Pro-Ship Incorporated FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.90B
• Operating Income: ¥1.40B
• Net Income: ¥429M
• EPS: ¥40.17

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

Proship Co., Ltd. (3763) delivered a strong FY2026 Q2 (consolidated, JGAAP), with clear evidence of high operating leverage and solid cash generation. Revenue rose 24.9% year over year to ¥3,896 million, supported by robust demand for its enterprise software and services. Gross profit was ¥1,550.9 million, translating to a gross margin of 39.8%, which, combined with tight operating cost control, lifted operating income to ¥1,404 million (+179.8% YoY). Operating margin expanded sharply to approximately 36.0%, indicating significant scalability in the cost base. Ordinary income of ¥1,451 million exceeded operating income, suggesting net non-operating gains (e.g., interest income or other income) added to profitability. Net income reached ¥998 million (+132.9% YoY), with a net margin of 25.6%, confirming high conversion of sales into bottom-line profit. DuPont decomposition indicates ROE of 10.58%, driven by a high net margin (25.62%), modest asset turnover (0.313x), and conservative leverage (financial leverage 1.32x). Using these components, ROA approximates 8.0%, consistent with a capital-light software model. Liquidity is very strong: current assets of ¥9,741 million and current liabilities of ¥2,045 million imply a current ratio around 4.76x and ample working capital of ¥7,696 million. The balance sheet is under-levered, with total liabilities of ¥2,486 million versus total equity of ¥9,433 million; this implies an equity ratio near 75.7% based on totals. Cash generation was robust, with operating cash flow of ¥1,445.6 million, 1.45x net income and about 37% of revenue, underpinning earnings quality. Depreciation and amortization were modest at ¥47.6 million, so EBITDA of ¥1,451.6 million (37.3% margin) closely tracks operating income, highlighting limited non-cash expense load. Interest expense was reported as zero and the company appears to have negligible debt, minimizing financial risk. Some reported metrics (e.g., equity ratio, cash and equivalents, investing cash flow, share counts, DPS) are shown as zero, indicating non-disclosure for those specific XBRL fields rather than true zero values; analysis focuses on disclosed non-zero figures. Dividend information is not disclosed in the data (annual DPS and payout shown as zero), so payout policy visibility is limited despite healthy earnings and cash flow. Overall, Proship demonstrates high profitability, strong cash conversion, and a fortress balance sheet, with the main uncertainties stemming from limited disclosure on certain items (capex/investing CF, cash balance, dividend policy) and typical software business risks (project timing and competitive dynamics).

Profitability Analysis

ROE_decomposition: ROE 10.58% = Net margin 25.62% × Asset turnover 0.313 × Financial leverage 1.32. This implies an ROA around 8.0% and confirms returns are primarily margin-driven rather than asset efficiency or leverage. margin_quality: Gross margin 39.8% and operating margin ~36.0% indicate strong pricing power and operating discipline. Ordinary income exceeding operating income (¥1,451m vs ¥1,404m) suggests net non-operating gains. Net margin of 25.62% remains high even after special items and taxes. operating_leverage: Revenue grew +24.9% YoY while operating income surged +179.8% YoY, reflecting powerful operating leverage and cost scalability. The modest D&A (¥47.6m) means margin gains are largely from operating efficiencies rather than accounting effects.

Growth Assessment

revenue_sustainability: Top-line growth of +24.9% YoY is strong; sustainability will depend on pipeline visibility, maintenance/subscription renewals, and new license wins. The low asset intensity supports scaling, but software project timing can introduce quarter-to-quarter volatility. profit_quality: Net margin 25.6% and EBITDA margin 37.3% reflect high-quality earnings. Ordinary income above operating income indicates non-operating tailwinds, but even excluding this, core profitability is strong. Implied tax burden appears moderate based on income tax of ¥193m versus pre-tax proxies. outlook: With ample working capital and high OCF, the company is positioned to invest in product and sales capacity. Key watchpoints are order intake, backlog, and any mix shift between licenses, maintenance, and cloud offerings that could influence margin trajectory.

Financial Health

liquidity: Current assets ¥9,740,621,000 vs current liabilities ¥2,044,550,000 yields a current ratio ~4.76x and quick ratio ~4.76x (inventories not reported). Working capital stands at ¥7,696,071,000, indicating ample short-term liquidity. solvency: Total liabilities ¥2,485,628,000 vs total equity ¥9,433,000,000 implies an equity ratio near 75.7% and a debt-to-equity ratio of 0.26x, signaling a very conservative capital structure. capital_structure: Interest expense is reported at 0, suggesting minimal to no interest-bearing debt. Ordinary income benefits from non-operating items, potentially including interest income, consistent with a net cash or low-debt profile.

Cash Flow Quality

earnings_quality: OCF of ¥1,445,638,000 is 1.45x net income (¥998,000,000), demonstrating strong cash conversion from earnings. FCF_analysis: Investing CF is undisclosed (shown as 0), so Free Cash Flow cannot be reliably computed despite strong OCF. Given low D&A (¥47.6m), maintenance capex is likely modest, but this remains an assumption absent disclosure. working_capital: High working capital (¥7.70bn) and strong OCF suggest effective receivables collection and controlled payables, supporting sustainable cash generation. Monitoring changes in receivables and contract liabilities will be key to assess seasonality and project timing effects.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to undisclosed dividends. With EPS at ¥40.17 and strong OCF, capacity for distributions appears ample, but no explicit payout data is provided. FCF_coverage: FCF coverage cannot be assessed because investing cash flows are undisclosed. OCF of ¥1.45bn provides a cushion for potential dividends, capex, and buybacks if pursued. policy_outlook: Dividend policy is not discernible from the provided data. Future disclosures on DPS and shareholder return policy (payout ratio or total return targets) will clarify sustainability and capital allocation priorities.

Risk Assessment

Business Risks:

• Project timing risk in enterprise software leading to revenue and margin volatility by quarter/half.
• Competitive pressure from large ERP vendors and cloud-native entrants affecting pricing and win rates.
• Transition risk between license, maintenance, and cloud/subscription models impacting revenue recognition and margins.
• Customer concentration risk typical in enterprise deals.
• Talent retention and hiring challenges for engineers and consultants.
• Regulatory or accounting changes that affect clients’ IT spending priorities.

Financial Risks:

• Revenue recognition complexity for multi-element software contracts under JGAAP.
• Working capital swings tied to large contracts (receivables and unearned revenue).
• Non-operating income variability that can affect ordinary income.
• Limited disclosure on cash and investing CF obscures FCF and liquidity deployment.

Key Concerns:

• Sustainability of extraordinary operating margin strength as growth normalizes.
• Visibility on capex/investments and cash balance due to undisclosed investing CF and cash equivalents.
• Lack of disclosed dividend policy despite strong earnings and OCF.

Investment Implications

Key Takeaways:

• Revenue ¥3.90bn (+24.9% YoY) with operating income ¥1.40bn (+179.8% YoY) demonstrates strong operating leverage.
• Margins are high: gross 39.8%, operating ~36.0%, EBITDA 37.3%, net 25.6%.
• ROE 10.58% is driven chiefly by margin strength and low leverage (financial leverage 1.32x).
• OCF ¥1.45bn equals 1.45x net income, indicating high earnings quality.
• Balance sheet is robust with implied equity ratio ~75.7% and D/E ~0.26x.
• Interest expense is negligible, reducing financial risk.
• Some key items (investing CF, cash balance, DPS, share counts) are undisclosed, limiting full valuation and payout analysis.

Metrics to Watch:

• Order intake, backlog, and renewal rates to gauge revenue sustainability.
• Mix shift between license, maintenance, and cloud subscriptions and related margin impacts.
• Receivables days and contract liabilities for working capital dynamics.
• R&D and SGA trends relative to revenue to assess operating leverage durability.
• Non-operating income components and any one-offs affecting ordinary income.
• Disclosure of cash, investing CF, and capital allocation (dividends/buybacks).

Relative Positioning: Within Japanese enterprise software peers, Proship’s profitability and cash conversion metrics this period are top-tier, supported by a very conservative balance sheet; sustainability will hinge on order momentum and the competitive landscape.

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