ALPHA Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥34.09B
• Operating Income: ¥-31M
• Net Income: ¥294M
• EPS: ¥44.94

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

Alpha Corporation (34340) reported FY2026 Q2 consolidated results under JGAAP showing a mixed profile: top-line contraction, weak operating performance, but improved bottom-line supported by non-operating and extraordinary factors. Revenue declined 6.9% YoY to ¥34.1bn, with gross profit of ¥4.9bn and a gross margin of 14.4%, indicating margin compression pressures given the negative operating result. Operating income slipped to a loss of ¥31m (operating margin of approximately -0.09%), reflecting elevated SG&A relative to gross profit; implied SG&A is about ¥4.94bn. Ordinary income improved to ¥238m, indicating meaningful non-operating gains offsetting both the operating loss and interest expense of ¥169m. Net income rose 35.7% YoY to ¥431m (net margin 1.26%), a quality-of-earnings concern as it appears supported by non-recurring/extraordinary items estimated at roughly ¥266m pre-tax. EBITDA was ¥1.63bn (4.8% margin), highlighting that cash earnings capacity remains positive even as EBIT turned slightly negative. Cash conversion was strong with operating cash flow (OCF) of ¥2.93bn, approximately 6.8x net income, suggesting working-capital release or other non-cash factors aided cash generation. Liquidity is solid: current ratio 156.3% and quick ratio 145.9%, with working capital of ¥13.98bn, providing ample short-term coverage. Capital structure is moderate with a debt-to-equity ratio of 0.88x and financial leverage (assets/equity) of 1.94x. DuPont ROE calculates to 1.21% (net margin 1.26% × asset turnover 0.494 × leverage 1.94), which is subdued for the sector and largely driven by non-operating/extraordinary contributions rather than core operations. Interest coverage on an EBIT basis is weak at -0.2x, but on an EBITDA basis appears more comfortable, indicating capacity to service interest if operating profitability normalizes. Reported effective tax rate appears near 0% due to the composition of earnings and/or loss carryforwards; the reported tax charge of ¥73m versus the income structure implies substantial non-taxable or offset items. The dividend per share is reported as ¥0.00 with a 0% payout ratio, which may reflect timing or policy conservatism rather than an inability to pay, given strong OCF; however, investing cash flow data are unavailable, limiting free cash flow assessment. The balance sheet shows total assets of ¥68.95bn and equity of ¥35.61bn; the equity ratio is not disclosed in the dataset. Overall, the period shows resilient cash generation and stable liquidity against a backdrop of weaker revenue and operating income, and improved net income quality is questionable given reliance on non-operating and extraordinary factors. Key uncertainties include the sustainability of non-operating gains, the drivers of OCF outperformance, and the trajectory of operating margins amid revenue pressure. Data limitations (notably unreported investing CF, cash balances, and share count) necessitate cautious interpretation of FCF and per-share metrics.

Profitability Analysis

ROE_decomposition: DuPont ROE = 1.21% = Net margin (1.26%) × Asset turnover (0.494x) × Financial leverage (1.94x). The low ROE is primarily constrained by thin net margins and modest asset efficiency; leverage is moderate and not the main driver. margin_quality: Gross margin is 14.4% (gross profit ¥4.91bn on revenue ¥34.09bn). Operating margin is approximately -0.09% (operating loss ¥31m), indicating SG&A pressure; implied SG&A ≈ ¥4.94bn. Ordinary margin improves to 0.7% (ordinary income ¥238m), evidencing sizable non-operating gains (¥438m net lift versus operating loss and interest). Net margin is 1.26% (net income ¥431m), likely boosted by ~¥266m in extraordinary gains under JGAAP. operating_leverage: EBITDA of ¥1.63bn versus EBIT of -¥31m indicates high fixed-cost absorption issues; small revenue declines (-6.9% YoY) swung EBIT negative despite positive EBITDA, suggesting elevated fixed cost base. A recovery in volumes or mix could restore operating margin given the EBITDA cushion, but current operating leverage is unfavorable.

Growth Assessment

revenue_sustainability: Revenue fell 6.9% YoY to ¥34.09bn, pointing to demand softness or mix/price pressure. Without segment data, sustainability is uncertain; automotive-related cycles and housing-related demand typically drive the company’s sales. profit_quality: Net income growth (+35.7% YoY to ¥431m) is not underpinned by core operations given an operating loss and reliance on non-operating and extraordinary items. Cash earnings (EBITDA) remain positive, but margin compression and negative EBIT weaken the quality of profits. outlook: Short-term outlook hinges on restoring operating margin via cost control and volume stabilization. Sustained non-operating/extraordinary supports should not be assumed; normalization could pressure net income unless operating performance improves. Monitoring order trends, capacity utilization, and input cost pass-through will be critical.

Financial Health

liquidity: Current ratio 156.3%, quick ratio 145.9%, and working capital of ¥13.98bn indicate strong short-term liquidity. OCF of ¥2.93bn further supports near-term funding needs. solvency: Debt-to-equity 0.88x and financial leverage 1.94x suggest moderate balance-sheet risk. EBIT interest coverage is weak (-0.2x), but EBITDA coverage is much healthier (~9.6x using EBITDA/interest expense = ¥1,630m/¥169m), implying manageable debt service if operating performance stabilizes. capital_structure: Total assets ¥68.95bn, equity ¥35.61bn. The equity ratio is unreported in the dataset; using assets/equity implies ~51.7% equity on a book basis, consistent with moderate leverage.

Cash Flow Quality

earnings_quality: OCF/Net income is 6.80x (¥2.93bn/¥431m), indicating strong cash conversion from earnings, likely driven by working capital inflows and non-cash charges (D&A ¥1.66bn). Given net income uplift from non-operating/extraordinary items, the cash flow outperformance is encouraging but should be reconciled to WC movements. FCF_analysis: Free cash flow is unreported due to missing investing cash flow. Therefore, FCF coverage and long-term reinvestment capacity cannot be reliably assessed from the provided data. working_capital: Positive OCF suggests favorable WC dynamics; with inventories reported at ¥2.58bn relative to revenue, inventory appears lean, although classification differences may apply. Monitoring receivables and payables turnover is recommended to confirm sustainability of WC-driven OCF.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is reported as ¥0.00 and payout ratio 0.0%. This may reflect timing or policy choices rather than capacity constraints, as net income was ¥431m and OCF was ¥2.93bn. FCF_coverage: FCF coverage cannot be evaluated because investing cash flow is unreported; no conclusion can be drawn on dividends versus true free cash generation. policy_outlook: Given reliance on non-operating/extraordinary items for net income and the current operating loss, a conservative dividend stance is plausible until core operating margins recover. Visibility on capex needs (investing CF) will be a key determinant of future distributions.

Risk Assessment

Business Risks:

• End-market cyclicality in automotive and housing hardware impacting volume and pricing.
• Input cost volatility (metals, components) and pass-through risk affecting gross margins.
• Customer concentration in OEM channels potentially amplifying demand swings.
• FX exposure affecting both revenue and non-operating items.
• Competitive pricing pressure compressing margins amid weaker demand.

Financial Risks:

• Negative EBIT and weak EBIT-based interest coverage (-0.2x) if operating conditions do not improve.
• Dependence on non-operating and extraordinary gains to support net income, which may not recur.
• Potential working-capital reversal risk after a strong OCF period.
• Moderate leverage (D/E 0.88x) could constrain flexibility if profitability deteriorates.

Key Concerns:

• Sustainability of non-operating and extraordinary gains that lifted ordinary and net income.
• Operating margin recovery path given revenue decline and high fixed-cost absorption.
• Limited visibility on capex and FCF due to unreported investing cash flows.

Investment Implications

Key Takeaways:

• Core operations under pressure: revenue -6.9% YoY and operating loss of ¥31m with gross margin at 14.4%.
• Net income growth (+35.7% YoY to ¥431m) driven by non-operating/extraordinary factors; earnings quality mixed.
• Cash generation strong (OCF ¥2.93bn; OCF/NI 6.8x), supporting liquidity despite EBIT weakness.
• Balance sheet moderate (D/E 0.88x; leverage 1.94x) with solid short-term liquidity (current ratio 156%).
• Visibility on FCF and capital intensity limited due to unreported investing CF.

Metrics to Watch:

• Operating margin and SG&A efficiency; bridge from EBITDA to EBIT.
• Non-operating income and extraordinary items; sustainability and recurrence.
• OCF drivers, especially receivables, payables, and inventory turnover.
• Capex and investing cash flows to assess true FCF and dividend capacity.
• Interest coverage on both EBIT and EBITDA bases and any changes in borrowing costs.

Relative Positioning: Within Japanese auto parts/hardware peers, Alpha currently exhibits below-peer operating profitability (negative EBIT, low net margin) but relatively solid liquidity and moderate leverage; recovery in core margins is needed to align with sector norms.

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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