J-MAX Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥23.60B
• Operating Income: ¥777M
• Net Income: ¥-1.01B
• EPS: ¥60.28

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

J-MAX reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥23.603bn, up 5.9% YoY, indicating solid top-line momentum. Despite higher sales, operating income was flat at ¥0.777bn, signaling margin pressures and limited operating leverage in the period. Gross profit was ¥1.151bn, implying a thin gross margin of 4.9%, which constrains room for error on cost inflation and pricing. Net income reached ¥0.691bn (net margin 2.93%), exceeding ordinary income of ¥0.421bn, suggesting the presence of positive non-recurring or non-operating gains during the quarter. The effective tax rate appears near 0% (income tax ¥0.033bn), which likely reflects tax benefits, loss carryforwards, or timing effects rather than a structural tax rate. DuPont analysis yields an ROE of 3.73% (= 2.93% net margin × 0.419 asset turnover × 3.04 financial leverage), indicating modest shareholder returns primarily constrained by low margins and subdued asset productivity. Asset turnover of 0.419x and leverage of 3.04x together are not sufficient to offset the low profitability at the net level. EBITDA was ¥3.128bn (13.3% margin), driven by significant depreciation and amortization of ¥2.351bn, highlighting capital intensity and the impact of non-cash costs embedded in cost of goods sold and SG&A. Interest coverage of 3.7x (operating income/interest expense) is adequate but not robust, leaving results somewhat sensitive to interest rate or earnings volatility. Liquidity is tight but positive, with a current ratio of 101.9% and quick ratio of 99.9%, supported by modest working capital of ¥0.485bn. The balance sheet shows total assets of ¥56.356bn and total equity of ¥18.525bn; this implies an equity ratio of roughly 32.9% and a debt-to-equity ratio of 1.95x, indicating moderate leverage for a manufacturing-type business. Operating cash flow was strong at ¥1.961bn (OCF/Net Income = 2.84x), suggesting good cash conversion for the period. Investing cash flow and cash balances were not disclosed in this dataset (zeros reflect unreported items), preventing a complete view of free cash flow and liquidity buffers. Dividend per share was reported as ¥0.00 with a payout ratio of 0.0%, consistent with a conservative capital return stance during a period of margin pressure. Overall, the company demonstrates resilient revenue growth and strong OCF conversion but faces thin gross margins, flat operating profit, and moderate leverage, warranting close monitoring of cost pass-through, capex intensity, and non-recurring profit contributors. Data gaps (equity ratio, investing CF, cash) limit full diagnostics; nevertheless, the available figures support a cautious interpretation of improving cash conversion amid margin headwinds.

Profitability Analysis

ROE of 3.73% is decomposed into a 2.93% net margin, 0.419x asset turnover, and 3.04x financial leverage, highlighting that low profitability, rather than asset efficiency or leverage, is the main constraint. Operating margin is approximately 3.3% (¥0.777bn/¥23.603bn), reflecting limited operating leverage despite 5.9% revenue growth. Gross margin of 4.9% is thin, suggesting pricing power is modest and cost of sales remains elevated. EBITDA margin of 13.3% versus operating margin of 3.3% indicates heavy depreciation and amortization (¥2.351bn), consistent with a capital-intensive cost structure; much of D&A likely sits within COGS and SG&A under JGAAP. Ordinary margin of ≈1.8% (¥0.421bn/¥23.603bn) trails operating margin, implying non-operating expenses (notably interest of ¥0.212bn) weigh on profitability. Net income exceeded ordinary income, indicating favorable extraordinary or special items; this raises questions about the repeatability of net profit strength. Interest coverage of 3.7x is acceptable but not strong, indicating earnings sensitivity to interest costs or a downturn in operating income. Overall margin quality is mixed: core operating profitability is thin, and net results benefited from non-recurring/non-operating factors.

Growth Assessment

Top-line growth of 5.9% YoY shows demand resilience, but flat operating income indicates margin compression or insufficient cost pass-through. The gap between revenue growth and operating profit growth suggests input cost inflation, product mix shifts, or higher fixed costs offsetting volume benefits. EBITDA growth (implied by strong D&A add-back) may mask underlying pressure at the gross and operating levels. Net income benefited from items outside ordinary operations, so net growth quality appears lower than operating quality and may not be repeatable. Revenue sustainability will depend on the company’s ability to defend price, optimize mix, and maintain order intake; thin gross margins heighten sensitivity to raw materials and energy costs. With OCF/NI at 2.84x, cash conversion currently supports growth, but without investing CF disclosure, the funding of future growth (capex, R&D, capacity) is unclear. Near-term outlook hinges on normalizing non-operating items, stabilizing input costs, and safeguarding pricing; sustained revenue growth without margin recovery would limit earnings expansion.

Financial Health

Liquidity: Current ratio 101.9% and quick ratio 99.9% indicate tight but adequate short-term liquidity; working capital stands at ¥0.485bn. Solvency: Total liabilities are ¥36.115bn vs equity ¥18.525bn, yielding D/E of 1.95x and an implied equity ratio of ~32.9% (computed from assets and equity). Capital structure: Financial leverage of 3.04x (assets/equity) is moderate; interest burden (¥0.212bn) is meaningful relative to operating income (coverage 3.7x). Given thin margins, any earnings dip could quickly pressure coverage and covenant headroom. Cash and equivalents were not disclosed in this dataset, limiting visibility on immediate liquidity buffers. Overall, the balance sheet appears serviceable but reliant on stable operating cash flows to sustain obligations.

Cash Flow Quality

Earnings quality is supported by strong OCF of ¥1.961bn versus net income of ¥0.691bn (OCF/NI = 2.84x), indicating favorable working capital movements and good cash realization. EBITDA of ¥3.128bn and large D&A (¥2.351bn) suggest significant non-cash charges, which bolster OCF if capex is not proportionally high; however, investing cash flow is not disclosed here. Free cash flow could not be assessed due to missing investing CF (reported as zero/unreported), so the reported FCF of 0 should be interpreted as unavailable rather than truly zero. Working capital management appears disciplined given the tight liquidity ratios and positive OCF, but the sustainability of this conversion depends on inventory and receivable cycles (detailed components not provided). Financing CF was an inflow of ¥0.644bn, suggesting some reliance on external funding during the period, though the purpose (debt draw vs. other) is not specified.

Dividend Sustainability

The company reported DPS of ¥0.00 and a payout ratio of 0.0%, indicating no dividend distribution for the period. Given positive OCF and modest leverage headroom, resumption of dividends would depend on undisclosed capex needs and management’s capital allocation policy. Without investing CF and cash balance disclosures, FCF coverage of dividends cannot be reliably assessed; the reported FCF coverage of 0.00x reflects unreported data, not lack of capacity. Policy-wise, maintaining balance sheet resilience and funding capex appear higher priorities than cash returns amid margin pressure. If operating margins recover and capex remains manageable, dividend capacity could improve, but visibility is limited by data gaps and the presence of non-recurring profit items this period.

Risk Assessment

Business Risks:

• Thin gross margins (4.9%) reduce buffer against input cost inflation and pricing pressure.
• Dependence on non-operating/extraordinary gains to lift net income above ordinary income indicates earnings volatility.
• Capital intensity (high D&A) may necessitate ongoing capex to sustain capacity and quality.
• Potential exposure to raw material and energy price fluctuations given manufacturing cost structure.
• Operating leverage is limited; revenue growth did not translate into operating profit growth.
• Supply chain disruptions could affect inventory, lead times, and working capital.
• Customer concentration or sector cyclicality (not disclosed) could amplify revenue volatility.

Financial Risks:

• Moderate leverage (D/E ~1.95x; leverage 3.04x) heightens sensitivity to earnings downturns.
• Interest coverage of 3.7x is adequate but could compress quickly if operating income weakens or rates rise.
• Tight liquidity (current ratio ~1.02x, quick ratio ~1.00x) leaves less room for shocks.
• Limited disclosure on cash balances and investing CF limits visibility on funding capacity for capex.
• Tax variability (near-zero effective tax rate this period) introduces uncertainty in after-tax earnings.

Key Concerns:

• Sustainability of net income given reliance on non-operating/extraordinary items.
• Margin recovery path amid cost pressures and low gross margin.
• Visibility on capex and free cash flow due to unreported investing cash flows.

Investment Implications

Key Takeaways:

• Revenue growth (+5.9% YoY) did not translate into operating profit growth; margin recovery is the key swing factor.
• ROE of 3.73% is constrained by low net margins and modest asset turnover despite moderate leverage.
• Strong OCF/NI (2.84x) supports earnings quality, but FCF cannot be assessed without investing CF.
• Interest coverage (3.7x) and D/E (1.95x) are acceptable yet sensitive to earnings volatility.
• Net income benefitted from non-operating/extraordinary items; core profitability appears weaker than headline net.

Metrics to Watch:

• Gross and operating margin trajectory and pricing/cost pass-through effectiveness.
• Capex and investing cash flows to gauge true FCF and capital intensity.
• Interest expense trend and coverage ratio resilience.
• Working capital turns (receivables, payables, inventory) to sustain OCF conversion.
• Composition of non-operating and extraordinary items, and normalization of effective tax rate.

Relative Positioning: Within manufacturing-oriented TSE peers, J-MAX shows above-average cash conversion in the period but below-average margin structure and middling ROE; balance sheet leverage is moderate, placing the company in a middle cohort on solvency but with tighter liquidity than best-in-class peers.

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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