SANKO TECHNO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥10.27B
• Operating Income: ¥746M
• Net Income: ¥614M
• EPS: ¥70.94

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

Sankotekuno Co., Ltd. (TSE:34350) reported FY2026 Q2 (cumulative) consolidated results showing modest top-line growth with some pressure further down the P&L. Revenue rose 2.0% YoY to ¥10.274bn, while operating income increased 0.5% YoY to ¥746m, implying slight operating margin compression versus sales growth. Net income declined 7.7% YoY to ¥561m, suggesting a heavier drag below operating level, despite minimal interest burden. Gross profit was ¥3.019bn, equating to a 29.4% gross margin, which remains solid for a materials/industrial fastener profile but implies some input cost or mix headwinds versus operating growth. Operating margin stands at 7.3% (¥746m/¥10.274bn), and ordinary income of ¥825m indicates positive non-operating contributions (net of ¥5.6m interest), likely from financial income or other non-operating gains. The DuPont framework points to a net margin of 5.46%, asset turnover of 0.392x, and financial leverage of 1.39x, leading to a calculated ROE of 2.97% for the period. This implies an ROA of roughly 2.1% and a conservative balance sheet posture supporting moderate ROE. Liquidity is very strong: the current ratio is 478.5% and the quick ratio 284.2%, underpinned by ¥12.48bn in working capital. Leverage appears modest with a debt-to-equity ratio of 0.41x and low interest expense, yielding an interest coverage of 132.6x. Operating cash flow of ¥820m exceeded net income (OCF/NI = 1.46x), indicating quality of earnings with favorable non-cash items or working capital contribution in the half. Free cash flow and investing cash flow are not disclosed (shown as zero, which should be treated as unreported), limiting the assessment of capital intensity and reinvestment. Reported “Effective Tax Rate: 0.0%” is also a non-disclosure artifact; using disclosed tax expense and net income implies an approximate tax rate near the high-20s percent. Equity ratio is shown as 0.0% but should be treated as unreported; the balance sheet composition (equity of ¥18.9bn vs assets of ¥26.2bn) indicates a high true equity ratio. Dividend per share and share data are also undisclosed in this dataset; EPS is provided at ¥70.94, enabling some per-share profitability context but not payout analysis. Overall, the business delivered resilient operating performance amid a softer bottom line, backed by robust liquidity and conservative leverage. Inventory remains a significant portion of current assets, consistent with the company’s product and channel profile, and will be a key determinant of cash conversion. The outlook hinges on construction and infrastructure demand trends, raw material cost dynamics, and the company’s ability to maintain price discipline. Near term, margin stability and working capital normalization will drive cash flow. Data gaps (investing CF, dividends, share count, equity ratio) constrain certain analyses, but available figures indicate healthy fundamentals with conservative financial risk.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.46%
• asset_turnover: 0.392x
• financial_leverage: 1.39x
• calculated_ROE: 2.97%
• implied_ROA: ≈2.14% margin_quality:
• gross_margin: 29.4% (GP ¥3,019m on sales ¥10,274m)
• operating_margin: 7.3% (OP ¥746m)
• ordinary_income_margin: 8.0% (OI ¥825m)
• net_margin: 5.46% (NI ¥561m)
• commentary: Gross margin is solid for the category; however, operating income grew only 0.5% against 2.0% sales growth, indicating minor cost/mix pressure or elevated SG&A. Non-operating items were a net positive (ordinary > operating), offsetting interest expense. operating_leverage: Revenue +2.0% YoY vs operating income +0.5% YoY suggests limited operating leverage this half and some fixed cost absorption or mix headwinds. SG&A (≈¥2,273m) equates to ~22.1% of sales, a meaningful cost base to manage for leverage gains.

Growth Assessment

revenue_sustainability: Top-line growth of +2.0% YoY indicates steady demand, likely supported by infrastructure and construction end-markets; pricing discipline and product mix will be key to sustaining growth amid macro variability. profit_quality: Operating income outpaced gross profit growth modestly but lagged sales growth, implying slight margin pressure. Net income declined 7.7% YoY, reflecting pressures below operating line and/or tax/other items. Interest burden is negligible. outlook: Near-term growth likely tracks domestic construction trends and public works cadence; cost normalization of steel and logistics may stabilize margins. Focus areas: price pass-through efficacy, product mix (higher-value anchors/systems), and inventory positioning to support service levels without bloating working capital.

Financial Health

liquidity:

• current_ratio: 478.5%
• quick_ratio: 284.2%
• working_capital: ¥12,478m
• commentary: Very strong short-term liquidity, supported by significant current assets and relatively low current liabilities. solvency_capital_structure:
• total_assets: ¥26,224m
• total_liabilities: ¥7,809m
• total_equity: ¥18,901m
• debt_to_equity: 0.41x
• equity_ratio_note: Reported 0.0% is an undisclosed metric; the balance sheet composition implies a high actual equity ratio.
• interest_coverage: 132.6x (very strong)
• commentary: Conservative leverage with ample equity buffer; low interest expense mitigates financial risk.

Cash Flow Quality

earnings_quality: OCF/NI at 1.46x (¥820m/¥561m) signals healthy cash conversion for the half, benefiting from non-cash items (D&A ¥190m) and/or working capital movements. free_cash_flow_analysis: Free cash flow is not computable due to undisclosed investing cash flow (shown as 0, treated as unreported). As such, FCF coverage of dividends cannot be assessed from this dataset. working_capital: Inventories are ¥6,406m within current assets of ¥15,775m, highlighting the inventory-intensive nature of the model. Inventory management and demand visibility will drive OCF volatility.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥70.94, but DPS and payout ratio are undisclosed (reported 0.00 is an unreported placeholder). Therefore, payout sustainability cannot be quantified from the provided data. FCF_coverage: Not assessable given unreported investing CF and FCF. policy_outlook: With strong liquidity and low leverage, capacity for ordinary distributions appears sound in principle; actual policy depends on undisclosed board decisions, capex needs, and growth investments.

Risk Assessment

Business Risks:

• Exposure to domestic construction and infrastructure cycles affecting demand for anchors/fastening systems.
• Raw material price volatility (e.g., steel) impacting gross margins and pricing needs.
• Inventory risk (obsolescence/overstock) given high inventory balances relative to current assets.
• Competitive pricing pressure in commoditized product lines.
• Project timing risk in public works and private construction leading to revenue lumpiness.

Financial Risks:

• Working capital swings impacting operating cash flow.
• Potential increase in interest rates from low base could modestly raise financing costs (though absolute exposure appears small).
• FX risk if sourcing or overseas sales are material (not disclosed here).
• Tax rate variability; calculated metrics in the dataset understate effective tax burden due to non-disclosure.

Key Concerns:

• Net income decline (-7.7% YoY) despite positive sales growth.
• Limited operating leverage in the period (OP +0.5% vs sales +2.0%).
• Data gaps (investing CF, dividends, equity ratio, share counts) constrain full valuation and payout analysis.

Investment Implications

Key Takeaways:

• Resilient operations with modest top-line growth and stable operating profit, but weaker bottom line.
• Strong liquidity and conservative leverage reduce financial risk.
• Cash conversion is solid this half (OCF/NI 1.46x), supporting balance sheet strength.
• Non-operating items are a net positive; interest burden is negligible.
• Inventory levels are a critical lever for cash flow and service levels.

Metrics to Watch:

• Gross and operating margins (price pass-through and cost normalization).
• Inventory turnover and working capital days (DSI, DSO, DPO when disclosed).
• Order trends in construction/infrastructure end-markets.
• Investing cash flow and capex to gauge reinvestment needs and FCF.
• Dividend policy disclosures (DPS, payout) and any buyback activity.

Relative Positioning: Within Japanese industrial materials/fasteners peers, the company exhibits strong liquidity and low leverage, with mid-to-high 20s gross margins and mid-single-digit net margins; ROE is modest, consistent with a conservative balance sheet profile.

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