Metaplanet Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥4.52B
• Operating Income: ¥2.75B
• Net Income: ¥-321M
• EPS: ¥23.22

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

Verdict: FY2025 Q3 shows headline-strong earnings with exceptionally high margins on small revenue and very low leverage, but the quality and sustainability of profit appear weak due to valuation-driven items and limited operating scale. Revenue rose to 45.17 (100M JPY), up +1702.1% YoY, while operating income reached 27.48 (100M JPY) (+1241.3% YoY), translating to an operating margin of about 60.8%. Net income printed at 135.28 (100M JPY), implying a net margin of roughly 299.5%, and total comprehensive income was 203.07 (100M JPY), signaling sizable other comprehensive gains. The balance sheet expanded to total assets of 5,507.44 (100M JPY), with equity of 5,329.07 (100M JPY), resulting in a very conservative D/E of 0.03x and an equity ratio of approximately 96.8%. However, the P/L structure is unusual: ordinary income is extremely high at 232.29 (100M JPY), yet profit before tax is negative (-3.11), and net income is strongly positive—this points to material non-recurring/valuation items and extraordinary items impacting the period. Gross profit was only 2.01 (100M JPY) on revenue of 45.17, implying a 4.4% gross margin and highlighting that operating profit was not driven by product/service gross margin but likely by other operating income. SG&A was 3.85 (100M JPY), or about 8.5% of revenue, lower than operating income, again reinforcing that non-core operating items dominated. The company’s asset base is highly concentrated in noncurrent assets (5,242.91 out of 5,507.44), while cash and deposits remain small at 14.88, introducing liquidity execution risk despite a high current ratio (406.5%). Margin expansion/compression in basis points versus prior periods is not determinable due to missing comparable margin disclosures (N/A), but current-period operating margin (≈6,080 bps) and net margin (≈29,950 bps) are abnormally high for the revenue base. Earnings quality is difficult to assess because operating cash flow is unreported (OCF/NI not calculable), and large comprehensive income suggests fair value sensitivity. DuPont shows ROE of 2.5% driven by an extreme net margin and very low asset turnover (0.008x), with minimal financial leverage (1.03x), indicating limited true operating productivity. Reported ROIC is 0.5%, far below a 7–8% value-creation threshold, implying that the large asset base is not yet earning adequate returns. Forward-looking, headline profitability is unlikely to be repeatable without demonstrable operating cash flow and clearer visibility on the underlying drivers of ordinary/comprehensive income. Key to watch will be cash generation, composition and liquidity of noncurrent assets, and the presence of extraordinary and valuation items driving P/L and OCI.

Profitability Analysis

ROE decomposition (DuPont): ROE ≈ Net Profit Margin (299.5%) × Asset Turnover (0.008x) × Financial Leverage (1.03x) ≈ 2.5%. The component that changed the most versus typical levels is the net profit margin, which is extraordinarily high relative to revenue scale, while asset turnover is extremely low and leverage is minimal. Business explanation: the profit structure appears driven by valuation-related or non-recurring items (ordinary income at 232.29 with negative PBT and large OCI), rather than gross margin from core operations (gross margin only 4.4% and SG&A exceeds gross profit). Sustainability: low—valuation gains and extraordinary items are inherently volatile, and the low ROIC (0.5%) indicates insufficient recurring returns on the sizable asset base. Concerning trends: operating cost structure (SG&A 3.85 vs gross profit 2.01) implies the core business is not covering overhead; operating margin of 60.8% is therefore likely supported by other operating income rather than recurring gross profit. Ordinary income margin (~514%) vs negative PBT suggests significant non-operating or extraordinary losses/gains whipsawing results; this volatility is not sustainable as a stable earnings base.

Growth Assessment

Revenue growth is outsized (+1702.1% YoY) but from a very small base, and the low gross margin (4.4%) signals weak underlying unit economics in reported operations. Operating income growth (+1241.3% YoY) appears decoupled from gross profit, implying dependence on other operating income or remeasurement effects rather than scalable core activities. Net income strength (135.28) and comprehensive income (203.07) likely reflect valuation/FX/other items; absent OCF disclosure, persistence is uncertain. With asset turnover at 0.008x and ROIC at 0.5%, the large balance sheet is not yet translating into productive revenue/profit, limiting visibility on sustainable growth. Outlook hinges on: 1) conversion of valuation gains into cash, 2) clearer monetization strategy for noncurrent assets (5,242.91), and 3) stabilization of the P/L structure (ordinary vs extraordinary items). Near term, expect elevated earnings volatility if fair value or extraordinary items persist as key drivers.

Financial Health

Liquidity: Current ratio 406.5% (239.58 current assets vs 58.94 current liabilities) and quick ratio equivalent, but cash is only 14.88, suggesting execution risk if current assets are illiquid; no explicit warning threshold breached (CR >> 1.0). Solvency: Very conservative capital structure—D/E 0.03x, total liabilities 178.37 vs equity 5,329.07; no leverage red flags (D/E < 2.0). Maturity mismatch: Low on paper given current assets exceed current liabilities by 180.64; however, the composition of current assets is largely undisclosed, so liquidity quality is uncertain. Off-balance sheet: No disclosures provided; cannot assess guarantees or commitments. Overall, headline balance-sheet strength is high, but practical liquidity relies on the realizability of current and noncurrent asset positions.

Cash Flow Quality

OCF, FCF, and capex are unreported, so OCF/Net Income cannot be calculated (quality indeterminate). Given the outsized net income (135.28) and comprehensive income (203.07) relative to gross profit (2.01), there is a risk that earnings are valuation-driven rather than cash generative. FCF sufficiency for dividends/capex cannot be assessed. Working capital appears small in absolute terms (AR 0.29, limited disclosed inventories), reducing the scope for deliberate working capital timing to manage earnings; however, the absence of OCF disclosure precludes firm conclusions. Key flag: OCF/NI < 0.8 cannot be tested—monitor once cash flows are reported.

Dividend Sustainability

Dividend data are unreported; payout ratio and FCF coverage are not calculable. Retained earnings stand at 223.88 and equity at 5,329.07, but without visibility on recurring cash generation, dividend capacity remains unclear. Given ROIC at 0.5% and uncertain OCF, a conservative stance on distributions would be prudent until sustainable FCF is demonstrated. Policy outlook cannot be inferred from disclosures provided.

Risk Assessment

Business Risks:

• Earnings concentration in valuation/extraordinary items leading to volatile ordinary income and net profit
• Low gross margin (4.4%) and SG&A exceeding gross profit indicate weak core profitability
• Very low asset turnover (0.008x) suggests limited operational scale relative to asset base
• Dependence on noncurrent assets (5,242.91) whose monetization path is unclear
• Potential exposure to market-priced assets (e.g., securities/crypto) implied by large OCI

Financial Risks:

• Liquidity execution risk: cash and deposits only 14.88 vs current liabilities 58.94 despite a high current ratio
• Valuation and impairment risk on sizable noncurrent assets impacting P/L and equity
• Earnings quality risk due to unreported OCF/FCF (cash conversion unknown)
• Tax volatility: effective tax rate appears distorted (-2.9%), indicating potential future normalization swings

Key Concerns:

• Mismatch between ordinary income (232.29), negative PBT (-3.11), and positive NI (135.28) indicates heavy non-recurring effects
• ROIC at 0.5% is below value-creation thresholds, questioning capital efficiency
• Limited disclosure granularity (non-operating income breakdown, cash flows) obscures drivers of earnings and liquidity

Investment Implications

Key Takeaways:

• Headline profitability is very strong (operating margin ~60.8%, net margin ~299.5%) but driven by non-core items
• ROE 2.5% is achieved via extreme margin and minimal leverage, offset by extremely low asset turnover
• Balance sheet is equity-heavy (equity ratio ~96.8%, D/E 0.03x), but cash is modest at 14.88
• ROIC of 0.5% flags subpar capital efficiency on a large asset base
• Earnings and OCI point to material valuation sensitivity; sustainability remains unproven absent OCF

Metrics to Watch:

• Operating cash flow and OCF/Net Income ratio (target >1.0 for quality)
• Composition and valuation of noncurrent assets; impairment or fair value movements
• Breakdown of ordinary vs extraordinary items; recurrence of gains/losses
• ROIC progression toward >5% and asset turnover improvement
• Cash balance and liquidity of current assets vs near-term obligations
• Gross margin and SG&A leverage to evidence true operating scalability

Relative Positioning: Versus typical operating companies, the firm shows unusually high accounting profitability but markedly weaker capital efficiency (ROIC 0.5%) and operational scale (AT 0.008x). Leverage is far lower than peers, which reduces financial risk, but earnings volatility tied to valuation items appears higher than average.

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