Kinjiro Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.96B
• Operating Income: ¥1.17B
• Net Income: ¥268M
• EPS: ¥39.00

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

FY2025 Q3 results for 勤次郎株式会社 show strong top-line momentum and significant operating leverage. Revenue reached ¥3,955m, up 28.2% YoY, while operating income surged 192.7% YoY to ¥1,166m, indicating both scale benefits and improved cost discipline. Gross profit of ¥1,805m implies a gross margin of about 45.6%, consistent with a mix/efficiency-driven improvement. Operating margin expanded to roughly 29.5%, highlighting robust profitability at the core business level. Ordinary income (¥1,164m) was nearly identical to operating income, suggesting minimal non-operating noise aside from modest interest expense. Net income of ¥766m rose 185.9% YoY, translating to a reported net margin of 19.37%. The DuPont breakdown indicates ROE of 7.66% driven by a healthy margin, moderate asset turnover (0.297x), and conservative leverage (1.33x). The balance sheet appears strong: total assets stand at ¥13,312m against total liabilities of ¥3,444m and equity of ¥9,996m, implying low gearing (~0.34x liabilities-to-equity). Liquidity is ample with a current ratio of 4.36x and minimal inventories (¥52m), underpinning working capital strength. Interest expense is small at ¥8.5m, yielding a very high interest coverage of ~137x, which supports financial resilience. The tax expense reported (¥133m) suggests an effective tax rate near the low teens if benchmarked to ordinary income, though the provided “effective tax rate” metric appears unpopulated. Cash flow statement items are not disclosed in the provided dataset, so operating and free cash flow quality cannot be directly assessed; however, earnings quality looks supported by the small gap between operating and ordinary income. Depreciation and amortization are not disclosed, so EBITDA metrics based on D&A are not meaningful here despite a presented value of zero. The company reported no dividends for the period; payout ratio and FCF coverage metrics are therefore not indicative of policy. Overall, the quarter reflects a profitable growth phase with conservative balance sheet risk, but the absence of disclosed cash flow data and D&A warrants caution in interpreting cash conversion and capital intensity. Monitoring sustainability of elevated margins and revenue growth will be key for the coming quarters. Despite data limitations, the trajectory points to improved operating efficiency and disciplined financial structure.

Profitability Analysis

ROE_decomposition: ROE 7.66% = Net margin 19.37% × Asset turnover 0.297 × Financial leverage 1.33. The primary driver is margin expansion, with modest asset utilization and prudent leverage providing additional support. margin_quality: Gross margin ~45.6% (¥1,805m/¥3,955m) and operating margin ~29.5% (¥1,166m/¥3,955m) indicate strong cost control and/or favorable mix. Net margin at 19.37% remains healthy after modest interest (¥8.5m) and taxes (¥133m). Limited non-operating items (ordinary ≈ operating) suggest earnings are largely operational. operating_leverage: Operating income +192.7% YoY on revenue +28.2% YoY demonstrates significant operating leverage. Fixed cost scaling and improved gross spread likely contributed to outsized EBIT growth. Sustainability will depend on maintaining pricing/mix and cost discipline.

Growth Assessment

revenue_sustainability: Revenue growth of +28.2% YoY indicates strong demand or share gains. The small inventory balance suggests a low-inventory or service/asset-light model, or strong turnover, which can help sustain growth without heavy working capital. profit_quality: Ordinary income closely tracks operating income, implying limited reliance on non-core gains. Interest expense is minimal, enhancing the quality of earnings. The indicated tax payment suggests normalizing effective tax rate dynamics. outlook: If pricing, utilization, and cost efficiencies persist, mid-to-high teens net margins could be sustained. Key watchpoints are demand normalization post-rapid growth, any reinvestment needs that could lift D&A and opex, and the ability to maintain gross spread amid input cost changes.

Financial Health

liquidity: Current ratio ~435.5% (¥5,226m/¥1,200m) and quick ratio ~431.2% reflect strong short-term liquidity. Working capital stands at ~¥4,026m, providing a buffer for growth. solvency: Total liabilities-to-equity ~0.34x (¥3,444m/¥9,996m) indicates conservative leverage. Interest coverage of ~137x underscores low refinancing risk and ample capacity to absorb rate or earnings volatility. capital_structure: Implied equity ratio by calculation is ~75.1% (¥9,996m/¥13,312m). The provided equity ratio metric appears unpopulated; nonetheless, the balance sheet composition points to a largely equity-funded structure.

Cash Flow Quality

earnings_quality: With ordinary income ≈ operating income and minimal interest burden, earnings quality appears operationally grounded. However, without disclosed cash flow statements, we cannot confirm cash conversion. FCF_analysis: Operating CF and Investing CF are not disclosed in the provided data, so FCF cannot be assessed. The lack of D&A disclosure also limits insight into maintenance capex needs. working_capital: Current assets are sizeable relative to current liabilities, and inventories are small (~¥52m), suggesting limited inventory risk. Receivables and payables dynamics are not disclosed; thus, WC-driven cash impacts are indeterminate.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS = 0) and a reported payout ratio of 0% suggest retention to fund growth or balance sheet optionality. Absent cash flow data, we cannot assess cash-based payout capacity. FCF_coverage: FCF coverage cannot be evaluated without disclosed OCF/Capex. As such, statements indicating 0.00x should be treated as not available rather than zero. policy_outlook: Given strong earnings and conservative leverage, the company has potential capacity for future distributions; however, reinvestment requirements and cash conversion will determine policy direction.

Risk Assessment

Business Risks:

• Potential normalization of demand after a high-growth phase (+28.2% YoY revenue).
• Margin compression risk if input costs rise or pricing/mix tailwinds fade.
• Customer concentration or project timing risk (not disclosed).
• Execution risk in scaling operations while maintaining quality and cost control.
• Competitive pressure that could erode gross margin.

Financial Risks:

• Limited visibility on cash conversion due to undisclosed OCF and capex.
• Potential increase in fixed costs or capex that could reduce operating leverage.
• Interest rate volatility, albeit current interest burden is low.
• Tax rate normalization variability (calculated ~low teens).

Key Concerns:

• Absence of cash flow disclosure constrains assessment of earnings-to-cash conversion.
• Undisclosed depreciation/amortization obscures capital intensity and maintenance needs.
• Sustainability of unusually strong operating margin (~29.5%) amid competitive dynamics.

Investment Implications

Key Takeaways:

• Strong operating leverage: EBIT +192.7% on revenue +28.2%.
• Healthy profitability: gross margin ~45.6%, operating margin ~29.5%, net margin 19.37%.
• Conservative balance sheet: liabilities-to-equity ~0.34x, interest coverage ~137x.
• ROE of 7.66% driven primarily by margin strength rather than leverage.
• Cash flow not disclosed; cash conversion and capex needs remain key unknowns.

Metrics to Watch:

• Revenue growth trajectory and order backlog/visibility (if disclosed).
• Gross and operating margin persistence versus input costs and pricing.
• OCF, capex, and FCF once disclosed; OCF/NI conversion ratio.
• D&A and capex trends to gauge capital intensity and maintenance needs.
• Working capital turns (DSO/DPO/DIO) when available.
• Tax rate normalization and any non-operating gains/losses.

Relative Positioning: Relative to typical TSE-listed peers, the company exhibits above-average profitability and below-average leverage, but with below-average disclosure on cash flow items in this dataset, which tempers visibility on cash generation.

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