Aplix Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥2.20B
• Operating Income: ¥155M
• Net Income: ¥103M
• EPS: ¥4.78

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

Aplix Corporation (37270) reported FY2025 Q3 (IFRS, consolidated) results showing a contraction in top line but improved operating profitability. Revenue was 22.01 (100M JPY), down 22.0% YoY, indicating softer demand or delayed project timing. Despite the revenue decline, the company generated operating income of 1.55 (100M JPY), translating to an estimated operating margin of about 7.0%, supported by a healthy gross profit of 7.61 (100M JPY) and a gross margin of 34.6%. SG&A was 6.07 (100M JPY), or 27.6% of sales, suggesting reasonable cost discipline relative to gross profit. Net income was 1.03 (100M JPY), down 16.8% YoY, with a net margin of 4.7% and an effective tax rate of roughly 20.8%. Profit before tax of 1.23 (100M JPY) vs operating income of 1.55 indicates net non-operating expense of about 0.32 (100M JPY). DuPont analysis yields ROE of 3.9% (net margin 4.7%, asset turnover 0.588x, financial leverage 1.43x), broadly consistent with the reported ROE. Asset turnover is modest and leverage conservative, placing the onus on margin improvement and/or revenue recovery for ROE expansion. Cash flow quality is acceptable: operating cash flow (OCF) was 1.35 (100M JPY), at 1.31x net income, though free cash flow (FCF) was negative at -8.16 (100M JPY) due to large investing outflows. The balance sheet remains strong with total equity of 26.22 (100M JPY), an equity ratio of 70.0%, and total liabilities of 12.91 (100M JPY); interest-bearing debt implied by short- and long-term loans totals 5.18 (100M JPY). Cash and equivalents were 13.24 (100M JPY), providing substantial liquidity even as investing cash outflows increased. Dividend payout ratio is elevated at 74.4% on earnings; dividends appear covered by OCF but not by FCF given the heavy investment phase, and total shareholder returns including buybacks (0.92) exceeded OCF. Disclosure gaps exist (e.g., current liabilities, interest expense, R&D, DPS), so certain ratios (current/quick ratio, interest coverage) are not computable from provided XBRL. Overall, the company shows resilient operating profitability and earnings quality amidst revenue pressure, funded investment for future growth, and maintains a conservative capital structure. Near-term focus should be on stabilizing revenue, sustaining gross margins, and translating investments into growth to improve ROE and FCF.

Profitability Analysis

ROE_decomposition: - Net profit margin: 4.7% (Net income 1.03 / Revenue 22.01). - Asset turnover: 0.588x (Revenue 22.01 / Total assets 37.44). - Financial leverage: 1.43x (Assets 37.44 / Equity 26.22). - Implied ROE: 3.9%, consistent with reported 3.9%. ROA (computed) ~2.8% (1.03 / 37.44). margin_quality: - Gross margin: 34.6% (7.61 / 22.01), solid for the business mix, indicating pricing and cost control despite lower revenue. - SG&A ratio: 27.6% (6.07 / 22.01), leaving an operating margin of ~7.0% (1.55 / 22.01). - EBITDA margin: 11.0% (EBITDA 2.42), suggesting moderate operating leverage. - Net non-operating loss of ~0.32 (PBT 1.23 vs OP 1.55) slightly diluted bottom-line margin; interest and other items not disclosed. operating_leverage: Revenue declined 22.0% YoY while operating margin remained positive at ~7.0%, implying some fixed cost absorption but effective cost management. The delta from OP to PBT (-0.32) further constrains leverage to net income. Depreciation and amortization at 0.88 (4.0% of revenue) indicates a relatively light asset base; incremental sales recovery could lift margins through operating leverage.

Growth Assessment

revenue_sustainability: Top line contracted to 22.01 (-22.0% YoY), highlighting near-term demand softness and/or project delays. Accounts receivable of 4.67 equates to ~21% of period revenue, consistent with normal billing; however, without prior-period AR, trend analysis is limited. profit_quality: Despite lower revenue, gross profit of 7.61 and OP of 1.55 indicate underlying profitability. Comprehensive income equaled net income (1.03), implying no material OCI-driven effects. OCF/NI at 1.31x supports earnings quality. outlook: With large investing outflows (-9.51) against minimal capex (-0.01), the company appears to be allocating capital to strategic investments (e.g., noncurrent assets or M&A). If these investments commercialize, medium-term growth could recover; near term, revenue stabilization and margin defense are critical. Data limitations (no order/backlog, segment, or R&D disclosure) temper visibility.

Financial Health

liquidity: Cash and equivalents of 13.24 provide a buffer. Current assets are 18.96; current liabilities were not disclosed, so current/quick ratios are not calculable. Working capital shown as 18.96 suggests ample short-term resources, though the lack of current liability detail is a constraint. solvency: Equity ratio is 70.0%, indicating a conservative balance sheet. Total liabilities are 12.91 vs equity 26.22 (total D/E 0.49x). Interest-bearing debt inferred from loans totals 5.18 (short-term 1.97, long-term 3.21), implying net cash likely positive versus cash 13.24, though exact net cash cannot be confirmed due to undisclosed cash breakdown. capital_structure: Leverage is modest (assets/equity 1.43x). Financing CF +2.67 and higher loans on balance sheet indicate increased borrowing to fund investments while maintaining liquidity, alongside shareholder returns (dividends and buybacks).

Cash Flow Quality

earnings_quality: OCF 1.35 vs NI 1.03 (OCF/NI 1.31x) suggests good accrual quality. EBITDA-to-OCF conversion of ~56% (1.35/2.42) is acceptable given working capital needs; detailed drivers are not disclosed. FCF_analysis: FCF was -8.16, driven by large investing outflows (-9.51) while capex was minimal (-0.01). This implies non-capex investments (e.g., financial assets, acquisitions, or intangibles) as the main cash outflow. The FCF shortfall was funded by a combination of OCF and net financing (+2.67), resulting in a decline in cash. working_capital: Accounts receivable 4.67 and inventories 0.85 appear manageable versus revenue; however, the absence of current liabilities prevents turnover and days calculations. AR at ~21% of revenue suggests standard collection exposure; inventory at ~4% of revenue indicates limited stock risk. Changes in working capital are not disclosed.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is high at 74.4% of earnings. With EPS of 4.78 JPY, this implies DPS around 3.5–3.6 JPY, broadly consistent with dividends paid in cash flows (-0.75 or ~75 million JPY) versus average shares. FCF_coverage: OCF covers dividends by ~1.8x (1.35/0.75), but FCF coverage is negative (-10.65x) due to heavy investment outflows. Share repurchases (-0.92) plus dividends (-0.75) exceed OCF, implying reliance on financing or cash reserves to support total shareholder returns. policy_outlook: Given elevated payout relative to earnings and negative FCF during an investment phase, dividend sustainability depends on the pace of investment and OCF growth. If large investments normalize or begin to contribute to earnings, sustainability improves; otherwise, flexibility (e.g., moderating buybacks) may be required. Formal dividend policy and DPS are not disclosed in the provided data.

Risk Assessment

Business Risks:

• Revenue contraction of 22.0% YoY indicates demand softness or timing risk in project-driven sales.
• Execution risk on significant investments reflected in large investing cash outflows despite minimal capex.
• Margin pressure risk if gross margin (34.6%) weakens amid pricing or mix changes.
• Customer concentration or project lumpiness risk (not disclosed but suggested by volatility in revenue).
• Limited disclosure on R&D and segment performance constrains visibility into growth drivers.

Financial Risks:

• Negative FCF (-8.16) increases reliance on cash balances and financing activities.
• Non-operating losses (~0.32 between OP and PBT) could include interest or other expenses; interest coverage not calculable due to undisclosed interest data.
• Potential interest rate risk with increased borrowings (short-term 1.97, long-term 3.21).
• Working capital risk due to incomplete current liability disclosure; liquidity ratios cannot be computed.
• Impairment risk on noncurrent assets if invested projects underperform.

Key Concerns:

• Sustained top-line weakness could limit operating leverage and ROE recovery.
• Dividend and buybacks exceeding OCF during an investment-heavy period.
• Visibility constraints from unreported items (current liabilities, DPS, interest expense, R&D).

Investment Implications

Key Takeaways:

• Profitability resilient with OP margin ~7.0% and EBITDA margin 11.0% despite a 22.0% revenue decline.
• ROE at 3.9% is constrained by modest asset turnover (0.588x) and conservative leverage (1.43x).
• Earnings quality is reasonable (OCF/NI 1.31x), but FCF is deeply negative due to strategic investments.
• Balance sheet strength (equity ratio 70.0%, cash 13.24) supports ongoing investment and flexibility.
• Shareholder returns (dividends + buybacks of 1.67) exceeded OCF, implying partial debt funding.

Metrics to Watch:

• Revenue trajectory and order intake to confirm stabilization or recovery.
• Gross margin sustainability and SG&A ratio to gauge operating leverage.
• OCF/NI conversion and FCF to assess cash generation as investments normalize.
• Debt levels, maturity mix, and any disclosed interest expense to evaluate coverage.
• AR and inventory trends versus sales to monitor working capital efficiency.
• ROE progression via margin improvement or asset turnover gains.
• Capital allocation disclosures (nature of investing CF, M&A, or intangible investments).
• Dividend policy updates and total shareholder return relative to OCF.

Relative Positioning: The company exhibits conservative leverage and solid gross margins but modest ROE and negative FCF due to elevated investment outflows; near-term positioning hinges on monetizing investments to restore growth and improve returns while maintaining balance sheet strength.

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