Cominix Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥18.76B
• Operating Income: ¥284M
• Net Income: ¥164M
• 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

Cominix (3173) reported FY2026 Q2 consolidated results under JGAAP with strong top-line growth but thin profitability and weak cash conversion. Revenue increased 33.6% YoY to ¥18.76bn, while operating income rose 18.7% YoY to ¥0.28bn, indicating negative operating leverage in the half. Gross profit of ¥3.19bn implies a gross margin of 17.0%, but operating margin remained low at 1.5%, reflecting a heavy SG&A burden. Ordinary income (¥0.23bn) was below operating income, suggesting modest net non-operating losses of about ¥0.06bn, despite interest expense of only ¥0.02bn. Net income declined 60.9% YoY to ¥0.06bn, compressing the net margin to 0.34%, likely influenced by a high effective tax burden and/or extraordinary effects. DuPont analysis shows ROE of 0.83%, driven by very low net margin (0.34%), moderate asset turnover (0.755x), and high financial leverage (3.22x). EBITDA was ¥0.36bn (1.9% margin), underscoring limited buffer to absorb cost inflation or demand shocks. Operating cash flow was negative at -¥0.10bn, resulting in an OCF/Net Income ratio of -1.55, highlighting weak earnings-to-cash conversion, likely due to working capital build. Financing cash flow was a net inflow of ¥0.25bn, consistent with funding needs for growth and/or working capital. The balance sheet shows total assets of ¥24.84bn and total equity of ¥7.71bn, implying a debt-to-equity ratio of 2.33x and relatively high leverage for a low-margin distributor. Liquidity appears adequate with a current ratio of 167% and quick ratio of 113%, supported by current assets of ¥19.26bn; inventories of ¥6.25bn are sizeable. Dividend per share is reported as zero, consistent with the period’s low profitability and negative operating cash flow. Several items are unreported in XBRL (e.g., cash balance, investing cash flows, equity ratio detail), so conclusions on cash and capex are constrained. Overall, the company is executing on growth but faces pressure on margins, earnings quality, and cash generation, with leverage amplifying financial risk. The near-term focus should be on stabilizing margins, normalizing the tax burden, and converting growth into cash via tighter working capital management.

Profitability Analysis

ROE_decomposition: ROE 0.83% = Net margin 0.34% × Asset turnover 0.755 × Financial leverage 3.22. The low ROE is primarily constrained by the very thin net margin; asset turnover is reasonable for a trading/distribution model, while leverage elevates ROE only marginally given the weak margin. margin_quality: Gross margin 17.0% (GP ¥3,185m on revenue ¥18,757m) supports the model, but SG&A absorption was heavy, with implied SG&A of roughly ¥2,901m (≈15.5% of revenue), compressing the operating margin to 1.5%. Ordinary margin is 1.2% and net margin is 0.34%, indicating additional drag from non-operating items and taxes. The large gap from operating to net income suggests one-off and/or tax-rate effects depressing bottom-line quality. operating_leverage: Revenue grew +33.6% YoY while operating income grew +18.7% YoY, implying negative operating leverage in the half. EBITDA margin of 1.9% and operating margin of 1.5% indicate limited fixed-cost leverage and sensitivity to gross margin fluctuations. Interest coverage is 14.9x (operating income/interest), providing some cushion at the operating level, but bottom-line leverage is high given thin net margins.

Growth Assessment

revenue_sustainability: Top-line growth of +33.6% YoY is strong and likely reflects demand recovery and/or expanded product/customer reach. Given the business model’s reliance on inventory and receivables, sustaining this growth will require continued funding and disciplined working capital cycles. profit_quality: Operating income growth lagged sales, and net income fell 60.9% YoY, indicating profit quality deterioration. The gap between ordinary income (¥229m) and operating income (¥284m) implies non-operating drag (~¥55m), while a high tax expense (¥166m) vs. bottom-line profit points to a volatile effective tax rate. outlook: Near-term growth prospects hinge on maintaining volume while defending gross margins and containing SG&A. Normalization of the effective tax rate and reduction of non-operating costs could materially improve net margins. However, inventory intensity and funding needs may weigh on cash-based growth unless conversion improves.

Financial Health

liquidity: Current ratio 167.3% and quick ratio 113.0% indicate adequate short-term liquidity. Current assets are ¥19,261m versus current liabilities of ¥11,513m, yielding working capital of ¥7,748m. Inventories of ¥6,246m are significant and a key driver of liquidity management. solvency: Debt-to-equity ratio is 2.33x, reflecting a leveraged capital structure for a low-margin operator. Interest expense is modest at ¥19m with 14.9x coverage by operating income, but sustained low margins could erode coverage if rates rise or earnings soften. capital_structure: Total assets ¥24,843m, liabilities ¥17,982m, and equity ¥7,708m imply financial leverage of 3.22x (assets/equity). The reported equity ratio is shown as 0.0% in the dataset but is unreported rather than truly zero; based on provided balances, equity ratio would approximate 31% if calculated.

Cash Flow Quality

earnings_quality: OCF of -¥99m against net income of ¥64m (OCF/NI = -1.55) signals weak cash conversion, likely driven by working capital investment. EBITDA-to-OCF conversion was negative in the half, highlighting timing and inventory effects. FCF_analysis: Investing cash flow is unreported (0 placeholder), so FCF cannot be reliably computed. Given negative OCF and positive financing inflow, underlying FCF was likely negative in the period, but capex intensity cannot be assessed. working_capital: Inventories at ¥6,246m are material; without receivables/payables detail, the precise drivers are unclear, but the negative OCF suggests inventory build and/or slower collections. Tightening inventory turns and receivables management is essential to restore positive cash generation.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is reported as ¥0.00 with a payout ratio of 0.0%. Given low net margin (0.34%), volatile tax expense, and negative OCF in the half, distributable capacity appears limited at present. FCF_coverage: FCF coverage is shown as 0.00x due to unreported investing cash flows; with OCF negative, cash-based coverage of dividends would be weak if any were paid. policy_outlook: Near-term dividend capacity will depend on stabilizing profitability and restoring positive, consistent OCF. Improved margin capture, normalization of the tax rate, and working capital discipline would support a future distribution framework.

Risk Assessment

Business Risks:

• Margin pressure from input cost inflation and pricing competition
• Demand cyclicality in industrial end-markets
• Inventory obsolescence risk given sizable stock levels
• Supplier concentration and procurement risks
• Execution risk in scaling while controlling SG&A

Financial Risks:

• High leverage (D/E 2.33x) relative to low margins
• Weak cash conversion (OCF/NI -1.55) and reliance on financing inflows
• Potentially volatile effective tax rate impacting net income
• Interest rate and refinancing risk if borrowing increases for working capital
• Working capital swings affecting liquidity

Key Concerns:

• Net income down 60.9% YoY despite strong sales growth
• Negative operating cash flow in the half
• Thin operating (1.5%) and EBITDA (1.9%) margins with limited buffer
• Non-operating and tax impacts depressing bottom line
• Large inventory base necessitating tight management

Investment Implications

Key Takeaways:

• Strong revenue growth (+33.6% YoY) but negative operating leverage
• Very thin net margin (0.34%) and low ROE (0.83%)
• Adequate liquidity (current ratio 167%) but high leverage (D/E 2.33x)
• OCF negative and financing inflow positive, implying funding needs
• Unreported cash and investing flows limit precision on FCF and capex

Metrics to Watch:

• Gross margin and SG&A-to-sales ratio
• Operating margin and ordinary margin trajectory
• OCF/NI conversion and free cash flow (once investing CF is disclosed)
• Inventory turns and receivable/payable days
• Effective tax rate normalization and non-operating gains/losses
• Interest coverage and net debt/EBITDA

Relative Positioning: Within Japanese industrial distributors/tools traders, Cominix exhibits stronger top-line momentum but thinner margins and higher leverage than conservative peers; its working-capital intensity and cash conversion are key differentiators to monitor.

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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