INTERTRADE Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.84B
• Operating Income: ¥-8M
• Net Income: ¥27M
• EPS: ¥-20.20

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

Intertrade Co., Ltd. (3747) reported FY2025 Q4 consolidated results under JGAAP showing muted top-line trends and a marked deterioration in below-operating line items. Revenue was ¥1,836 million, down 0.7% YoY, indicating broadly flat demand conditions across its solution lines. Gross profit of ¥652.9 million translates to a 35.6% gross margin, which is reasonably healthy and suggests pricing and direct cost control remain intact. Operating income was slightly negative at ¥-8 million (operating margin roughly -0.4%), implying largely breakeven core operations with limited operating leverage this period. The most striking feature is ordinary income at ¥-213 million, a large gap versus operating income that points to significant non-operating losses beyond the ¥1.7 million in interest expense. Net income came in at ¥-145 million (EPS -¥20.20), with the net margin at -7.9%, broadly consistent with the DuPont inputs provided. Asset turnover was 1.24x and financial leverage 1.38x, yielding a calculated ROE of -13.48%. Liquidity appears strong: current assets of ¥1,423 million against current liabilities of ¥272 million result in a current ratio of 5.23x and quick ratio of 5.20x. Total equity of ¥1,076 million against total assets of ¥1,481 million implies an equity ratio of about 72.7% despite the reported 0.0% placeholder (disclosed as unreported), indicating a conservative balance sheet. Operating cash flow was modestly negative at ¥-12 million; combined with investing cash outflows of ¥-252 million, free cash flow was ¥-264 million. Depreciation and amortization were ¥17.2 million, low relative to revenue, consistent with an asset-light model. Interest coverage on an EBIT basis was -4.8x due to slightly negative operating income, but absolute interest burden remains small. Dividend payments were nil with a payout ratio of 0%, which is appropriate given the net loss and negative FCF. Several items are unreported in XBRL (e.g., equity ratio flagged as 0.0%, cash and equivalents at 0, share count at 0), so conclusions rely on the disclosed subtotals and derived metrics. Overall, the core business appears near breakeven with adequate gross margins, but profitability was dragged down by sizable non-operating losses, and cash outflows were driven by investment activities. The balance sheet provides a buffer for execution, but visibility on the nature and persistence of non-operating losses and investment cash uses is central to the outlook.

Profitability Analysis

ROE_decomposition: DuPont inputs indicate Net Profit Margin -7.90%, Asset Turnover 1.240x, and Financial Leverage 1.38x, yielding ROE of -13.48%. The negative ROE is driven primarily by the net margin, not leverage or asset utilization. With operating margin around -0.4% but ordinary income at -¥213m, below-operating items are the principal swing factor. margin_quality: Gross margin of 35.6% is solid for a solutions/IT services profile and consistent with value-added delivery. The step-down from gross to operating margin reflects elevated SG&A relative to the current revenue base, but the operating loss is small at -¥8m, implying manageable operating cost structure. The major compression occurs below operating income, likely from investment-related or valuation losses, given interest expense is only ¥1.7m. operating_leverage: Revenue declined 0.7% YoY, and operating income slipped to a small loss, suggesting limited positive operating leverage at current scale. A modest topline uptick or tighter SG&A control could swing to profitability, but the sensitivity of ordinary income to non-operating items currently overwhelms incremental operating leverage.

Growth Assessment

revenue_sustainability: Revenue of ¥1,836m declined marginally (-0.7% YoY), indicating stable but not expanding demand. The gross margin profile suggests the company retains pricing power in core offerings, but growth catalysts are not evident in the period. profit_quality: Core profit quality is mixed: near-breakeven operating income shows operational stability, but ordinary and net losses are dominated by non-operating factors. With interest expense minimal, the ordinary loss likely stems from securities-related valuation losses, one-off provisions, or other non-operating costs. outlook: If non-operating headwinds normalize, the company’s gross margin and cost base could support a return to operating profitability. Sustained revenue growth would be required to improve operating leverage, while greater transparency and reduction of non-operating losses are critical to restoring net profitability.

Financial Health

liquidity: Current ratio 522.8% and quick ratio 519.7% reflect ample near-term liquidity (CA ¥1,423m vs. CL ¥272m). Working capital is ¥1,151m, offering substantial cushion. Reported cash & equivalents at 0 should be treated as unreported; however, the large current asset base implies adequate liquid resources. solvency: Total liabilities ¥413m vs. equity ¥1,076m implies a debt-to-equity of 0.38x (using total liabilities as a proxy for debt). The implied equity ratio is ~72.7% (1,076/1,481), indicating a conservative capital structure and strong solvency. capital_structure: Low financial leverage (Assets/Equity 1.38x) limits risk and reduces interest burden, though it also constrains ROE improvement absent margin recovery. Interest expense is modest at ¥1.66m, and coverage issues are due to negative EBIT rather than high debt.

Cash Flow Quality

earnings_quality: OCF/Net Income is 0.08x (OCF ¥-12m vs. NI ¥-145m), indicating weak conversion this period. Given near-breakeven operating income, OCF weakness likely reflects working capital outflows or timing effects rather than core profitability collapse. FCF_analysis: Free cash flow is ¥-264m (OCF ¥-12m + Investing CF ¥-252m). The investing outflow appears to be the primary driver of negative FCF; without detail, it could include software development, capitalized R&D, or investment securities. working_capital: Inventories are minimal at ¥8.4m, consistent with a low-inventory business model. The large working capital base and quick ratio suggest receivables and cash/short-term deposits dominate current assets, but detailed composition is not disclosed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0.00 with a payout ratio of 0%, appropriate given negative earnings and FCF in the period. FCF_coverage: With FCF at ¥-264m, there is no coverage for dividends this period. Resumption would require both sustained operating cash inflow and reduced investing cash outflows. policy_outlook: Given the loss and cash profile, a conservative stance on shareholder returns is likely to continue until profitability and cash generation stabilize.

Risk Assessment

Business Risks:

• Revenue stagnation (-0.7% YoY) indicating limited growth momentum in core businesses
• High sensitivity of earnings to small changes in SG&A given near-breakeven operating margin
• Execution risk in scaling solutions while preserving gross margins
• Customer concentration or project timing risk typical for solution/service businesses (not disclosed but common)

Financial Risks:

• Large non-operating losses (ordinary income ¥-213m vs. operating income ¥-8m) potentially tied to investment securities or valuation effects
• Negative free cash flow (¥-264m) driven by significant investing outflows
• Weak OCF conversion (OCF/NI 0.08x) possibly due to working capital swings
• Limited interest burden but negative EBIT leads to negative coverage (-4.8x)

Key Concerns:

• Persistence and nature of non-operating losses that overwhelm operating performance
• Visibility on investing cash outflows and expected returns
• Ability to reignite top-line growth to leverage fixed costs and return to operating profitability

Investment Implications

Key Takeaways:

• Core operations are roughly breakeven with solid 35.6% gross margin but slight operating loss
• Ordinary loss of ¥-213m drives net loss; non-operating items are the primary earnings swing factor
• Strong balance sheet with implied equity ratio ~72.7% and low leverage (D/E ~0.38x)
• Liquidity is ample (current ratio 5.23x; quick ratio 5.20x), providing runway for execution
• Cash generation is weak this period (OCF ¥-12m; FCF ¥-264m) due mainly to investing outflows

Metrics to Watch:

• Trajectory of ordinary income and disclosure of non-operating gain/loss components
• Quarterly OCF and working capital movements (receivables and contract assets)
• Revenue growth re-acceleration and order backlog indicators
• SG&A efficiency and operating margin progression
• Investing cash flows breakdown (capex vs. financial investments vs. capitalized development)

Relative Positioning: Financially conservative with strong equity buffer and liquidity versus many small-cap peers, but currently weaker on net profitability due to sizable non-operating losses; operating fundamentals appear more resilient than bottom-line results suggest.

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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