COMTURE CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥18.65B
• Operating Income: ¥2.08B
• Net Income: ¥1.28B
• 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

Comture (3844) delivered steady topline and operating profit growth in FY2026 Q2, with revenue up 4.8% YoY to ¥18.65bn and operating income up 4.7% YoY to ¥2.08bn. Gross profit reached ¥3.91bn, translating to a gross margin of roughly 21.0%, indicating stable pricing and cost control in a tight IT services labor market. Operating margin stood near 11.1%, broadly unchanged YoY, suggesting neutral operating leverage in the period. Net income rose 9.6% YoY to ¥1.40bn, lifting the net margin to 7.5%, supported by limited non-operating volatility. DuPont metrics show a calculated ROE of 7.33%, driven by a 7.51% net margin, 0.72x asset turnover, and modest financial leverage of 1.36x. The balance sheet is robust: total assets were ¥25.90bn and equity ¥19.12bn, implying an equity ratio of about 73.8% despite the ratio being shown as 0.0% in the dataset. Liquidity appears strong with a current ratio of 316% and working capital of ¥14.25bn, consistent with a cash-rich, low-debt profile typical for domestic IT services firms. Depreciation and amortization were only ¥86m (about 0.5% of sales), confirming a capital-light model and supporting structurally solid EBITDA of ¥2.16bn (11.6% margin). The cash flow statement, however, shows weak operating cash flow of ¥46m in the half, yielding an OCF/NI ratio of 0.03, which is unusually low. This likely reflects working capital outflows (e.g., receivables build) rather than a deterioration in underlying earnings quality, but it warrants close monitoring. Financing cash outflows of ¥748m likely reflect shareholder returns (dividends and/or buybacks), though the specific split is not disclosed in the provided figures. Several items are undisclosed or presented as zero (e.g., cash and equivalents, inventories, interest expense, investing cash flows, equity ratio, DPS), so conclusions are based on available non-zero data and standard industry behavior. The effective tax rate, estimated from reported tax expense (¥701m) versus pre-tax earnings (proxied by ordinary income of ¥2,079m), is roughly 34%, consistent with Japan’s statutory range despite the dataset showing 0.0%. Overall, profitability and the balance sheet are healthy, but cash conversion in the period is soft, likely driven by seasonal and growth-related working capital needs. Near-term focus should be on the trajectory of receivables, billings, and collections into H2 to validate earnings-to-cash conversion. In context of domestic SI peers, Comture’s margin profile remains competitive, with conservative leverage and ample liquidity cushioning execution risk. With revenue growth moderate and operating leverage neutral this half, sustained margin discipline and improved cash conversion are key to strengthening ROE. We acknowledge data limitations where line items were not disclosed in XBRL, and we base our analysis on the reported non-zero values and standard interpretations under JGAAP.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.51% (NI ¥1,401m / Revenue ¥18,652m)
• asset_turnover: 0.72x (Revenue ¥18,652m / Assets ¥25,902m)
• financial_leverage: 1.36x (Assets ¥25,902m / Equity ¥19,115m)
• calculated_ROE: 7.33% (matches provided DuPont figure) margin_quality: Gross margin ~21.0% and operating margin ~11.1% indicate stable pricing and cost discipline. Net margin at 7.5% benefits from minimal non-operating drag. D&A is low (¥86m, ~0.5% of sales), consistent with a capital-light IT services model; EBITDA margin ~11.6% aligns with the operating margin profile. operating_leverage: Revenue grew 4.8% YoY while operating income rose 4.7% YoY, implying largely neutral operating leverage in H1. Cost structure appears well-managed, but incremental margin expansion was limited during the period.

Growth Assessment

revenue_sustainability: Topline expanded 4.8% YoY to ¥18.65bn, a moderate pace consistent with steady demand for SI, cloud migration, and DX projects. Sustained growth will depend on order intake, backlog conversion, and headcount/productivity trends. profit_quality: Operating income growth of 4.7% is broadly in line with revenue, suggesting stable mix and pricing. Ordinary income closely tracks operating income, indicating limited non-operating volatility. Effective tax expense (~¥701m) suggests normalized taxation despite the reported 0.0% ratio field. outlook: With capital-light operations and a strong balance sheet, Comture is positioned to pursue growth while maintaining margins. Near-term growth likely hinges on enterprise IT investment cycles and the company’s ability to secure and deliver higher-value projects; watch for H2 seasonality and backlog execution.

Financial Health

liquidity: Current assets ¥20.84bn vs current liabilities ¥6.59bn yield a current ratio of ~316% and quick ratio similar given undisclosed inventories. Working capital stands at ¥14.25bn. Cash and equivalents are undisclosed in the dataset, but liquidity appears ample based on current assets. solvency: Total liabilities ¥7.14bn vs equity ¥19.12bn imply a debt-to-equity of ~0.37x and an equity ratio of ~73.8% (calculated), indicating a conservative capital structure. capital_structure: Financial leverage is modest at 1.36x. Interest expense is not disclosed (shown as zero), suggesting minimal financial debt; interest burden is likely negligible.

Cash Flow Quality

earnings_quality: OCF of ¥46m vs net income of ¥1,401m yields an OCF/NI ratio of 0.03, indicating weak cash conversion in H1. This is commonly driven by receivables build and unbilled work in progress in growth periods for SI businesses. FCF_analysis: Investing cash flow is undisclosed (shown as zero). Given minimal D&A, capital intensity is low, implying that normalized FCF should track OCF excluding working capital swings. The reported FCF figure is shown as zero in the dataset; actual FCF cannot be confirmed without full investing cash flow disclosure. working_capital: The large working capital base (¥14.25bn) suggests cash conversion is sensitive to billing and collection timing. Monitoring days sales outstanding (DSO) and unbilled receivables into H2 will be critical.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥43.95; payout ratio is shown as 0.0% due to undisclosed DPS. Historically, financing CF outflow of ¥748m may include dividends and/or buybacks, but the split is not disclosed. FCF_coverage: With OCF weak in H1 and investing CF undisclosed, FCF coverage of dividends cannot be reliably assessed. On a normalized basis, low capex needs support potential coverage, contingent on improved cash conversion. policy_outlook: Given a strong equity base and low leverage, the company has capacity for shareholder returns, but visibility is limited due to undisclosed DPS and cash balance in the dataset.

Risk Assessment

Business Risks:

• Project execution risk and potential delivery delays affecting revenue recognition and margins
• Engineer hiring and retention amid wage inflation in the IT services labor market
• Pricing pressure from clients and competition in SI/DX projects
• Dependence on enterprise IT spending cycles and macroeconomic conditions
• Partner ecosystem risk (e.g., cloud hyperscaler alliances and certification depth)
• Mix shift risk between fixed-price vs. time-and-materials contracts affecting margin volatility
• Customer concentration risk if large accounts drive a significant share of revenue
• Cybersecurity and data protection risks inherent to system integration work

Financial Risks:

• Weak H1 cash conversion (OCF/NI 0.03) indicating working capital sensitivity
• Receivables and unbilled WIP buildup risk during growth periods
• Limited visibility on cash and equivalents due to undisclosed line item
• Potential for dividend/buyback outflows (¥748m financing CF) to outpace free cash flow in weak cash conversion periods
• Exposure to tax and accounting timing differences under JGAAP affecting interim ratios

Key Concerns:

• OCF materially below net income in the half
• Neutral operating leverage despite revenue growth, limiting ROE expansion
• Several key disclosures (cash, DPS, investing CF, inventories) are not reported in the dataset

Investment Implications

Key Takeaways:

• Topline and operating income grew ~5% YoY with stable margins (~11% OPM)
• ROE at 7.33% reflects modest leverage and mid-single-digit net margin
• Balance sheet strength is notable: ~74% equity ratio (calculated) and current ratio >3x
• Cash conversion was weak in H1; working capital management is the swing factor
• Capital-light model (D&A ~0.5% of sales) supports medium-term FCF potential once WC normalizes

Metrics to Watch:

• Order backlog and book-to-bill to gauge H2 revenue visibility
• DSO and trend in trade receivables/unbilled balances to track cash conversion
• Operating margin trajectory and staffing utilization rates
• Hiring pace and wage cost inflation versus pricing power
• Breakdown of financing CF into dividends vs. buybacks; DPS disclosure
• Cash and equivalents balance and net cash position once disclosed

Relative Positioning: Within Japanese SI peers, Comture exhibits competitive profitability (OPM ~11%) and a conservative balance sheet with low leverage; however, cash conversion this half lags better-performing peers, making working capital discipline a key differentiator near term.

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