S E Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥10.80B
• Operating Income: ¥-43M
• Net Income: ¥181M
• EPS: ¥-1.88

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

SE Co., Ltd. (consolidated, JGAAP) reported FY2026 Q2 revenue of ¥10.801bn, down 8.9% YoY, reflecting top-line softness that pressured operating leverage. Gross profit was ¥3.233bn, yielding a solid gross margin of 29.9%, but operating income slipped to a small loss of ¥43m (operating margin of about -0.4%), and net income was a loss of ¥56m (net margin -0.52%). Despite the accounting loss, operating cash flow was positive at ¥276.7m, indicating reasonable cash conversion supported by non-cash charges (D&A ¥346.0m) and likely working capital dynamics. DuPont decomposition indicates the negative ROE (-0.52%) is driven by the slim negative net margin, with asset turnover of 0.466 and financial leverage of 2.14 roughly neutral in aggregate. Liquidity appears sound with a current ratio of 177% and a quick ratio of 170%, supported by ¥16.094bn of current assets versus ¥9.076bn of current liabilities. The capital structure is moderate with total liabilities of ¥14.249bn versus total equity of ¥10.8bn (debt-to-equity ~1.32x), implying manageable solvency risk at current earnings levels, although EBIT-based interest coverage is negative due to the operating loss. Financing cash flow was a sizable outflow of ¥1.131bn, consistent with debt repayment or other shareholder-related cash uses, while investing cash flow was not disclosed. Dividend per share is reported as ¥0.00 with a payout ratio of 0%, aligning with the current loss and cash conservation. Overall profitability quality is mixed: gross margin resilience contrasts with pressure at the operating line and negative ordinary/net results. Cash flow quality is better than earnings imply, with positive OCF and EBITDA of ¥303m (2.8% margin) underscoring underlying cash generation capacity despite H1 headwinds. Working capital is ample (¥7.018bn), and inventories are modest relative to current assets, supporting liquidity. The outlook will hinge on H2 revenue reacceleration and cost discipline to restore positive operating leverage. Data limitations exist (several items reported as zero reflect non-disclosure rather than actual zero), but the available figures allow a reasonable assessment of profitability, cash flow, and balance sheet resilience. Key watchpoints include revenue trajectory, operating expense control, and financing cash outflows.

Profitability Analysis

ROE_decomposition: DuPont inputs: net profit margin -0.52%, asset turnover 0.466x, financial leverage 2.14x. Multiplying yields an implied ROE around -0.52%, consistent with the reported figure. The negative ROE is predominantly driven by a slim negative net margin; asset turnover and leverage are broadly neutral to the result. margin_quality: Gross margin is 29.9% (¥3.233bn/¥10.801bn), indicating pricing and mix remain resilient. Operating margin is approximately -0.4% (operating loss ¥43m), and ordinary margin is about -0.2%, showing SG&A and other operating costs offset gross profitability. Net margin is -0.52%, with the gap from operating to net also reflecting interest expense (¥21.4m) and tax noise amid a loss. operating_leverage: Revenue declined 8.9% YoY while operating income deteriorated 44.6% YoY into a small loss, indicating elevated operating leverage. EBITDA margin of 2.8% versus negative EBIT suggests that incremental fixed costs and D&A weigh on break-even; modest volume recovery could swing EBIT back positive, but further top-line pressure would magnify losses.

Growth Assessment

revenue_sustainability: Top-line declined 8.9% YoY to ¥10.801bn, suggesting demand softness or timing effects. With a healthy gross margin, the revenue shortfall rather than pricing appears to be the principal headwind. Sustainability will depend on order intake and backlog conversion in H2. profit_quality: EBITDA remains positive at ¥303m, and OCF is positive at ¥277m despite the loss, supporting the view that underlying operations generate cash. However, the negative operating and net results indicate that current scale is below the cost base’s efficient level. outlook: If H2 revenue normalizes seasonally and management executes on cost control, operating leverage could improve margins. Conversely, persistent demand weakness would keep EBIT negative. No guidance is provided here; thus, near-term visibility is limited given the disclosed data.

Financial Health

liquidity: Current ratio 177.3% and quick ratio 169.7% indicate robust short-term liquidity. Working capital of ¥7.018bn provides cushion for operational needs. solvency: Total liabilities ¥14.249bn versus equity ¥10.8bn yields a debt-to-equity of 1.32x, a moderate leverage profile. EBIT-based interest coverage is negative due to an operating loss, but EBITDA vs. interest (¥303m/¥21.4m ≈ 14x) suggests capacity to service debt if EBITDA is sustained. capital_structure: Implied equity ratio (based on non-zero assets and equity) is approximately 46–47%, though the reported equity ratio field is zero (unreported). Financial leverage is 2.14x (assets/equity), consistent with a balanced structure for the business profile.

Cash Flow Quality

earnings_quality: OCF of ¥276.7m versus net loss of ¥56m (OCF/NI ≈ -4.94 due to negative NI) indicates cash earnings exceed accounting earnings, aided by D&A (¥346.0m). FCF_analysis: Investing cash flow is undisclosed (reported as zero). Therefore, a reliable free cash flow cannot be derived here; reported FCF of zero reflects missing investing data, not necessarily a lack of investment. working_capital: Current assets of ¥16.094bn and inventories of ¥696m imply low inventory intensity relative to liquid assets. Positive OCF alongside negative EBIT suggests working capital management and non-cash charges are supporting cash generation.

Dividend Sustainability

payout_ratio_assessment: With net income negative (¥-56m) and DPS reported at ¥0.00, the payout ratio is effectively 0%. This is consistent with loss mitigation and cash preservation. FCF_coverage: FCF coverage cannot be assessed because investing cash flow (and therefore capex) is not disclosed; the reported 0.00x reflects missing data rather than true coverage. policy_outlook: Given current losses and financing cash outflows, maintaining a conservative dividend stance appears prudent until profitability stabilizes and cash needs for operations and debt service are clear.

Risk Assessment

Business Risks:

• Revenue contraction of 8.9% YoY increasing operating leverage sensitivity
• Margin pressure at the operating level despite resilient gross margin
• Potential demand/timing volatility affecting H2 recovery
• Execution risk in cost control to restore positive EBIT
• Limited visibility due to non-disclosure of certain items (e.g., investing CF)

Financial Risks:

• Negative EBIT leading to poor interest coverage on an EBIT basis
• Large financing cash outflow (¥1.131bn) implying refinancing or repayment needs
• Reliance on working capital management to support OCF amid losses
• Moderate leverage (D/E ~1.32x) that could constrain flexibility if earnings weaken

Key Concerns:

• Sustained top-line weakness would likely keep EBIT negative
• Continuation of sizable financing cash outflows without offsetting OCF growth
• Uncertainty around capex and investment needs due to undisclosed investing CF

Investment Implications

Key Takeaways:

• Top-line declined 8.9% YoY; operating income fell to a ¥43m loss, highlighting operating leverage.
• Gross margin remains healthy at 29.9%, indicating pricing/mix resilience.
• OCF positive at ¥276.7m and EBITDA at ¥303m; cash generation outperforms accounting earnings.
• Liquidity is strong (current ratio 177%, quick ratio 170%) with ¥7.0bn working capital.
• Capital structure moderate (D/E ~1.32x; financial leverage 2.14x), but EBIT coverage is weak.
• Financing CF outflow of ¥1.131bn warrants monitoring for refinancing and covenant headroom.
• Dividend currently at ¥0.00 with loss-making quarter; preservation of cash is evident.
• Data gaps (investing CF, cash balance) limit full assessment of FCF and capex trajectory.

Metrics to Watch:

• H2 revenue growth rate and order backlog conversion
• Operating expense run-rate and EBITDA margin progression
• EBIT/interest coverage and net debt trajectory
• Working capital turns (receivables, payables, inventory days)
• Capital expenditures and investing cash flows once disclosed
• Financing activities (debt repayments/refinancing) and liquidity headroom

Relative Positioning: Within a mid-leverage peer context, the company exhibits better-than-earnings cash generation and strong liquidity, but lags on operating margin resilience due to elevated operating leverage amid a near-term revenue dip.

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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