MIE Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.43B
• Operating Income: ¥284M
• Net Income: ¥177M
• EPS: ¥149.02

Income Statement

Balance Sheet

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

MIE Corporation (34420) reported FY2026 Q2 consolidated JGAAP results showing resilient profitability amid slightly lower top-line revenue. Revenue declined marginally by 0.8% YoY to ¥3,434 million, while operating income rose 4.9% YoY to ¥284 million, indicating effective cost control and operating discipline. Gross profit was ¥721 million, translating to a gross margin of 21.0%, which supported an operating margin of 8.3%. Ordinary income came in at ¥261 million, and net income was ¥179 million, up 2.1% YoY, yielding a net margin of 5.21%. DuPont analysis indicates ROE of 5.95%, driven by a 5.21% net margin, asset turnover of 0.423x, and financial leverage of 2.70x. The implied ROA is approximately 2.2% (net income/total assets), signaling moderate profitability for an industrial-type business. Interest coverage is comfortable at ~14.9x (operating income/interest expense), reflecting manageable financial risk despite a debt-to-equity ratio of 1.79x. Liquidity remains adequate with a current ratio of 1.43x and a quick ratio near 1.00x, supported by inventories of ¥1,575 million (about 30% of current assets). The calculated effective tax rate based on disclosed tax expense and implied pre-tax income is approximately 29.6%, broadly in line with Japan’s statutory range; the reported “0.0%” tax rate appears to reflect non-disclosure rather than economics. Cash flow figures (OCF, FCF) are not disclosed in the XBRL for this period, limiting assessment of earnings-to-cash conversion; however, working capital is positive at ¥1,575 million. Equity is ¥3,008 million against total assets of ¥8,126 million, implying an equity ratio of roughly 37% despite an undetailed reported figure. EPS is ¥149.02, though share count and book value per share were not disclosed in the data extract. No dividends are reported for the period; payout and FCF coverage metrics are therefore not observable. Overall, the quarter reflects stable operations with mild top-line softness offset by cost efficiency, moderate leverage, and adequate liquidity. Data gaps around cash flows and depreciation limit depth of cash conversion and capital intensity analysis, so conclusions should be read with these constraints in mind.

Profitability Analysis

ROE of 5.95% decomposes into a net margin of 5.21%, asset turnover of 0.423x, and financial leverage of 2.70x. Operating margin is 8.27% (¥284m/¥3,434m), supported by a gross margin of 21.0%, indicating reasonable value-add after materials and direct costs. The spread between operating margin (8.3%) and net margin (5.2%) reflects interest and taxes; the interest burden appears manageable given a coverage ratio of ~14.9x. Estimated tax burden (NI/pre-tax) is ~70.4%, consistent with a ~29.6% effective tax rate. The YoY divergence—revenue -0.8% versus operating income +4.9%—suggests positive operating leverage and/or effective cost containment. Ordinary margin is ~7.6% (¥261m/¥3,434m), implying limited non-operating drag. EBITDA is not computable due to undisclosed depreciation; in the absence of D&A data, operating income serves as a proxy for operating cash earnings, but this likely understates true EBITDA for a manufacturing business. Asset turnover at 0.42x indicates a capital-intensive profile, typical of industrials, which caps ROE unless margins expand or turnover improves. Overall profitability is stable to slightly improving, with cost controls offsetting modest top-line pressure.

Growth Assessment

Revenue contracted slightly by 0.8% YoY, signaling a softer demand environment or pricing pressure. Despite the decline, operating income grew 4.9% YoY, indicating that the company is extracting efficiencies in COGS or SG&A. Net income rose 2.1% YoY, showing that below-the-line items (interest/taxes) remained controlled. The sustainability of growth hinges on demand stabilization and the ability to maintain gross margin at ~21% amid input cost variability. With asset turnover at 0.423x, meaningful growth in ROE would require either improving turnover (e.g., better inventory turns, receivables management) or further margin enhancement. Lack of cash flow data limits assessment of whether growth is supported by internal cash generation versus working capital releases. No guidance is provided in the dataset; near-term outlook appears to be steady-state with an emphasis on efficiency gains rather than top-line expansion. If the firm can maintain operating discipline, modest profit growth could be sustained even on flat revenues. However, any further revenue softness would test operating leverage and potentially compress margins. Mix, pricing power, and order backlog (not disclosed) will be key determinants of growth visibility.

Financial Health

Liquidity is adequate: current ratio 1.43x and quick ratio ~1.00x indicate the company can meet near-term obligations without relying on inventory liquidation. Working capital stands at ¥1,575 million, providing a buffer for operations. Solvency is moderate: debt-to-equity is 1.79x, while the implied equity ratio is about 37% (¥3,008m/¥8,126m). Interest coverage is strong at ~14.9x, suggesting comfortable debt service capacity at current earnings levels. Total liabilities of ¥5,387 million versus total assets of ¥8,126 million reflect a balanced capital structure leaning toward debt but not excessive given coverage. Inventory represents ~30% of current assets, typical for industrials; inventory quality and turnover are not disclosed, which tempers confidence. Absence of disclosed cash and equivalents in the extract prevents precise net debt analysis. Overall, the balance sheet appears sound, with manageable leverage and sufficient liquidity.

Cash Flow Quality

Operating cash flow, investing cash flow, and financing cash flow are not disclosed in this period’s dataset, so OCF/NI and FCF metrics reported as zero should be treated as unavailable rather than economic zeros. Earnings quality therefore cannot be validated via cash conversion this quarter. Depreciation and amortization are also undisclosed, limiting the ability to separate cash and non-cash components of operating profit and to assess maintenance capex needs. Working capital is positive (¥1,575 million), and with inventories at ¥1,575 million, cash conversion will depend on inventory and receivables turns, neither of which is available. Interest paid (¥19.1 million) is modest relative to operating income, and tax expense (¥75.3 million) aligns with a normal effective rate, suggesting no unusual tax-driven accruals. In the absence of OCF/FCF data, a prudent interpretation is that earnings are credible but need confirmation from future cash flow disclosures. Monitoring subsequent quarters for OCF relative to net income will be important to validate accrual quality.

Dividend Sustainability

No annual DPS is disclosed for the period, and the payout ratio/FCF coverage metrics shown as zero reflect non-disclosure. With EPS of ¥149.02 and net income of ¥179 million, there is theoretical capacity to fund dividends, but policy and historical payouts are not available here. Without OCF and capex data, free cash flow coverage cannot be assessed. Capital structure (D/E 1.79x) and healthy interest coverage (~14.9x) suggest room for shareholder returns if policy permits, but leverage and potential capex needs (unknown due to missing D&A/CFI) should be considered constraints. Until dividend policy and cash flow are disclosed, dividend sustainability and trajectory remain indeterminate.

Risk Assessment

Business Risks:

• Top-line softness (-0.8% YoY) could persist if end-market demand weakens further.
• Gross margin sensitivity to input costs and pricing power in a competitive industrial market.
• Dependence on inventory management; potential inventory obsolescence risk given inventories are ~30% of current assets.
• Operating leverage: cost discipline aided profits this quarter, but negative volume shocks could reverse the trend.
• Customer concentration or cyclicality risks typical of industrial/manufacturing (not disclosed but common sector characteristics).

Financial Risks:

• Moderate leverage (D/E 1.79x) increases sensitivity to earnings volatility.
• Cash flow visibility is limited due to non-disclosure of OCF/FCF, constraining assessment of debt service resilience through cycles.
• Potential capex requirements not observable without D&A/CFI, which could pressure free cash flow.
• Refinancing risk cannot be assessed without debt maturity profile and cash balance disclosure.

Key Concerns:

• Absence of cash flow data (OCF/FCF) and depreciation obscures earnings quality and capital intensity.
• Slight revenue decline may signal demand or pricing pressure; sustainability of margin resilience is untested.
• Inventory reliance requires close monitoring of turns and working capital efficiency.
• Dividend policy undisclosed; capital allocation priorities are unclear.

Investment Implications

Key Takeaways:

• Resilient profitability: operating income +4.9% YoY despite revenue -0.8% YoY.
• ROE at 5.95% reflects moderate margins and turnover, supported by leverage of 2.70x.
• Liquidity is adequate (current ratio 1.43x; quick ratio ~1.00x) with working capital of ¥1,575 million.
• Interest coverage is strong (~14.9x), mitigating solvency concerns at current earnings.
• Cash flow and D&A not disclosed; validation of earnings-to-cash conversion is pending.
• Net margin of 5.21% and operating margin of 8.3% indicate solid cost control.
• Equity ratio implied at ~37% despite the reported field being undetailed.

Metrics to Watch:

• OCF to net income conversion and free cash flow once disclosed.
• Gross and operating margin trajectory amid input cost and demand changes.
• Asset turnover and inventory turns to gauge working capital efficiency.
• Leverage (D/E) and interest coverage as rates and credit conditions evolve.
• Order backlog/book-to-bill (if disclosed) for demand visibility.
• Capex levels and D&A to assess maintenance vs. growth spend.
• Dividend policy disclosures and payout intentions.

Relative Positioning: Against typical Japanese industrial small/mid caps, MIE shows stable margins, moderate leverage, and adequate liquidity, but trails firms with higher asset turnover and clearer cash flow disclosure; its ROE is solid but not high, with upside dependent on cash conversion, turnover improvements, and sustained margin discipline.

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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