TEIKOKU SEN-I Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥24.30B
• Operating Income: ¥2.81B
• Net Income: ¥2.19B
• EPS: ¥108.06

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

Teikoku Sen-i Co., Ltd. (3302) delivered solid topline and strong profit growth in FY2025 Q3 under JGAAP on a consolidated basis. Revenue rose 9.6% YoY to ¥24.3bn, while operating income increased 37.6% YoY to ¥2.81bn, demonstrating pronounced operating leverage. Net income advanced 27.4% YoY to ¥2.79bn, with a net margin of 11.46%, supported by both operating improvement and sizeable non-operating contributions. Ordinary income of ¥3.999bn exceeded operating income by approximately ¥1.19bn, indicating meaningful non-operating gains (e.g., investment income or other non-core items). Gross profit of ¥5.77bn implies a gross margin of 23.8%, which, together with the higher operating margin of 11.6%, suggests effective cost control and/or a favorable mix. The DuPont decomposition shows ROE at 4.0%, driven by an 11.46% net margin, low asset turnover of 0.284x, and modest leverage of 1.23x. Balance sheet strength is a key highlight: current ratio is 600% and quick ratio 483%, with working capital of ¥33.55bn, pointing to ample liquidity. Total assets are ¥85.4bn against total liabilities of ¥16.31bn, implying a conservative capital structure; by calculation, the equity ratio is about 81.6% (the disclosed equity ratio appears unreported at 0.0%). Interest burden is negligible (interest expense ¥2.19m; implied coverage ≈1,284x), minimizing financial risk. The effective tax rate, estimated from disclosed tax expense and net income, is roughly 24–25%, despite the reported 0.0% metric being an artifact of unreported fields. Cash flow statements are unreported (all zeros), limiting assessment of earnings-to-cash conversion and free cash flow. Dividend data are also unreported (DPS and payout shown as 0.00), restricting dividend sustainability analysis this quarter. Overall, earnings quality appears supported by improving operating margin, but a notable portion of profits stems from non-operating income, whose persistence is uncertain. ROE remains modest relative to Japan mid-cap norms, constrained by low asset turnover and a very cash-strong balance sheet. We view the near-term outlook as constructive given margin momentum and liquidity, with key monitoring items including the sustainability of non-operating gains, working capital dynamics, and any changes in capital allocation policy.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 11.46%
• asset_turnover: 0.284x
• financial_leverage: 1.23x
• calculated_ROE: 4.00%
• interpretation: ROE of 4% is driven primarily by healthy net margin but is capped by low asset turnover; leverage is modest and does not materially amplify returns. margin_quality:
• gross_margin: 23.8% (GP ¥5,774m / Rev ¥24,303m)
• operating_margin: 11.6% (OP ¥2,812m / Rev ¥24,303m)
• ordinary_margin: 16.5% (Ord ¥3,999m / Rev ¥24,303m)
• net_margin: 11.46% (NI ¥2,785m / Rev ¥24,303m)
• commentary: Operating margin expansion versus the implied prior-year level (~9.2%) indicates cost discipline and/or favorable mix. Ordinary margin materially exceeds operating margin due to non-operating gains, which may be less stable than core operating profit. operating_leverage:
• revenue_growth_YoY: 9.6%
• operating_income_growth_YoY: 37.6%
• implied_margin_expansion: ~+2.4pp YoY (from ~9.2% to ~11.6%)
• assessment: High drop-through from sales to profits this period; sensitivity to volumes and mix appears favorable. Sustainability should be monitored, especially if non-recurring cost savings or pricing were contributors.

Growth Assessment

revenue_sustainability: Revenue growth of 9.6% YoY suggests steady demand across key lines; however, without segment disclosure, the breadth of growth is unclear. Project timing and public/private demand cycles could influence quarterly volatility. profit_quality: Core profitability improved, but the gap between ordinary income and operating income (~¥1.19bn) indicates reliance on non-operating items. Earnings quality would be stronger if operating profit were the primary driver of bottom-line growth. outlook: Near-term outlook is constructive given margin gains and a strong balance sheet. Key uncertainties include the persistence of non-operating gains, raw material cost trends, FX on inputs, and the ability to maintain pricing power.

Financial Health

liquidity:

• current_assets: ¥40,258m
• current_liabilities: ¥6,708m
• current_ratio: 600.1%
• quick_ratio: 482.9%
• working_capital: ¥33,550m
• assessment: Very strong liquidity with ample coverage of short-term obligations. Inventory of ¥7,865m appears manageable relative to current liabilities. solvency:
• total_assets: ¥85,424m
• total_liabilities: ¥16,314m
• total_equity: ¥69,690m
• debt_to_equity: 0.23x (liabilities/equity)
• interest_expense: ¥2.19m
• interest_coverage: ~1,284x (OP/Interest)
• equity_ratio_computed: ≈81.6% (equity/assets); disclosed equity ratio 0.0% is unreported
• assessment: Balance sheet is conservative with low leverage and negligible interest burden, providing resilience against shocks. capital_structure: Primarily equity-funded with limited financial debt implied by minimal interest costs. Capacity for further investment or shareholder returns exists without straining solvency.

Cash Flow Quality

earnings_quality: Cash flow statements are unreported this quarter. As such, OCF/NI and FCF metrics shown as 0.00 are not meaningful. The quality of earnings cannot be validated via cash conversion. FCF_analysis: Free cash flow cannot be assessed due to missing OCF and capex data. Given substantial working capital and low leverage, the company appears capable of funding operations internally, but confirmation awaits cash flow disclosure. working_capital: Working capital is robust at ¥33.55bn. Without turnover data (DSO/DIO/DPO), we cannot assess cash tied in receivables or inventories; however, the high quick ratio suggests liquidity is not overly dependent on inventory monetization.

Dividend Sustainability

payout_ratio_assessment: Dividend and payout metrics are unreported (DPS and payout shown as 0.00 are placeholders). Without cash flow and share count data, payout ratio cannot be assessed. FCF_coverage: Not assessable due to missing OCF/FCF figures. Balance sheet strength suggests capacity, but policy and actual cash generation remain key. policy_outlook: No disclosure provided this quarter. Future commentary on capital allocation (dividends, buybacks, growth capex) will be important, given modest ROE and surplus liquidity.

Risk Assessment

Business Risks:

• Dependence on non-operating income to lift ordinary profit, which may be volatile or non-recurring.
• Potential variability in demand due to project timing and public/private procurement cycles.
• Raw material price fluctuations and supply chain constraints impacting margins.
• Pricing pressure and competitive intensity in industrial and textile-related markets.
• FX exposure on imported materials or overseas sales, if applicable.

Financial Risks:

• Low asset turnover (0.284x) constraining ROE despite strong margins.
• Concentration of assets in low-yielding cash or investments could dilute returns.
• Working capital swings could affect cash conversion, though liquidity is currently ample.
• Non-operating income reliance increases earnings volatility relative to cash flows.

Key Concerns:

• Sustainability of the ¥~1.19bn non-operating contribution to ordinary profit.
• Lack of reported cash flow data impedes verification of earnings quality.
• ROE at 4% remains below typical medium-term targets, requiring improvements in asset efficiency or capital allocation.

Investment Implications

Key Takeaways:

• Revenue +9.6% YoY to ¥24.3bn; operating income +37.6% YoY to ¥2.81bn indicates strong operating leverage.
• Net margin at 11.46% and operating margin at 11.6% reflect improved profitability.
• Ordinary income exceeds operating income by ~¥1.19bn, highlighting material non-operating gains.
• ROE is modest at 4.0% due to low asset turnover (0.284x) and conservative leverage.
• Balance sheet is very strong: equity ratio ~81.6% (computed), current ratio 600%, interest expense de minimis.
• Cash flow and dividend data are unreported, limiting assessment of cash conversion and payout sustainability.
• Outlook constructive but dependent on durability of margin gains and the non-operating income contribution.

Metrics to Watch:

• Operating margin trend and cost-to-sales ratio.
• Ordinary vs. operating income gap (composition of non-operating gains).
• OCF and FCF once reported; OCF/NI conversion ratio.
• Working capital efficiency: inventory and receivables turnover.
• Asset turnover and capital intensity; potential asset optimization.
• Capital allocation disclosures: dividends, buybacks, growth investments.
• Effective tax rate stability vs. one-off items.

Relative Positioning: The company is conservatively financed with superior liquidity versus many domestic peers, and profitability is improving. However, ROE remains below peer medians due to low asset turnover and reliance on non-operating income, suggesting room for efficiency gains and clearer capital allocation to enhance returns.

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