GAtechnologies Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥248.95B
• Operating Income: ¥7.09B
• Net Income: ¥4.02B
• EPS: ¥97.80

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

Verdict: A strong FY2025 Q4 finish with robust top-line growth translating into outsized operating and net profit gains, underpinned by very high cash conversion. Revenue rose 31.1% YoY to 2,489.47, while operating income surged 92.1% to 70.95 and net income climbed 128.6% to 38.90, indicating meaningful operating leverage. Gross profit reached 421.63 with a gross margin of 16.9%, and SG&A was 348.65, implying an SG&A ratio of about 14.0% of sales. Operating margin improved to roughly 2.85% (70.95/2,489.47), with the growth differential versus revenue implying margin expansion. Based on reported growth rates, we estimate operating margin expanded by about 90 bps YoY (from ~1.94% to ~2.85%), though exact prior-year margins are not disclosed. Net margin improved to approximately 1.56% (38.90/2,489.47), an estimated expansion of roughly 66 bps YoY. EBITDA was 130.56 (EBITDA margin 5.2%), supported by depreciation and amortization of 59.61, suggesting low current capital intensity. Earnings quality is strong: operating cash flow of 159.35 was 4.10x net income, and free cash flow of 122.98 comfortably covered modest capex of 3.00. The equity ratio stands at 37.4% and calculated ROE is 12.4% (vs a reported 0.1% that likely reflects definitional/XBRL differences), with DuPont components of 1.6% net margin, 3.022x asset turnover, and 2.62x leverage. Leverage (D/E 1.62x) is slightly above a conservative benchmark but appears manageable given cash generation and cash & equivalents of 303.65. Liquidity ratios cannot be computed due to unreported current liabilities, but current assets are 487.99 and inventories are 116.82, highlighting working capital intensity. Tax burden remains notable with a 35.0% effective tax rate. Dividend information is unreported; DOE is 0.0% and payout (reported) is 0.1%, suggesting minimal or undisclosed distributions. Forward-looking, the combination of sales growth, operating leverage, and strong OCF supports reinvestment capacity and potential future shareholder returns, but inventory-heavy operations and leverage call for continued discipline. Overall, the quarter demonstrates improving profitability and very high cash flow quality with moderate balance sheet risk.

Profitability Analysis

ROE decomposition: ROE ≈ Net Profit Margin × Asset Turnover × Financial Leverage = 1.6% × 3.022 × 2.62 ≈ 12.4%, consistent with the calculated figure. The largest driver of improvement YoY appears to be margin expansion, as operating income grew 92.1% versus revenue up 31.1%, indicating positive operating leverage. Business drivers likely include improved gross-to-SG&A spread (gross margin 16.9% vs SG&A ratio 14.0%) and better scale efficiencies in selling/general expenses. This improvement seems partially sustainable if topline growth persists and mix/pricing hold, though the low absolute operating margin (~2.85%) suggests sensitivity to volume and mix. Estimated operating margin expansion of ~90 bps and net margin expansion of ~66 bps indicate efficiency gains; however, we lack granularity on non-operating items and SG&A components, limiting attribution. Asset turnover is high at 3.022x, reflecting rapid revenue generation on the asset base, but likely aided by inventory turns in a transaction-driven model; sustainability depends on market conditions and execution. Financial leverage at 2.62x assets/equity supports ROE but introduces balance sheet sensitivity if operating conditions tighten. Watch for SG&A growth outpacing revenue in subsequent periods; in this period, revenue growth outstrips implied SG&A growth, suggesting favorable operating leverage. Effective tax rate at 35.0% dampens net margin, and any normalization could further support ROE.

Growth Assessment

Revenue growth of 31.1% YoY to 2,489.47 reflects strong demand and scale. Operating income up 92.1% to 70.95 signals improved efficiency and operating leverage. Net income up 128.6% to 38.90 shows additional tailwinds from below-EBIT line and/or tax/efficiency, though non-operating details are undisclosed. Gross margin at 16.9% and EBITDA margin at 5.2% suggest a low-margin, high-throughput model benefiting from scale. Sustainability hinges on continued transaction volumes and inventory turnover; inventories of 116.82 indicate ongoing working capital deployment. With OCF of 159.35 and minimal capex of 3.00, internal funding for growth is ample. Absent R&D disclosure, growth appears more execution- and market-driven than technology investment-led. Outlook: if macro conditions remain supportive for transactions and management maintains cost discipline, mid-term growth with incremental margin expansion is plausible, but growth is sensitive to market cycles and funding conditions.

Financial Health

Total assets are 823.70 and total equity is 314.53, yielding an equity ratio of 37.4% and leverage of 2.62x. Debt-to-equity is reported at 1.62x, modestly above a conservative 1.5x benchmark—monitor leverage and refinancing risk. Current ratio and quick ratio are not calculable due to unreported current liabilities and cash, limiting liquidity assessment; no explicit warning on Current Ratio < 1.0 can be made. Cash & equivalents of 303.65 provide a sizable liquidity buffer relative to accounts payable of 54.34 and inventories of 116.82. Maturity mismatch risk cannot be fully assessed without short-term debt data; however, high cash and positive OCF help mitigate near-term risks. No off-balance sheet obligations are disclosed in the provided data. Capital structure appears balanced for growth but somewhat sensitive to market shocks given D/E and inventory reliance.

Cash Flow Quality

OCF of 159.35 is 4.10x net income of 38.90, indicating high earnings quality. Free cash flow was 122.98 after modest capex of 3.00, leaving ample capacity for debt service and potential distributions. The divergence of OCF over NI is positive and may reflect healthy working capital inflows; however, without itemized working capital movements, we cannot attribute drivers (e.g., inventory reductions, faster receivable collection, or higher payables). With EBITDA at 130.56 and D&A at 59.61, cash generation is strong relative to accounting earnings. No signs of aggressive working capital manipulation are evident from the summary; nonetheless, sustained OCF/NI > 1.0 should be monitored across periods to confirm durability. Financing CF of -13.51 suggests modest net repayments or limited distributions, consistent with balance sheet prudence.

Dividend Sustainability

Dividend data are unreported; DOE is 0.0% and the reported payout ratio is 0.1%, implying minimal or undisclosed dividends. Based on fundamentals, FCF of 122.98 comfortably exceeds net income of 38.90 and capex needs of 3.00, indicating strong capacity to fund dividends if pursued. Without explicit dividend amounts and policy guidance, payout sustainability cannot be quantitatively confirmed. Given leverage at 1.62x D/E and a 37.4% equity ratio, any future dividend policy should balance distributions with maintaining liquidity and funding growth. Coverage from FCF appears ample for a moderate payout under current conditions.

Risk Assessment

Business Risks:

• Cyclicality in transaction volumes affecting revenue and margins
• Inventory valuation and turnover risk (inventories 116.82) impacting gross margin and cash flow
• Pricing/mix pressure in a low-margin model (operating margin ~2.85%)
• Regulatory and compliance risks affecting real estate/transaction processes under IFRS revenue recognition timing
• Potential tax burden persistence (effective tax rate 35.0%)

Financial Risks:

• Leverage sensitivity with D/E at 1.62x above conservative benchmark
• Liquidity assessment constrained by unreported current liabilities and interest-bearing debt details
• Refinancing and interest rate risk if short-term debt is material (unreported)
• Working capital intensity and potential cash tie-up in inventories

Key Concerns:

• Limited disclosure on non-operating items, interest expense, and current liabilities obscures full earnings quality and liquidity assessment
• Low absolute margin structure increases vulnerability to volume/mix shocks
• Discrepancy between calculated ROE (12.4%) and reported ROE (0.1%) suggests definitional/XBRL differences that complicate peers comparison

Investment Implications

Key Takeaways:

• Strong topline growth (+31.1%) translated into outsized operating (+92.1%) and net income (+128.6%) gains
• Operating margin improved to ~2.85%, with estimated ~90 bps YoY expansion
• Cash conversion is excellent: OCF/NI at 4.10x and FCF at 122.98
• Balance sheet is moderately leveraged (D/E 1.62x) with an equity ratio of 37.4% and cash of 303.65
• High asset turnover (3.022x) supports a calculated ROE of 12.4%
• Dividend capacity appears strong given FCF, but policy/disclosures are limited

Metrics to Watch:

• Operating margin trajectory and SG&A ratio discipline
• Inventory turnover and level (116.82) relative to sales
• OCF/Net Income and working capital movements
• Debt-to-equity and any changes in interest-bearing debt and interest coverage
• Effective tax rate normalization
• Cash balance versus near-term obligations (once current liabilities are disclosed)

Relative Positioning: Within transaction- and inventory-intensive business models, the company demonstrates superior cash generation and high asset turnover with moderate leverage; however, absolute margins are thin, leaving profitability sensitive to market cycles and execution.

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