Mullion Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥3.25B
• Operating Income: ¥874M
• Net Income: ¥459M
• EPS: ¥58.63

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

For FY2025 Q4 (JGAAP, non-consolidated), Marion delivered solid top- and bottom-line growth with revenue of ¥3,254m (+13.1% YoY) and net income of ¥459m (+34.3% YoY). Operating income rose to ¥874m (+25.8% YoY), indicating positive operating leverage as profit growth outpaced sales. Reported gross profit of ¥1,185m implies a gross margin of 36.4%, while EBITDA of ¥1,111m yields a healthy 34.1% margin, underscoring robust underlying profitability for an asset-intensive model. The DuPont breakdown shows ROE of 9.63%, driven by a 14.11% net margin, modest asset turnover of 0.173x, and high financial leverage of 3.94x. Cash generation was strong: operating cash flow (OCF) of ¥1,595m was 3.47x net income, and free cash flow (FCF) was approximately ¥800m after ¥795m of net investing outflows. Liquidity appears comfortable with a current ratio of 196% and working capital of ¥1,604m, supported by strong OCF. The balance sheet is highly leveraged (liabilities/equity 3.04x), but interest coverage of 7.7x (EBIT basis) suggests manageable debt service at current earnings levels. Using ordinary income as a proxy for pre-tax profit, the effective tax rate is about 27% (¥179.5m/¥665m), which aligns with standard corporate tax levels in Japan. Equity represents roughly 25.4% of total assets (¥4,768m/¥18,797m), though the provided equity ratio line shows 0.0%, which likely reflects a disclosure limitation rather than economic reality. Some line-item inconsistencies exist (e.g., reported cost of sales versus gross profit), so we rely on internally consistent figures (margins, EBITDA, and DuPont metrics) for analysis. No dividend was disclosed for the period (DPS ¥0), and payout ratio is reported at 0%, implying full retention of earnings despite ample FCF. Given the asset-heavy balance sheet and recurring interest expense, sustaining the current profitability and OCF is key to maintaining solvency and funding reinvestment. The growth profile appears supported by operating efficiency gains and disciplined cost control, enhancing return generation even with low asset turnover. Overall, Marion exhibits improving profitability, strong cash conversion, adequate liquidity, and elevated but serviceable leverage, with the main sensitivities tied to funding costs, asset utilization, and visibility of future investment cash flows. Data gaps (e.g., cash balance, shares outstanding, and some line items) limit full ratio coverage, but available non-zero disclosures support a constructive view of earnings quality in this period.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 14.11% (NI ¥459m / Revenue ¥3,254m)
• asset_turnover: 0.173x (Revenue ¥3,254m / Assets ¥18,797m)
• financial_leverage: 3.94x (Assets ¥18,797m / Equity ¥4,768m)
• calculated_ROE: 9.63% (matches reported) margin_quality:
• gross_margin: 36.4% (implied by reported gross profit ¥1,185m; note COGS line appears inconsistent)
• ebitda_margin: 34.1% (EBITDA ¥1,111m / Revenue ¥3,254m)
• operating_margin: 26.9% (Operating income ¥874m / Revenue ¥3,254m)
• net_margin: 14.11% (Net income ¥459m / Revenue ¥3,254m)
• commentary: Margins expanded alongside sales, indicating positive operating leverage and effective cost control. EBITDA-to-Operating gap reflects moderate non-cash D&A (¥237m), consistent with an asset-intensive model. operating_leverage: Operating income growth (+25.8% YoY) exceeded revenue growth (+13.1% YoY), evidencing operating leverage. Fixed-cost absorption likely improved, and SG&A discipline supported margin gains.

Growth Assessment

revenue_sustainability: Sales increased 13.1% YoY to ¥3,254m. Sustainability will depend on asset utilization and pipeline of revenue-generating assets/projects given low asset turnover (0.173x). profit_quality: Earnings quality appears strong: OCF/NI at 3.47x, EBITDA margin 34.1%, and interest coverage 7.7x. Net margin of 14.1% benefits from cost control and manageable finance costs. outlook: With high leverage and low turnover, incremental growth hinges on maintaining occupancy/fee generation, pricing, and capital deployment. Interest-rate sensitivity and investment pacing will influence forward growth and profitability.

Financial Health

liquidity:

• current_ratio: 196.1% (CA ¥3,274m / CL ¥1,670m)
• quick_ratio: 196.1% (no inventories reported; zero values may reflect non-disclosure)
• working_capital: ¥1,604m
• commentary: Short-term liquidity is comfortable and supported by strong OCF. solvency_capital_structure:
• total_assets: ¥18,797m
• total_liabilities: ¥14,492m
• total_equity: ¥4,768m
• equity_ratio_estimate: 25.4% (Equity/Assets), noting the provided 0.0% equity ratio appears to be a disclosure placeholder.
• debt_to_equity: 3.04x (Liabilities/Equity)
• interest_coverage: 7.7x (EBIT/Interest expense; ¥874m/¥113m)
• commentary: Leverage is elevated but interest coverage is adequate at current earnings. Balance-sheet resilience depends on sustaining EBITDA and access to refinancing.

Cash Flow Quality

earnings_quality: Strong; OCF of ¥1,595m is 3.47x net income, indicating robust cash conversion and limited accrual risk in this period. fcf_analysis: FCF ≈ ¥800m (OCF ¥1,595m + Investing CF -¥795m). Investing outflows signal ongoing reinvestment/capex or asset acquisitions consistent with the asset-heavy model. working_capital: Positive contribution implied by strong OCF relative to NI. Specific line items are not disclosed, but liquidity metrics suggest no near-term strain.

Dividend Sustainability

payout_ratio_assessment: No dividend disclosed (DPS ¥0; payout ratio 0%). With NI of ¥459m and FCF of ~¥800m, capacity exists, but policy appears to prioritize retention. fcf_coverage: Not applicable this period given no dividend. Hypothetically, FCF coverage would be ample if distributions were initiated. policy_outlook: Given leverage (D/E 3.04x) and ongoing investment needs, the company may continue to favor reinvestment and balance-sheet management over cash distributions in the near term, barring a clear shift in capital allocation policy.

Risk Assessment

Business Risks:

• Dependence on asset utilization and low asset turnover (0.173x) to drive revenue.
• Sensitivity to market demand/occupancy or transaction volumes in an asset-intensive model.
• Execution risk on investment pipeline and timing of asset acquisitions/disposals.
• Cost inflation risks affecting operating margins despite recent leverage.

Financial Risks:

• High leverage (Liabilities/Equity 3.04x) increases sensitivity to earnings volatility.
• Interest-rate exposure given interest expense of ¥113m and reliance on debt funding.
• Refinancing risk if credit conditions tighten.
• Potential cash flow volatility if working capital reverses.

Key Concerns:

• Maintaining interest coverage above comfortable thresholds if rates rise or EBITDA softens.
• Sustaining OCF strength to fund investing needs without increased leverage.
• Data gaps (cash balance, share count, inventory detail) limit precision of certain ratios and per-share analyses.

Investment Implications

Key Takeaways:

• Profitability improved meaningfully: operating income +25.8% on revenue +13.1%, with EBITDA margin at 34.1%.
• ROE of 9.63% is supported by strong net margin but muted by low asset turnover; leverage is a significant ROE driver.
• Cash generation is strong (OCF/NI 3.47x; FCF ~¥800m), enhancing financial flexibility.
• Balance sheet remains highly leveraged (D/E 3.04x), but interest coverage of 7.7x is adequate.
• Liquidity is solid (current ratio ~196%), reducing near-term funding risk.

Metrics to Watch:

• Asset turnover and occupancy/utilization metrics driving revenue efficiency.
• Interest coverage and average borrowing cost as rates evolve.
• OCF sustainability and working-capital movements.
• Scale and returns of investing cash flows (capex/asset acquisitions) versus FCF.
• Equity ratio and net debt trajectory.

Relative Positioning: Within Japan’s asset-intensive small-cap cohort, Marion exhibits above-average cash conversion and operating margins, offset by higher leverage and low asset turnover. Its profile is that of a disciplined operator with improving efficiency but elevated balance-sheet risk.

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