TOCALO Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.31B
• Operating Income: ¥6.52B
• Net Income: ¥3.82B
• EPS: ¥74.46

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Tocalo (3433) delivered a solid FY2026 Q2 with broad-based profitability improvements on healthy top-line growth. Revenue rose 9.5% YoY to ¥28.31bn, while operating income climbed 21.1% YoY to ¥6.52bn, evidencing positive operating leverage. Net income advanced 24.5% YoY to ¥4.43bn, outpacing sales growth and confirming cost discipline and mix improvements. Gross margin stood at 33.1%, and operating margin reached about 23.0%, indicating strong pricing power and efficient cost control for a processing/coatings business. EBITDA was ¥8.04bn with a 28.4% margin, highlighting a capital-intensive but cash-generative model before working capital and capex. Ordinary income of ¥6.76bn exceeded operating income, suggesting modest non-operating gains (likely financial income) net of minimal interest expense (¥9m). ROE was reported and calculated at 6.51%, driven primarily by high margins and very low leverage, with asset turnover of 0.336x reflecting a sizable asset base relative to sales. The balance sheet appears exceptionally strong: total equity of ¥68.01bn against total assets of ¥84.34bn implies an equity ratio around 80.6% (despite the reported 0.0% placeholder). Liquidity is robust with a current ratio near 296%, and the debt-to-equity ratio is a modest 0.23x, amplified by negligible interest burden (interest coverage ~724x). Operating cash flow of ¥2.70bn translates to an OCF/Net Income ratio of 0.61, pointing to weaker cash conversion this half, likely due to working capital build. Investing cash flow was not disclosed (0 placeholder), so Free Cash Flow cannot be reliably assessed despite the reported 0, and cash balance was also undisclosed. Dividend data (DPS and payout) were not provided; however, financing cash outflows of ¥2.55bn suggest shareholder returns and/or debt repayments. On growth quality, the combination of sales expansion and stronger margins indicates healthy demand and good execution, but sustainability will depend on end-market cycles (notably semiconductors, electronics, and industrial customers common to thermal spray/coating services). Overall, fundamentals are characterized by high profitability, low financial risk, and disciplined cost structure, offset by temporary softness in cash conversion and limited visibility into capex and dividend policy due to missing disclosures. The DuPont profile underscores margin strength as the main ROE driver, with low leverage and modest asset turns limiting upside. Despite data gaps (inventories, cash, investing CF, DPS), the available figures support a view of resilient operations and a conservative balance sheet into 2H. Monitoring working capital normalization, capex commitments, and pricing/mix in key segments will be important for the outlook. Absent capex disclosures, the durability of margin expansion versus potential capacity additions is a key watchpoint. The company appears positioned to navigate cyclical swings with ample equity and liquidity.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 15.64%
• asset_turnover: 0.336x
• financial_leverage: 1.24x
• calculated_ROE: 6.51%
• commentary: ROE is margin-driven given low leverage and modest asset turnover. Ordinary income exceeds operating income by ~¥238m, indicating helpful but small non-operating contributions. margin_quality:
• gross_margin: 33.1%
• operating_margin: 23.0% (¥6.52bn / ¥28.31bn)
• EBITDA_margin: 28.4%
• tax_burden_note: Income tax was ¥1.69bn; implied effective tax rate appears in a normal mid-20s range based on ordinary income, despite the placeholder 0.0% metric.
• assessment: Margin expansion outpaced revenue growth, indicating favorable mix and cost control. EBITDA-to-operating income spread (approx. ¥1.52bn D&A) aligns with a capital-intensive asset base. operating_leverage: Revenue +9.5% YoY vs operating income +21.1% YoY implies positive operating leverage; fixed-cost absorption and pricing/mix likely contributed.

Growth Assessment

revenue_sustainability: Top-line growth of 9.5% YoY suggests healthy demand across core coating/processing end-markets. Sustainability depends on semiconductor, electronics, and industrial capex cycles. profit_quality: Net income +24.5% YoY and margins at multi-decade-comparable levels indicate strong execution. Ordinary income support is modest; core growth is operational. outlook: If end-market demand remains stable, operating leverage can continue to support earnings. Watch for cyclical normalization in semiconductors and export-sensitive sectors, FX effects on costs/pricing, and capacity utilization.

Financial Health

liquidity:

• current_assets: ¥39.96bn
• current_liabilities: ¥13.51bn
• current_ratio: 295.9%
• quick_ratio: 295.9% (inventories unreported)
• working_capital: ¥26.45bn
• commentary: Very strong near-term liquidity; inventory data are undisclosed, but high current assets vs. current liabilities provide ample buffer. solvency:
• total_assets: ¥84.34bn
• total_equity: ¥68.01bn
• implied_equity_ratio: ≈80.6% (¥68.01bn / ¥84.34bn)
• total_liabilities: ¥15.95bn
• debt_to_equity: 0.23x
• interest_coverage: 724.2x
• commentary: Minimal financial risk with a largely equity-financed balance sheet and negligible interest burden. capital_structure: Predominantly equity-funded; low leverage provides flexibility for investment and shareholder returns.

Cash Flow Quality

earnings_quality: OCF/Net Income at 0.61 indicates weaker conversion this half, likely from working capital build (e.g., receivables or unreported inventories). Earnings remain supported by cash profits (EBITDA ¥8.04bn). FCF_analysis: Investing CF was undisclosed (0 placeholder), so FCF cannot be reliably determined despite a reported 0. Financing outflow of ¥2.55bn implies distributions or debt repayment. working_capital: Large positive working capital (¥26.45bn) supports operations; timing effects likely suppressed OCF. Monitor receivable days, unreported inventory levels, and payables.

Dividend Sustainability

payout_ratio_assessment: Payout metrics were not disclosed (DPS 0 placeholder). With EPS at ¥74.46 and strong balance sheet, capacity for distributions appears ample, but policy is not inferable from current data. FCF_coverage: Not assessable due to missing investing CF; reported FCF of 0 is a placeholder, not an economic measure. policy_outlook: Financing CF of -¥2.55bn could reflect dividends and/or buybacks; clarity requires management guidance or detailed cash flow notes.

Risk Assessment

Business Risks:

• Cyclical exposure to semiconductor, electronics, and industrial capex cycles affecting coating service demand.
• Customer concentration risk typical in specialized coatings/processing niches.
• Commodity and energy cost volatility impacting materials and process costs.
• Technological shifts in substrates and manufacturing processes requiring continuous process innovation.
• FX fluctuations influencing export competitiveness and imported material costs.

Financial Risks:

• Working capital swings impacting OCF conversion, as seen with OCF/NI at 0.61.
• Capex visibility risk due to undisclosed investing CF; potential for large periodic capex.
• Limited disclosure of cash and inventories complicates near-term liquidity and inventory risk assessment.
• Potential contingent liabilities or asset retirement obligations not visible in summarized data.

Key Concerns:

• Sustainability of margin expansion if mix/pricing tailwinds normalize.
• End-market demand normalization in semiconductors could reduce operating leverage.
• Insufficient visibility on capex and cash balances limits FCF and dividend assessment.

Investment Implications

Key Takeaways:

• Strong 1H profitability with operating margin ~23% and net margin ~15.6%.
• Positive operating leverage as operating income growth outpaced sales.
• Exceptionally strong balance sheet with implied equity ratio ~80.6% and near-zero interest burden.
• OCF conversion soft (0.61x NI), likely due to working capital build.
• Incomplete disclosures (cash, inventories, investing CF, DPS) constrain FCF/dividend analysis.

Metrics to Watch:

• Order trends and utilization in semiconductor/electronics-related segments.
• Working capital metrics (receivable days, inventory turns once disclosed).
• Capex commitments and timing (investing CF, new capacity projects).
• Pricing/mix and gross margin trajectory.
• OCF/NI normalization and FCF generation in 2H.
• Shareholder returns (dividends/buybacks) via financing CF detail.

Relative Positioning: Within precision surface treatment/coatings peers, Tocalo exhibits stronger margins and a more conservative balance sheet, with lower leverage and modest asset turnover; cash conversion volatility is a watchpoint relative to peers with steadier WC cycles.

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