HAVIX CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.09B
• Operating Income: ¥166M
• Net Income: ¥284M
• EPS: ¥36.42

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

Habix Co., Ltd. (3895) reported FY2026 Q2 standalone results showing top-line softness and pronounced operating deleverage. Revenue declined 6.1% year over year to ¥6.09bn, while operating income fell 44.2% to ¥166m, indicating a sharp drop in operating margin and sensitivity to volume/mix and costs. Gross profit was ¥1.115bn, implying an 18.3% gross margin, which appears compressed for a specialty paper/nonwoven manufacturer amid input cost and pricing pressures. Despite weak operating results, ordinary income reached ¥177m and net income was ¥284m (down 35.6% YoY), suggesting non-operating/extraordinary gains offset part of the deterioration; net income exceeding ordinary income points to special gains below the operating line. EPS was ¥36.42; share count data are not disclosed in the XBRL, limiting per-share cross‑checks. DuPont analysis shows ROE at 3.83% with a 4.66% net margin, asset turnover of 0.503x, and financial leverage of 1.63x; returns are subdued versus typical cost of equity. EBITDA was ¥286m, producing a low 4.7% EBITDA margin, highlighting margin pressure. Liquidity is strong: current ratio 214.9% and quick ratio 199.5%, backed by ¥8.23bn of current assets and ¥3.83bn of current liabilities. Solvency indicators are healthy with total liabilities of ¥4.96bn and equity of ¥7.41bn; while the reported equity ratio shows as 0% (undisclosed), the balance sheet implies roughly 61% equity-to-assets. Operating cash flow was solid at ¥560m, approximately 1.97x net income, supporting earnings quality. Investing cash flow is not disclosed (shown as zero), preventing a reliable free cash flow estimate; reported FCF is zero due to missing capex disclosure. Financing cash flow was an outflow of ¥346m, suggesting dividend/repayment uses of cash, although DPS is shown as zero (undisclosed) and payout ratio is reported as 0%. Interest expense was minimal at ¥5.0m with a comfortable 33.3x interest coverage. Overall, Habix demonstrates robust liquidity and manageable leverage, but profitability is under pressure due to negative operating leverage and likely unfavorable pricing/input dynamics. Data limitations around cash, equity ratio, capex, and dividends restrict depth of cash return and FCF assessments; analysis focuses on the disclosed non-zero items.

Profitability Analysis

ROE_decomposition: ROE 3.83% = Net Profit Margin 4.66% × Asset Turnover 0.503× × Financial Leverage 1.63×. The subdued ROE is primarily constrained by low asset turnover and modest margins rather than high leverage. margin_quality: Gross margin of 18.3% and EBITDA margin of 4.7% indicate tight spread after manufacturing costs and SG&A. Operating income of ¥166m on ¥6.09bn revenue points to a materially lower operating margin versus prior year (OI down 44.2% on revenue down 6.1%). Net income (¥284m) benefited from non-operating/extraordinary items (net > ordinary), which temporarily masks weaker core profitability. operating_leverage: A 6.1% decline in revenue led to a 44.2% decline in operating income, evidencing high negative operating leverage and a sizable fixed-cost base. This sensitivity suggests that small revenue changes have outsized effects on operating profit, a key risk until pricing, mix, or volumes recover.

Growth Assessment

revenue_sustainability: Revenue decreased 6.1% YoY to ¥6.09bn. For a specialty paper/nonwovens supplier, this likely reflects softer demand in hygiene/industrial applications or pricing normalization post input-cost spikes. profit_quality: Core profit quality weakened: gross profit of ¥1.115bn and EBITDA of ¥286m point to compression at both gross and operating levels. The OCF/NI ratio of 1.97 is strong, but with net income exceeding ordinary income, non-recurring gains likely boosted bottom line. outlook: Recovery hinges on demand stabilization, price-cost pass-through, and utilization rates. If volumes stabilize and cost inputs (pulp, energy, logistics) moderate, margins could normalize. Conversely, persistent demand softness would sustain negative operating leverage. Lack of capex disclosure clouds visibility on capacity and efficiency upgrades.

Financial Health

liquidity: Current assets ¥8,230.8m vs. current liabilities ¥3,829.6m yields a current ratio of 214.9% and quick ratio of 199.5%, indicating ample short-term coverage. Working capital stands at ¥4,401.2m. solvency: Total liabilities ¥4,961.0m against equity ¥7,408.0m implies a debt-to-equity ratio of 0.67x. Interest expense is low (¥5.0m) with 33.3x coverage, suggesting limited financial strain. capital_structure: While the reported equity ratio is shown as 0% (undisclosed), the balance sheet implies equity/asset ratio of approximately 61.2% (¥7.408bn/¥12.1bn), a conservative structure supportive of resilience.

Cash Flow Quality

earnings_quality: OCF/Net Income is 1.97x, indicating earnings backed by cash generation in the period. This helps offset concerns from weaker operating margins. FCF_analysis: Investing cash flow and capex are not disclosed (shown as zero), preventing a reliable free cash flow calculation; the reported FCF of zero reflects missing data, not true zero spending. Financing cash outflow of ¥346.1m suggests repayments or distributions despite DPS disclosure being zero. working_capital: Inventories are ¥591.0m (low relative to current assets), consistent with a high quick ratio. The strong OCF suggests working capital management supported cash (details by component not disclosed).

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% with DPS 0.00, but DPS disclosure appears incomplete. With EPS at ¥36.42, any actual payout would need confirmation from company releases. FCF_coverage: Free cash flow cannot be assessed due to undisclosed capex (investing CF shown as zero). OCF of ¥560.6m suggests capacity to cover modest dividends, but visibility is insufficient for coverage analysis. policy_outlook: Given healthy liquidity and low interest burden, the balance sheet could support stable dividends under normal conditions. However, current profit compression and missing capex data argue for a cautious stance until margin recovery and capital needs are clarified.

Risk Assessment

Business Risks:

• Negative operating leverage amplifying earnings volatility on small revenue changes
• Input cost volatility (pulp, energy, chemicals) impacting gross margin
• Pricing pressure and mix shifts in hygiene/specialty nonwovens markets
• Customer concentration risk typical in OEM/industrial supply chains
• Demand cyclicality tied to consumer and industrial end-markets

Financial Risks:

• Margin compression reducing interest coverage headroom if rates or debt increase
• Potential capex needs not visible due to undisclosed investing CF
• Exposure to FX if raw materials or sales are denominated in foreign currencies (not disclosed)

Key Concerns:

• Operating income down 44.2% YoY versus a 6.1% revenue decline
• EBITDA margin low at 4.7%, pointing to limited buffer for further shocks
• Net income supported by non-operating/extraordinary gains (net > ordinary), potentially non-recurring

Investment Implications

Key Takeaways:

• Top-line down 6.1% with severe operating deleverage (OI -44.2%)
• ROE of 3.83% constrained by low asset turnover and modest margins
• Strong liquidity (current ratio 214.9%, quick ratio 199.5%) and moderate leverage (D/E 0.67x)
• OCF strong at ¥560.6m (1.97x net income), supporting earnings quality
• Disclosure gaps on capex, cash, and dividends limit FCF and payout visibility

Metrics to Watch:

• Gross and operating margin trajectory vs. input costs
• Volume/mix recovery and pricing actions (impact on asset turnover and OI)
• Capex disclosures and investing cash flows (to assess FCF and capacity upgrades)
• Working capital turns (inventory and receivables days) and their cash impact
• Non-operating/extraordinary items affecting net income sustainability

Relative Positioning: Within Japan’s specialty paper/nonwovens space, Habix exhibits a conservative balance sheet and strong liquidity but currently weaker operating profitability and returns versus peers experiencing better price-cost pass-through; margin normalization is key for competitive positioning.

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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