Superbag Company,Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥13.43B
• Operating Income: ¥296M
• Net Income: ¥260M
• EPS: ¥175.58

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

Verdict: A mixed FY2026 Q2—top-line growth of 2.4% failed to translate into profit growth, with operating and ordinary income declining YoY, but cash generation outpaced accounting profits, partially offsetting concerns. Revenue rose to 134.31, while operating income fell 11.0% to 2.96 and net income declined 4.2% to 2.60. Gross profit was 26.22, yielding a gross margin of 19.5%, and operating margin compressed to 2.2%. Using back-solved priors, operating margin compressed by roughly 34 bps YoY (from ~2.54% to 2.20%). Net margin also compressed by about 13 bps YoY (from ~2.07% to 1.94%). Ordinary income decreased 13.0% to 3.39, and non-operating income of 0.74 (notably 0.24 from dividends) cushioned operating softness. Earnings quality was solid: operating cash flow (3.85) exceeded net income (2.60), with an OCF/NI ratio of 1.48x, indicating good cash conversion. Leverage is the key balance sheet flag: D/E is 2.06x (>2.0 threshold), despite liquidity remaining adequate with a current ratio of 140.9% and quick ratio of 110.3%. Interest coverage is strong at 10.21x, suggesting debt service capacity is comfortable at current earnings levels. ROE is 5.3% via low net margins and moderate asset turnover but elevated financial leverage (3.06x). ROIC is 4.5%, below a 5% warning threshold, implying value creation is marginal after capital costs. SG&A at 23.25 appears sticky relative to modest revenue growth, contributing to operating deleverage. With no capex or investing CF disclosure, visibility into FCF sustainability is limited; however, financing CF was an outflow (-1.13), suggesting some debt reduction or dividend/coupon payments. The calculated payout ratio of 68.1% looks elevated versus cash generation norms, and sustainability hinges on FCF that is currently unreported. Looking forward, the company must protect gross margin and optimize SG&A to defend ROE amid leverage constraints; cash generation provides some buffer, but ROIC improvement is needed for a healthier capital efficiency profile.

Profitability Analysis

ROE (5.3%) decomposes into Net Profit Margin (1.9%) × Asset Turnover (0.897x) × Financial Leverage (3.06x). The weakest leg is the margin, with operating margin at ~2.20% and net margin at ~1.94%, while asset turnover is just under 1x and leverage is elevated. The most notable change YoY appears in margin, evidenced by operating income down 11.0% on 2.4% revenue growth, implying operating deleverage and/or cost pressures. Likely drivers include input cost inflation (paper, energy) and sticky SG&A (23.25) relative to modest sales growth; gross margin at 19.5% leaves limited buffer to absorb overhead. Non-operating income (0.74), including 0.24 of dividends, partially mitigated the operating shortfall, but reliance on non-operating items (non-operating income ratio ~28–29% of operating income) is not a durable earnings engine. Sustainability: without clear pricing power, margin recovery depends on stabilizing raw material/energy costs and tighter SG&A control; structural improvement will require mix upgrades and productivity gains. Watch for concerning trends where expense growth exceeds revenue growth; current period shows revenue +2.4% vs operating profit -11%, signaling negative operating leverage.

Growth Assessment

Top-line growth of 2.4% is modest and below what is typically needed to expand margins given the fixed-cost base. Profit growth is negative across operating (-11.0%) and ordinary (-13.0%) layers, and net income fell 4.2%, indicating cost pressures outweighed revenue gains. Revenue sustainability appears tied to steady demand in retail/e-commerce packaging and the ongoing substitution from plastics to paper, but macro sensitivity remains high. Profit quality relies on protecting gross margins and curbing SG&A; current data suggest margin compression and limited operating leverage. Non-operating income (notably dividend income) supported ordinary income, but this is not a robust growth driver. Outlook: absent pricing actions or cost relief, earnings growth will remain constrained; cash conversion strength is a positive but not a substitute for margin recovery. Near-term focus should be on price pass-through, procurement efficiencies, and product mix (higher value-added packaging).

Financial Health

Liquidity is adequate with a current ratio of 140.9% and a quick ratio of 110.3%, comfortably above 1.0. No warning on current ratio (<1.0) is triggered. Leverage is high with D/E at 2.06x (warning >2.0); this elevates sensitivity to earnings volatility. Interest coverage is strong at 10.21x, indicating manageable debt service at current profit levels. Maturity profile: current liabilities of 74.57 are well covered by current assets of 105.06, reducing near-term refinancing pressure; short-term loans are 11.32 versus cash and deposits of 31.50, which is conservative from a liquidity standpoint. Long-term loans are 18.19; overall interest-bearing debt is not fully disclosed but at least totals the loan amounts. No off-balance sheet obligations are reported in the provided data. Equity is 48.96, implying an equity ratio around 32.7% (approximate), consistent with moderate leverage but above the flagged D/E threshold; continued deleveraging would bolster resilience.

Cash Flow Quality

OCF/NI is 1.48x, a strong signal of earnings quality and cash conversion. OCF (3.85) is close to EBITDA (4.30) after tax (1.07) and interest (0.29), suggesting limited adverse working capital movements in the period. Free cash flow cannot be assessed as capex and investing cash flows are unreported; therefore, dividend and debt reduction coverage by FCF is unknown. No explicit signs of working capital manipulation are evident from the snapshot; receivables (36.47), inventories (22.83), and payables (22.40) appear balanced relative to sales scale, but lack of YoY deltas constrains deeper diagnosis. Financing cash outflow (-1.13) indicates net cash used for dividends, debt repayment, or other financing; without detail, sustainability cannot be concluded.

Dividend Sustainability

The calculated payout ratio is 68.1%, above the 60% benchmark for comfort, implying a somewhat stretched distribution relative to earnings. FCF coverage is not calculable due to missing capex/investing CF data; thus, we cannot confirm whether dividends are internally funded after investments. OCF of 3.85 provides a cushion, but sustainability depends on capex intensity and working capital needs. Policy outlook: given elevated leverage (D/E 2.06x) and ROIC at 4.5% (<5% warning), maintaining high payouts could constrain deleveraging and reinvestment; a balanced approach would likely prioritize margin recovery and capital efficiency improvement.

Risk Assessment

Business Risks:

• Input cost volatility (paper/pulp and energy) pressuring gross margins
• Price pass-through risk to customers amid competitive packaging markets
• Demand cyclicality tied to retail, consumer goods, and e-commerce volumes
• Product mix risk if value-added segments underperform
• Operational leverage risk given thin operating margin (~2.2%)

Financial Risks:

• High leverage (D/E 2.06x) increases sensitivity to earnings downturns
• Refinancing risk if credit conditions tighten despite current liquidity
• Interest rate risk impacting borrowing costs over time
• Potential dividend overcommitment (payout ~68%) without clear FCF visibility

Key Concerns:

• ROIC at 4.5% below 5% warning threshold, indicating marginal value creation
• Margin compression despite revenue growth (operating margin -34 bps YoY)
• Reliance on non-operating income (~25–29% of operating income) to support ordinary profit
• Data gaps on capex and investing cash flows limit FCF assessment

Investment Implications

Key Takeaways:

• Revenue grew 2.4% but profits declined; negative operating leverage evident
• Operating margin compressed to ~2.2%; net margin ~1.9%
• Cash conversion is healthy (OCF/NI 1.48x), partially de-risking earnings quality
• Leverage is elevated (D/E 2.06x) despite strong interest coverage (10.21x)
• ROE 5.3% is supported by leverage rather than margins; ROIC 4.5% is weak
• Non-operating income provides cushioning but is not a structural growth driver

Metrics to Watch:

• Gross margin and price pass-through to offset input cost changes
• SG&A-to-sales ratio and operating leverage trajectory
• OCF/NI and FCF after capex once disclosed
• Net debt/EBITDA and interest coverage trends
• Working capital turns (AR and inventory days) for cash discipline
• ROIC versus WACC as a gauge of value creation

Relative Positioning: Within Japanese packaging/printing peers, Superbag shows thinner margins and higher leverage than conservative operators, but demonstrates better-than-expected cash conversion this quarter; improving ROIC and reducing leverage are necessary to close the performance gap.

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