COMTURE CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥18.65B
• Operating Income: ¥2.08B
• Net Income: ¥1.40B
• EPS: ¥43.95

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 solid but modestly paced FY2026 Q2, with top-line and operating profit growing ~5% and earnings quality supported by positive operating cash flow. Revenue rose 4.8% YoY to 186.52, while operating income increased 4.7% YoY to 20.77 and ordinary income similarly rose 4.8% to 20.79. Net income outperformed at +9.6% YoY to 14.01, aided by a stable non-operating result and a contained SG&A ratio. Gross margin printed at 20.8%, and operating margin was 11.1%, essentially flat YoY. Based on growth back-solves, operating margin compressed by roughly 1 bp YoY, while net margin expanded by about 33 bps to 7.5% on stronger below-the-line efficiency. EBITDA reached 21.68 with an 11.6% margin, underpinned by low D&A of 0.91. Cash generation was healthy: operating CF of 14.75 exceeded net income (OCF/NI 1.05x), and capex was light at 0.22, indicating disciplined investment. The balance sheet is very strong with cash and deposits of 118.41 and a current ratio of 318%, providing ample liquidity. Leverage is conservative (D/E 0.36x as reported), with negligible interest burden (interest expense 0.01) and extraordinary interest coverage of 2,077x. Equity stands at 191.15 against total assets of 259.02, implying an equity ratio of roughly 73.8%, supporting resilience. Working capital remained well managed; receivables of 67.27 imply approximately 65 days of sales, consistent with SI business norms. Dividend visibility looks reasonable: a calculated payout ratio of 55.2% appears covered by estimated FCF (OCF minus capex). ROE calculated at 7.3% reflects low leverage and a significant cash balance; ROIC (18.7%) is strong, indicating solid value creation on invested capital. Forward-looking, steady demand and utilization should support margins, but wage inflation and hiring to secure capacity remain watch points. Overall, execution remains disciplined, with incremental growth, robust liquidity, and adequate cash conversion positioning the company well for continued shareholder returns.

Profitability Analysis

ROE decomposition: ROE 7.3% = Net Profit Margin (7.5%) × Asset Turnover (0.720) × Financial Leverage (1.36x). The primary driver of ROE remains the net margin, which expanded by about 33 bps YoY (estimated), while operating margin was effectively flat with an estimated 1 bp compression. Asset turnover at 0.720 suggests that asset growth (notably cash and intangibles including goodwill of 20.07 and total intangibles of 34.10) somewhat dilutes turnover, but revenue growth remains positive. Financial leverage is low at 1.36x, curbing ROE upside but enhancing stability. The largest change appears at the net margin level (vs. flat operating margin), likely due to minimal non-operating drag and a manageable effective tax rate of 32.6% compared to the prior period. Business reason: disciplined SG&A (9.6% of sales) and stable gross profitability offset wage and subcontracting cost pressures typical for SIers. Sustainability: operating margin flatness appears sustainable near term given utilization and project mix; net margin uplift could be maintained if non-operating items stay neutral and tax rate is stable. Watch points: SG&A growth is not disclosed in detail, but if personnel costs accelerate faster than revenue, operating leverage could erode. Also, rising intangible assets (including goodwill) suggest ongoing M&A or capitalized development; impairment or amortization could weigh on future margins if growth slows.

Growth Assessment

Top-line growth of 4.8% YoY (to 186.52) indicates steady demand, likely driven by ongoing digital transformation and cloud/system integration projects. Operating income growth of 4.7% tracked revenue, implying stable operating leverage. Net income growth of 9.6% outpaced revenue on favorable below-the-line dynamics and tight expense control. Non-operating income/expense was small (net +0.02), minimizing volatility. EBITDA margin of 11.6% and low D&A (0.91) underscore an asset-light profile consistent with IT services. ROIC at 18.7% signals efficient capital deployment and strong project-level returns. Growth sustainability hinges on maintaining utilization, controlling subcontracting costs, and securing skilled engineers amid labor market tightness. With cash of 118.41 and limited debt, the company has capacity to invest in hiring, training, and selective M&A to support pipeline growth. However, wage inflation and potential delays in client IT budgets could cap near-term margin expansion. Overall, growth looks incremental and defensible rather than explosive.

Financial Health

Liquidity is excellent: current ratio 317.7% and quick ratio 317.7%, driven by cash and deposits of 118.41 versus current liabilities of 61.20. No warning thresholds breached (Current Ratio well above 1.0; D/E reported at 0.36x, far below 2.0). Equity of 191.15 versus total assets of 259.02 implies an equity ratio of ~73.8%, indicating a conservative balance sheet. Short-term loans are minimal (2.00), and cash coverage of short-term debt is exceptionally strong. Maturity mismatch risk is low given large current assets relative to current liabilities and negligible reliance on long-term borrowing (unreported, but not required given cash). Off-balance sheet obligations are not disclosed in the data; no specific lease or guarantees noted. Interest burden is negligible (interest expense 0.01), and interest coverage is extremely high at 2,077x, underscoring solvency strength.

Cash Flow Quality

OCF of 14.75 exceeded net income of 14.01 (OCF/NI 1.05x), indicating acceptable earnings quality with limited accrual build. Using OCF minus capex, FCF is estimated at 14.53, which is healthy for a half-year and reflects the asset-light model. Working capital appears well managed; accounts receivable at 67.27 imply roughly 65 days of sales for a half-year basis, reasonable for project-based billing. No signs of aggressive working capital management are evident in the provided data. Investing CF is unreported, but low capex (-0.22) suggests limited cash burn on fixed assets. Financing CF of -7.79 likely reflects dividends and/or buybacks; detailed breakdown is unreported. Overall cash conversion is strong and supports ongoing shareholder returns and growth investments.

Dividend Sustainability

The calculated payout ratio is 55.2%, within a sustainable range (<60% benchmark), aligning with steady earnings growth. Interim DPS disclosures (Q1 12 JPY, Q3 12 JPY) suggest ongoing quarterly/interim payments, though full-year DPS is not reported. Estimated FCF of 14.53 (OCF 14.75 minus capex 0.22) appears to cover estimated dividend cash outflows (approx. 55% of net income, or ~7.7 in cash terms) with a comfortable buffer. With net cash positioning and strong liquidity, the company has capacity to maintain or modestly increase dividends if earnings continue to grow. Policy specifics (target payout or DOE) are unreported; absent a formal policy, we assume continuation of a stable-to-increasing dividend track consistent with payout behavior. Key watch points are earnings trajectory and any step-up in investment/M&A that could temporarily absorb cash.

Risk Assessment

Business Risks:

• Wage inflation and tight labor market for engineers could pressure gross margin and SG&A.
• Project execution risk (fixed-price projects) may lead to cost overruns and margin slippage.
• Demand cyclicality in enterprise IT budgets could delay or downsize projects.
• Dependence on key technology partners/platforms (cloud vendors) could affect pipeline and pricing.
• Goodwill (20.07) and total intangibles (34.10) introduce impairment risk if acquired units underperform.

Financial Risks:

• Concentration of cash balances may introduce low asset turnover and depress ROE.
• Potential hidden lease or purchase commitments not disclosed could affect future cash flows.
• Tax rate variability (32.6% effective) could impact net margin if incentives change.

Key Concerns:

• Operating margin effectively flat YoY despite revenue growth, limiting operating leverage.
• Asset turnover at 0.720 suggests efficiency could be weighed down by rising cash/intangibles.
• Limited disclosure on SG&A components and investing cash flows reduces visibility on cost drivers and capital allocation.

Investment Implications

Key Takeaways:

• Steady growth with disciplined execution: revenue +4.8% YoY and operating income +4.7% YoY.
• Net margin improvement (~+33 bps) lifted NI +9.6% YoY, aided by benign non-operating items.
• Cash conversion remains healthy (OCF/NI 1.05x) with low capex, supporting strong FCF.
• Balance sheet highly conservative (equity ratio ~74%, current ratio ~318%).
• ROIC is strong at 18.7%, indicating solid value creation despite modest ROE from low leverage.

Metrics to Watch:

• Utilization rates and billable headcount growth versus wage inflation.
• Operating margin trajectory and SG&A as a percentage of sales.
• Accounts receivable days and any buildup indicating collection risk.
• Order backlog and pipeline in cloud/DX segments.
• Any changes in dividend policy or share repurchases impacting cash balance and ROE.

Relative Positioning: Within Japanese SI/IT services peers, the company exhibits above-average balance sheet strength, healthy cash conversion, and strong ROIC, but with ROE tempered by low leverage and a sizable cash position; growth is steady rather than high-beta.

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