OHMURA SHIGYO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.95B
• Operating Income: ¥144M
• Net Income: ¥92M
• EPS: ¥25.94

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

Omura Paper Industry Co., Ltd. (39530) reported steady topline growth for FY2026 Q2 with revenue of ¥2,951 million, up 1.1% year on year, while delivering stronger profit growth, indicating improved operating leverage. Gross profit was ¥744 million, translating to a gross margin of 25.2%, which supports a modest operating margin of 4.9% on operating income of ¥144 million (+17.1% YoY). Ordinary income reached ¥150 million, and net income was ¥92 million (+18.7% YoY), equating to a net margin of 3.12%. DuPont decomposition yields a calculated ROE of 1.91% based on a net margin of 3.12%, asset turnover of 0.424x, and financial leverage of 1.45x; this matches the reported ROE figure. EBITDA totaled ¥246 million, suggesting an 8.3% EBITDA margin and ample interest coverage, with EBIT/interest at roughly 73x given interest expense of just ¥2.0 million. The balance sheet appears conservative: total assets were ¥6,966 million against total liabilities of ¥1,997 million and equity of ¥4,817 million, implying low leverage (debt-to-equity 0.41x) and a strong liquidity buffer (current ratio 372.6%). Working capital stood at ¥3,321 million, supported by sizable current assets of ¥4,539 million. Despite healthy profits, operating cash flow was negative at -¥414 million, yielding an OCF/net income ratio of -4.50; this likely reflects a working capital build (e.g., receivables or reduced payables), as inventories are small at ¥64 million. Investing cash flow and cash balance were not disclosed (zeros indicate unreported items), limiting visibility on capex and liquidity headroom. The effective tax rate is listed as 0.0% due to data limitations, but based on income tax expense of ¥46.9 million and net income of ¥92.0 million, an implied ETR around the low-to-mid 30% range appears plausible. Dividend data (DPS, payout, FCF coverage) and share-related metrics were not disclosed this period, so capital return assessment is constrained. Overall, profitability improved versus largely flat sales, underpinned by cost control and low financing costs, but cash flow conversion is currently weak. The balance sheet’s low leverage and ample working capital mitigate near-term financial risk. Key uncertainties include the durability of margin gains, the drivers of OCF weakness, and the absence of disclosure on cash, capex, and dividends. The company’s semiannual figures suggest disciplined operations with conservative financing, but monitoring cash conversion and working capital intensity is critical for assessing sustainability.

Profitability Analysis

ROE_decomposition: ROE 1.91% = Net margin 3.12% × Asset turnover 0.424 × Financial leverage 1.45. Net margin reflects modest profitability; asset turnover is low for a converter/processor, dampening ROE; leverage is conservative, limiting ROE amplification. margin_quality: Gross margin 25.2% (¥744m/¥2,951m) supports operating margin 4.9% (¥144m/¥2,951m) and ordinary margin 5.1% (¥150m/¥2,951m). Net margin 3.12% reflects normal tax and non-operating effects. Margin expansion outpaced revenue growth (OI +17.1% vs revenue +1.1%), indicating cost discipline and improved mix or productivity. operating_leverage: Positive operating leverage is evident with low single-digit sales growth driving high teens operating profit growth. Fixed cost absorption appears improved (EBITDA margin 8.3%, EBIT margin 4.9%). Continued leverage is sensitive to volume stability and raw material/energy costs.

Growth Assessment

revenue_sustainability: Revenue grew 1.1% YoY to ¥2,951m, suggesting stable demand. With inventory at only ¥64m, the model likely relies on order-based flows rather than heavy stocking, which can stabilize margins but may constrain surge capacity. profit_quality: Operating income grew 17.1% YoY to ¥144m, with net income up 18.7% to ¥92m. Interest expense is minimal (¥2.0m), so profit gains are operational rather than financial-engineering driven. However, OCF was -¥414m, indicating profit-to-cash conversion was weak this half, likely due to working capital consumption. outlook: If cost control and pricing discipline persist, mid-single-digit operating margin is attainable. Near-term growth depends on demand resilience and input cost trends (paper/feedstock, energy, logistics). Sustained improvement requires normalization of working capital and stabilization of cash conversion.

Financial Health

liquidity: Current assets ¥4,539m vs current liabilities ¥1,218m yield a current ratio of 372.6% and quick ratio of 367.3% (inventory-light at ¥64m). Working capital is ¥3,321m, providing ample near-term coverage. solvency: Total liabilities ¥1,997m vs equity ¥4,817m imply debt-to-equity of 0.41x and financial leverage of 1.45x. Interest burden is light (¥2.0m), and EBIT/interest is ~73x, indicating strong solvency. capital_structure: Balance sheet skews toward equity financing with modest borrowings. Equity ratio was not disclosed this period (reported 0.0% indicates non-disclosure, not actual zero). The structure affords flexibility but tempers ROE.

Cash Flow Quality

earnings_quality: Net income ¥92m vs operating cash flow -¥414m results in an OCF/NI ratio of -4.50, signaling weak cash realization this period. Given small inventories, the drag likely stems from receivables growth or reduced payables. FCF_analysis: Investing cash flow and capex were not disclosed. Depreciation was ¥102m, implying underlying maintenance capex requirements; absent capex data, true FCF cannot be determined. Reported Free Cash Flow of 0 reflects non-disclosure. working_capital: Inventory levels are low (¥64m), consistent with a light-stock model. The negative OCF likely reflects timing effects in trade receivables/payables. Monitoring collection cycles and supplier terms will be key to normalizing cash conversion.

Dividend Sustainability

payout_ratio_assessment: Dividend-related metrics (DPS, payout ratio) were not disclosed this period; reported zeros indicate non-disclosure. With net income positive and leverage low, capacity exists in principle, but cash distribution prudence depends on cash flow normalization. FCF_coverage: FCF coverage cannot be assessed due to unreported investing cash flows and reported OCF negativity this period. Any payout would need to be evaluated against prospective recovery in OCF and underlying capex needs. policy_outlook: No explicit policy was disclosed. Given conservative leverage, a modest dividend policy could be sustainable over the cycle, provided working capital reverses and operating cash flow turns positive.

Risk Assessment

Business Risks:

• Input cost volatility (paper/feedstock, energy) affecting gross margin
• Demand cyclicality in end markets (packaging/printing-related)
• Customer concentration and pricing pressure risks typical of converters
• Operational leverage to volume with relatively fixed cost base
• Supply chain and logistics cost variability

Financial Risks:

• Weak cash conversion this period (OCF -¥414m) implying working capital sensitivity
• Potential capex needs not visible due to non-disclosure of investing cash flows
• Limited visibility on cash and liquidity buffers (cash balance not disclosed)
• ROE constrained by low asset turnover and conservative leverage

Key Concerns:

• Sustainability of margin gains versus modest sales growth
• Timing and magnitude of working capital reversal to restore positive OCF
• Lack of disclosure on cash, capex, and dividends hindering capital allocation assessment

Investment Implications

Key Takeaways:

• Revenue stable (+1.1% YoY) with stronger profit growth (OP +17.1%, NP +18.7%), indicating positive operating leverage
• Margins modest but improving: GM 25.2%, OPM 4.9%, NPM 3.12%
• ROE low at 1.91%, constrained by low asset turnover (0.424x) and conservative leverage (1.45x)
• Balance sheet conservative: D/E 0.41x, current ratio 373%, interest coverage ~73x
• Cash conversion weak: OCF -¥414m, OCF/NI -4.50, likely due to working capital build
• Key disclosures missing: cash balance, investing CF/capex, dividend policy

Metrics to Watch:

• Operating cash flow trend and OCF/NI ratio (target normalization to >1.0 over time)
• Receivables and payables turnover days to pinpoint working capital drivers
• Gross and operating margin trajectory versus input cost trends
• Capex (maintenance vs growth) and resulting FCF
• Order intake/backlog or book-to-bill (if disclosed) to gauge demand momentum
• Equity ratio and net debt evolution to validate balance sheet resilience

Relative Positioning: A small-cap, inventory-light paper/packaging processor with conservative leverage and improving margins, but currently weaker cash conversion and lower ROE versus peers that achieve higher asset turnover.

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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