Naigai Tec Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥15.24B
• Operating Income: ¥487M
• Net Income: ¥253M
• EPS: ¥88.75

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

Naigai Tech Co., Ltd. (33740) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite top-line pressure. Revenue declined 5.7% YoY to 15,240 million yen, but operating income rose 15.2% YoY to 487 million yen, and net income increased 22.8% YoY to 310 million yen, indicating margin expansion and tighter cost control. The reported gross profit margin of 12.7% suggests improved mix or procurement discipline versus the prior year, although the provided cost of sales and gross profit figures are not internally consistent; we rely on the disclosed gross margin. Operating margin reached 3.2% (487/15,240), ordinary margin 3.1% (478/15,240), and net margin 2.03%, consistent with the DuPont inputs. ROE is calculated and reported at 2.60%, driven primarily by modest net margin and low asset turnover (0.641x), with moderate financial leverage (assets/equity of 1.99x). Liquidity appears solid with a current ratio of 181.8% and working capital of 7,525 million yen, supported by 16,721 million yen in current assets and 9,196 million yen in current liabilities. Balance sheet strength is underpinned by total equity of 11,945 million yen (approximately 50.2% equity ratio based on assets of 23,791 million yen), despite a reported equity ratio of 0.0% that likely reflects non-disclosure in the XBRL tag. Interest expense is modest at 22.8 million yen, with interest coverage of 21.3x based on operating income, indicating low near-term refinancing risk. The effective tax rate computed from ordinary income and tax expense is approximately 32–33%, notwithstanding a reported metric of 0.0% that appears to be a placeholder. Cash flow data (operating, investing, financing) and cash balances are not disclosed in this dataset, so cash flow quality and dividend coverage cannot be directly assessed. Inventory stands at 2,214 million yen (13.2% of current assets), consistent with a relatively lean working capital posture for a technology equipment distributor. Despite revenue softness, the company delivered stronger profitability, implying a favorable shift in margin drivers, such as product mix, pricing, or SG&A efficiency. The low ROE underscores structural constraints from thin margins and modest asset turnover typical of trading/distribution models. Dividend information is not disclosed; DPS and payout ratio appear as zero, likely reflecting missing data rather than actual zeros. Overall, the company displays defensive balance sheet characteristics and improved earnings momentum, but sustained ROE enhancement will likely require further margin improvement and/or higher asset turnover.

Profitability Analysis

ROE_decomposition: ROE 2.60% = Net margin 2.03% × Asset turnover 0.641 × Financial leverage 1.99. The primary drag is thin net margin and relatively low asset turnover; leverage is moderate and not the key driver. margin_quality: Gross margin is reported at 12.7% (1,933.7 million yen gross profit on 15,240 million yen sales). Operating margin is 3.2%; ordinary margin 3.1%; net margin 2.03%. The YoY increase in operating and net income despite lower sales indicates better cost discipline and/or improved mix. Note: cost of sales and gross profit figures are not internally reconcilable; we rely on the stated gross profit and margins for analysis. operating_leverage: Revenue down 5.7% YoY with operating income up 15.2% suggests positive operating leverage from SG&A control and mix. Interest expense is small, with coverage at 21.3x, so financial leverage contributes little to earnings volatility.

Growth Assessment

revenue_sustainability: Sales declined to 15,240 million yen (-5.7% YoY), likely reflecting cyclical softness in capital goods demand (e.g., semiconductor-related equipment) or timing of project deliveries. Sustainability will depend on order intake and backlog conversion. profit_quality: Profit growth outpaced sales due to margin expansion. Net margin of 2.03% remains low, but the improvement is notable. Effective tax burden approximates 32–33% (157.1/478), supportive of normalized earnings quality. outlook: If mix/pricing improvements persist and demand stabilizes, operating margin could remain above prior-year levels. Key forward indicators include orders, backlog, gross margin trajectory, and utilization of working capital (AR, inventory turns), especially given the absence of cash flow disclosure.

Financial Health

liquidity: Current ratio 181.8% and quick ratio 157.8% indicate ample near-term liquidity. Working capital totals 7,525 million yen (16,721 - 9,196). solvency: Total liabilities of 12,683 million yen versus equity of 11,945 million yen imply a debt-to-equity ratio of 1.06x (on a broad liabilities basis). Interest coverage is strong at 21.3x. capital_structure: Assets of 23,791 million yen and equity of 11,945 million yen imply an approximate equity ratio of 50.2% and leverage (assets/equity) of 1.99x. The reported equity ratio of 0.0% appears to be undisclosed rather than truly zero.

Cash Flow Quality

earnings_quality: OCF is not disclosed (shown as zero). Thus, OCF/Net Income of 0.00 in the dataset should not be interpreted as weak cash conversion; it is simply unavailable. FCF_analysis: Free cash flow is undisclosed. Without OCF and capex, we cannot assess FCF generation or coverage. working_capital: Inventory is 2,214 million yen (13.2% of current assets). Working capital is healthy at 7,525 million yen. Absent AR/AP details and cash data, we cannot evaluate cash conversion cycle or potential build/flush dynamics.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are undisclosed (zeros reflect non-reporting). With net income of 310 million yen and no FCF data, payout capacity cannot be computed. FCF_coverage: Not assessable due to missing OCF/FCF data. policy_outlook: Given moderate leverage and solid liquidity, the balance sheet could support a dividend under typical policies; however, absence of dividend disclosures precludes conclusions on current policy or trajectory.

Risk Assessment

Business Risks:

• Cyclical demand in semiconductor and electronics capital equipment markets
• Project timing/acceptance risk causing revenue lumpiness
• Pricing pressure and competitive intensity in distribution/trading businesses
• Supply chain and lead-time volatility affecting delivery and margins
• Inventory obsolescence risk tied to rapid technology cycles
• Customer concentration and order cancelation risk
• FX volatility if procurement is foreign currency-denominated

Financial Risks:

• Working capital swings impacting cash generation in down-cycles
• Potential rise in interest rates increasing financing costs (though coverage is currently strong)
• Dependence on trade payables and short-term liabilities for funding operations
• Limited visibility on cash balances and cash flows due to non-disclosure in this dataset

Key Concerns:

• Low ROE at 2.60% despite improved profitability
• Absence of cash flow disclosure limits assessment of earnings quality and dividend capacity
• Revenue contraction (-5.7% YoY) suggests end-market softness or delivery timing issues

Investment Implications

Key Takeaways:

• Earnings resilience: operating income +15.2% and net income +22.8% YoY despite sales -5.7%
• Margins improved: OPM 3.2%, GPM 12.7%; interest burden low with 21.3x coverage
• Balance sheet strength: equity ~50% of assets; current ratio 181.8%
• ROE remains subdued at 2.60% due to thin margins and low asset turnover
• Cash flow and dividend data not disclosed, constraining capital return and FCF analysis

Metrics to Watch:

• Order intake and backlog trends
• Gross margin and operating margin progression
• Asset turnover (sales/assets) and inventory turnover
• Operating cash flow to net income ratio and free cash flow
• Equity ratio and debt-to-equity trajectory
• Interest coverage and effective tax rate normalization
• Dividend announcements and payout policy

Relative Positioning: Within Japanese electronics/equipment trading peers, Naigai Tech shows solid liquidity and moderate leverage but below-peer ROE (peers often 8–10%+ in normal cycles). Profitability is improving, yet structural thin margins and modest asset turnover cap returns absent sustained mix/pricing gains.

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