Sasatoku Printing Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥2.74B
• Operating Income: ¥-13M
• Net Income: ¥-18M
• EPS: ¥3.09

Income Statement

Balance Sheet

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

Sasatoku Printing Co., Ltd. (TSE:39580) reported FY2026 Q1 consolidated results under JGAAP with revenue of ¥2,742 million, down 4.1% year over year, reflecting a soft topline environment. Gross profit was ¥541 million, implying a gross margin of 19.7%, which is modest for printing/packaging peers and insufficient to cover period expenses. Operating income was a loss of ¥13 million, yet this represents a 14.7% YoY improvement, suggesting some progress in cost control and/or mix. Ordinary income was positive at ¥24 million, indicating that non-operating income more than offset the operating loss and interest expense. Net income came in at ¥17 million, down 10.8% YoY, with EPS of ¥3.09, implying an estimated share count of roughly 5.5 million (derived from net income/EPS) as the reported share data were not disclosed. The bridge from operating loss to ordinary profit implies approximately ¥37 million in net non-operating gains, despite ¥4.3 million of interest expense. The tax line shows a ¥3.6 million benefit, and the gap between ordinary income and net income suggests the presence of extraordinary items and/or non-controlling interest impacts not disclosed in the dataset. DuPont analysis yields a very low ROE of 0.18%, driven by a thin net margin of 0.62%, low asset turnover of 0.189x, and moderate financial leverage of 1.57x. Liquidity appears sound with a current ratio of 141% and a quick ratio of 129%, supported by working capital of about ¥1,490 million. Leverage is conservative with a debt-to-equity ratio of 0.53x and total equity of ¥9,217 million against total assets of ¥14,489 million. Cash flow statements were not disclosed for the quarter; thus, OCF/NI and FCF figures showing zero are placeholders and cannot be interpreted as actual cash outcomes. Dividend data likewise show zero, which should be treated as not reported rather than a confirmed suspension. Overall, the quarter shows resilient recurring profit at the ordinary level despite operating weakness, underpinned by non-operating gains and a tax benefit, but profitability remains subpar. The balance sheet is relatively robust, providing cushion to execute on margin recovery initiatives. Key monitoring items include pricing power and cost pass-through, utilization, and the sustainability/quality of non-operating income. Data limitations constrain cash flow and dividend assessments; conclusions focus on the available non-zero items.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 0.62% × Asset turnover 0.189 × Financial leverage 1.57 = ROE 0.18% (matches reported). The primary drag is the low net margin, itself constrained by a negative operating margin. Gross margin of 19.7% (¥541m/¥2,742m) indicates limited price/mix advantage versus cost inflation, especially if paper/ink and energy costs remain elevated. Operating income of -¥13m equates to an operating margin of approximately -0.5%, reflecting SG&A of roughly ¥554m (calculated as gross profit minus operating income), or about 20.2% of sales—exceeding gross margin and causing the operating loss. Ordinary income of ¥24m shows a positive non-operating contribution of around ¥37m (ordinary minus operating), more than offsetting interest expense of ¥4.3m; likely sources include dividend/interest income, subsidies, or FX gains. The reported interest coverage ratio of -3.0x (based on negative EBIT) highlights that core operations do not currently cover interest, despite ordinary profit being positive. Effective tax rate reads 0.0% in the summary, but the income tax line is a benefit of ¥3.6m; together with ordinary income and net income, this implies undisclosed extraordinary/non-controlling items affecting the bottom line. Operating leverage appears high: a 4.1% revenue decline coincides with a small operating loss, but YoY improvement in operating income suggests SG&A control and/or better mix. Margin quality is mixed—gross margin is positive but not yet sufficient to cover fixed costs; ordinary-level gains rely on non-operating items, which may be less durable.

Growth Assessment

Revenue declined 4.1% YoY to ¥2,742m, indicating weak demand or price pressure in the quarter. Profit growth is uneven: operating income improved YoY but remained negative, while net income declined 10.8% YoY to ¥17m, implying non-operating support and potentially adverse extraordinary factors. The sustainability of ordinary income (¥24m) hinges on the repeatability of non-operating gains; underlying operating trend needs margin rebuilding to support durable profit growth. With asset turnover at 0.189x on a quarterly basis (annualization would still be low for the sector), capital efficiency is subdued, limiting ROE expansion absent margin improvement. Near-term outlook depends on pricing power and cost pass-through for inputs (paper, inks, energy) and on capacity utilization to dilute fixed costs. If SG&A discipline continues and gross margin stabilizes or improves, breakeven at the operating line is plausible. However, absence of order/backlog data and customer segment detail limits forward visibility. Overall, revenue sustainability is uncertain; profit quality leans on non-operating items this quarter, with core profitability yet to inflect.

Financial Health

Liquidity: current ratio 141% and quick ratio 129% indicate solid near-term coverage; inventories are modest at ¥433m relative to current assets. Working capital stands at approximately ¥1,489.9m (¥5,122.7m - ¥3,632.8m), providing operational buffer. Solvency: total liabilities ¥4,860.9m versus equity ¥9,217.0m yields a debt-to-equity ratio of 0.53x, a conservative capital structure. Financial leverage (assets/equity) is 1.57x, consistent with a strong equity base for the asset level. The disclosed equity ratio reads 0.0%, which appears undisclosed rather than literal; based on available assets/equity, the economic equity ratio is roughly 63.6%. Interest expense of ¥4.3m is modest, but negative EBIT implies reliance on non-operating sources to cover financing costs in the short term. No cash/cash equivalents were disclosed; thus, absolute liquidity headroom cannot be quantified from the data provided.

Cash Flow Quality

Cash flow statements were not disclosed for the quarter (OCF, ICF, FCF all shown as zero placeholders), so OCF/Net Income and FCF coverage metrics are not meaningful. Earnings quality is therefore indeterminate from a cash conversion standpoint. Working capital levels are disclosed (inventories ¥433m; current assets ¥5,122.7m; current liabilities ¥3,632.8m), but the period change is unknown; thus, the direction of cash tied in receivables or inventories cannot be assessed. Free cash flow cannot be calculated without OCF and capex detail (depreciation also not disclosed). Given operating loss at the EBIT level, verifying cash earnings via OCF will be critical once disclosed; a positive ordinary income suggests possible dividend/interest inflows, but these may not translate into strong OCF if working capital absorbed cash.

Dividend Sustainability

Annual DPS and payout ratio are shown as 0.00%, which should be treated as not disclosed rather than an actual suspension. Without OCF/FCF data and with operating income negative, rigorous assessment of coverage is not possible. On balance sheet strength alone (low leverage, ample equity), the company appears capable of sustaining modest shareholder returns; however, policy visibility is lacking and near-term priority may be operating margin restoration. Until core profitability turns positive and cash generation is confirmed, a conservative dividend stance would be consistent with fundamentals, but no conclusion can be drawn from the provided data.

Risk Assessment

Business Risks:

• Input cost inflation (paper, inks, packaging materials, energy) pressuring gross margin
• Pricing power and pass-through risk with key customers in printing/packaging
• Utilization risk; fixed-cost absorption is sensitive to volume declines
• Customer concentration and order volatility (not disclosed, but typical sector risk)
• Technological substitution and digitalization reducing traditional print demand
• Supply chain and logistics disruptions affecting lead times and costs

Financial Risks:

• Negative EBIT implies weak interest coverage from core operations
• Dependence on non-operating income to achieve ordinary profit
• Potential extraordinary losses or non-controlling interests impacting net income
• Cash flow visibility is low due to undisclosed OCF/FCF
• Working capital swings can materially affect cash in low-margin businesses

Key Concerns:

• Sustained operating loss despite cost improvements
• Low ROE (0.18%) driven by thin margins and low asset turnover
• Revenue decline (-4.1% YoY) without clear visibility on recovery
• Unclear sustainability and quality of non-operating gains
• Lack of disclosed cash flow and dividend data this quarter

Investment Implications

Key Takeaways:

• Topline contracted 4.1% YoY; core operating margin remained slightly negative (-0.5%).
• Ordinary income positive at ¥24m due to net non-operating gains (~¥37m), masking weak core operations.
• Net income ¥17m (EPS ¥3.09) declined 10.8% YoY; implied shares ~5.5m based on EPS.
• Gross margin 19.7% insufficient to cover SG&A (~20.2% of sales); breakeven requires either higher gross margin or lower SG&A.
• Balance sheet conservative: D/E 0.53x, leverage 1.57x, current ratio 141%.
• ROE remains low at 0.18%, constrained by margin and asset turnover.
• Cash flow and dividend metrics not disclosed; any zero values should be treated as placeholders.

Metrics to Watch:

• Quarterly operating margin and SG&A ratio progress toward breakeven
• Gross margin trends vs. input cost indices (paper/ink/energy) and price pass-through rates
• Non-operating income components (dividends, subsidies, FX) and their repeatability
• Extraordinary items and minority interest impact bridging ordinary to net income
• Order trends/backlog and utilization rates to gauge fixed-cost absorption
• Working capital turns (DSO/DIO/DPO) and OCF once disclosed
• Capex and depreciation (currently undisclosed) to assess maintenance vs. growth spending

Relative Positioning: Within Japan’s printing/packaging cohort, Sasatoku exhibits a conservative balance sheet and adequate liquidity but weaker profitability, with negative operating margin and very low ROE; near-term performance is more reliant on non-operating income than many peers, leaving it relatively exposed until core margins recover.

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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