flexibility, but sustained profit quality requires stabilizing non-operating items.

Financial Health

Liquidity is adequate: current ratio 168.6% and quick ratio 114.1% indicate sufficient near-term coverage. Working capital stands at 74.69 with current assets (183.6) well above current liabilities (108.9). Solvency is a concern: D/E at 2.22x (warning threshold >2.0) and equity ratio roughly 31% (77.1/248.4). Interest-bearing debt is concentrated in short-term loans (38.0) and long-term loans (46.2), implying meaningful refinancing needs over time. Maturity mismatch risk is moderate: short-term loans (38.0) are outweighed by cash (43.2) and receivables (57.3), but inventory (59.4) quality must remain solid to avoid liquidity strain. Interest coverage at 4.9x is acceptable but not strong; deterioration in EBITDA would quickly tighten coverage. No off-balance sheet obligations were reported in the provided data.

Cash Flow Quality

OCF of 2.93 versus net income of 0.64 yields OCF/NI of 4.58x, indicating high cash conversion this quarter. With capex at 0.52, estimated proxy FCF is positive (~2.4) absent other investing flows (not disclosed). This supports basic reinvestment and some deleveraging, though financing CF was -7.11 (likely debt repayments/dividends), which outpaced OCF. Working capital dynamics are not fully disclosed, but given strong revenue growth, a positive OCF suggests effective receivables collection or inventory discipline this period; sustainability should be monitored. No clear signs of working capital manipulation appear in the limited dataset.

Dividend Sustainability

The calculated payout ratio is 354.2%, which would be unsustainably high if reflective of true distributions; however, detailed dividend data (DPS, total dividends) are unreported, limiting precision. With positive OCF (~2.93) and modest capex (~0.52), the capacity to fund dividends exists only if distributions are modest. Elevated leverage (D/E 2.22x) and thin EBITDA margin (2.0%) argue for prioritizing deleveraging over aggressive payouts. Policy outlook: expect a conservative stance tied to earnings normalization; sustainability hinges on restoring net margins and normalizing the tax rate.

Risk Assessment

Business Risks:

• Margin compression amid competitive pricing and mix shifts (gross margin 21.7%, operating margin 1.5%).
• Demand cyclicality in industrial/tooling end-markets, sensitive to capex cycles.
• Intangible assets (24.36) and goodwill (8.26) create impairment risk if performance weakens.

Financial Risks:

• High leverage: D/E 2.22x and equity ratio ~31%, with Debt/EBITDA effectively very high given small EBITDA.
• Interest rate and refinancing risk with short-term loans of 38.0 and interest coverage at 4.9x.
• Tax volatility: effective tax rate at 74.8% materially depresses net income.

Key Concerns:

• Net income down 60.9% YoY despite strong sales growth, resulting in ROE only 0.8% and ROIC 1.2%.
• Non-operating expenses (1.42) outpacing non-operating income (0.87), pressuring ordinary income.
• Dividend sustainability uncertain given a calculated payout ratio of 354% and limited disclosure.

Investment Implications

Key Takeaways:

• Strong revenue momentum (+33.6% YoY) not translating into bottom-line growth.
• Operating margin compressed to 1.5% and ordinary income fell 28% YoY due to non-operating drag.
• Leverage elevated (D/E 2.22x); interest burden (0.58) is a critical swing factor for profits.
• OCF quality solid (OCF/NI 4.6x), providing near-term flexibility despite weak NI.
• ROIC at 1.2% is well below target levels, indicating inefficient capital deployment.

Metrics to Watch:

• Operating margin progression and SG&A ratio vs sales.
• Interest coverage and trajectory of short-term loans.
• Effective tax rate normalization toward historical averages.
• Inventory turns and receivables days as growth continues.
• OCF and FCF consistency relative to dividend outlays.

Relative Positioning: Versus domestic industrial distributors, Cominix shows stronger near-term revenue growth but weaker capital efficiency (ROIC 1.2%) and higher leverage, leaving it more exposed to rate and cycle risk; improving mix/pricing and deleveraging are key to closing the profitability 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
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