UNICON Holdings Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥4.11B
• Operating Income: ¥256M
• Net Income: ¥155M
• EPS: ¥15.76

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

FY2026 Q1 was a solid top-line and operating profit beat, but capital efficiency and leverage remain the key overhangs. Revenue rose 28.1% YoY to 41.13, outpacing typical market growth and signaling strong demand or improved pricing. Gross profit was 5.04 with a gross margin of 12.3%, while operating income climbed 40.8% YoY to 2.56, implying better operating leverage. Net income reached 1.55, up 22.4% YoY, with an effective tax rate of 21.2%. Operating margin for the quarter stands at roughly 6.2% (2.56/41.13), an improvement in direction versus revenue growth given the faster OI growth than sales. Basis-point comparisons for gross and operating margins versus last year are not quantifiable due to absent prior-period margin data, but the spread between revenue and operating income growth indicates directional margin expansion. DuPont shows ROE of 4.5% driven by a thin 3.8% net margin, low 0.280x asset turnover, and high 4.22x financial leverage. ROIC is only 2.1%, well below a typical 7–8% target and likely below the company’s cost of capital, highlighting value-creation pressure. The balance sheet is levered: D/E is 3.22x and equity ratio is low at 23.7%, with goodwill of 17.97 equal to about 52% of equity—amplifying impairment risk. Liquidity looks reliant on receivables (76.47) and short-term borrowings are substantial at 55.39, though cash & equivalents stand at 24.34; current ratio is not disclosed. Cash flow quality cannot be verified because OCF and FCF are unreported; therefore earnings-to-cash conversion remains an open question. Dividend signaling is aggressive: disclosed Q3 DPS of 230.64 JPY implies a high payout (calculated 287.3%) versus Q1 EPS of 15.76 JPY, which appears unsustainably high absent a sharp earnings inflection or seasonality. Equity-method income is negligible (0.01), so profits are predominantly operating rather than affiliate-driven. Forward-looking, the revenue momentum and operating leverage are positives, but the combination of sub-WACC ROIC, high leverage, and limited cash flow disclosure tempers the outlook until we see sustained cash generation and deleveraging.

Profitability Analysis

ROE (4.5%) decomposes into Net Profit Margin (3.8%) × Asset Turnover (0.280x) × Financial Leverage (4.22x). The structure indicates ROE is primarily supported by high leverage rather than strong margins or asset efficiency. Among the three, the most influential drag is low asset turnover (0.280x) and the modest net margin (3.8%). The likely business drivers include a receivables-heavy model (AR 76.47 vs revenue 41.13 this quarter), which depresses turnover, and a gross margin profile of 12.3% that leaves limited room after SG&A (3.31). Operating leverage appears favorable this quarter (OI +40.8% vs revenue +28.1%), suggesting fixed-cost absorption or improved price/mix. Sustainability is mixed: operating leverage can persist if volume/pricing holds, but margin gains could be vulnerable to cost inflation or pricing competition; low ROIC (2.1%) indicates structural profitability challenges. No evidence is available to determine if SG&A rose faster than revenue; only the absolute SG&A is disclosed, so we cannot flag an overrun. Overall, profitability improved tactically in Q1, but strategic returns remain weak versus benchmarks.

Growth Assessment

Revenue expanded 28.1% YoY to 41.13, a strong pace suggesting robust demand or acquisition effects (not disclosed). Operating income advanced 40.8% to 2.56, indicating positive operating leverage and likely mix/pricing benefits. Net income increased 22.4% to 1.55; the smaller NI growth versus OI hints at higher below-OP items or tax/interest effects (interest unreported). Equity-method income is immaterial (0.01), so the growth is fundamentally from core operations. With ROIC at 2.1%, incremental growth must translate into higher margins or faster asset turns to create economic value. The effective tax rate sits at 21.2%, not a growth constraint. Without segment or order/backlog data, sustainability is uncertain; watch for normalization after a strong Q1. Near-term outlook hinges on maintaining sales momentum while managing working capital to avoid financing-driven growth.

Financial Health

Leverage is high: D/E is 3.22x (warning threshold > 2.0), and the equity ratio is low at 23.7%, limiting shock absorption. Interest-bearing debt detail is partial, but short-term loans are 55.39 and long-term loans 5.25, indicating a heavy short-term funding mix. Liquidity: current ratio is not disclosed; however, current assets are 110.41 versus notable short-term debt (55.39) and payables (44.98), suggesting reliance on receivable collections (AR 76.47) to meet obligations. Cash & equivalents are 24.34, providing some buffer, but maturity mismatch risk exists given the sizable short-term borrowings. Goodwill is 17.97, ~52% of equity, posing impairment risk if performance falters. No off-balance sheet obligations are reported in the provided data. Overall solvency is stretched, and refinancing/interest-rate risk is elevated due to leverage and short-term debt concentration.

Cash Flow Quality

OCF, FCF, and capex are undisclosed, so OCF/NI cannot be calculated and cash conversion quality cannot be validated. With AR at 76.47 (nearly 185% of quarterly sales), working-capital intensity appears high; if growth is AR-led, it could suppress OCF even as earnings rise. Inventories are low (2.25), so no inventory build signal. Potential working-capital manipulation cannot be assessed without AR aging or DSO, but monitoring DSO and any quarter-end AR spikes will be important. Dividend and debt servicing sustainability from internal cash generation remains unverified.

Dividend Sustainability

Reported Q3 DPS of 230.64 JPY versus Q1 EPS of 15.76 JPY implies a high payout (calculated payout 287.3%), which appears unsustainably high on Q1 earnings alone unless earnings are heavily back-half-weighted or the DPS refers to an annualized policy including special elements. FCF coverage is not calculable due to missing OCF and capex. With ROIC at 2.1% and leverage at 3.22x D/E, maintaining an elevated payout would likely require either stronger profit delivery in subsequent quarters or external funding—both carry risk. Policy clarity (ordinary vs special dividend) is needed to assess sustainability more precisely.

Risk Assessment

Business Risks:

• Margin pressure risk due to a low gross margin base (12.3%) and competitive/pricing dynamics
• Execution risk in improving asset turnover from a receivables-heavy balance sheet
• Potential goodwill impairment (goodwill ~52% of equity) if acquired businesses underperform
• Supply chain or cost inflation risk that could erode operating leverage gains

Financial Risks:

• High leverage (D/E 3.22x) elevates refinancing and interest-rate sensitivity
• Short-term funding reliance (ST loans 55.39) raises maturity mismatch risk
• Liquidity dependence on receivable collections (AR 76.47 vs cash 24.34)
• Dividend strain given high implied payout versus quarterly earnings and undisclosed FCF

Key Concerns:

• ROIC at 2.1% is below typical WACC, indicating value-creation shortfall
• Unknown OCF/NI and FCF due to unreported cash flow statements
• Lack of margin bps comparatives due to absent prior-period margin disclosure
• Interest expense and coverage unreported, limiting assessment of debt-servicing capacity

Investment Implications

Key Takeaways:

• Strong Q1 growth (revenue +28.1%, OI +40.8%) with signs of operating leverage
• ROE 4.5% supported primarily by high leverage, not by margin or turnover strength
• ROIC 2.1% underscores structural profitability headwinds
• Balance sheet risk: D/E 3.22x and significant short-term debt (55.39)
• Cash conversion and dividend coverage cannot be validated without OCF/FCF

Metrics to Watch:

• Operating cash flow and FCF; OCF/NI target > 1.0
• DSO and AR trends; reduction in AR relative to sales
• Operating margin progression by bps versus prior periods
• Net debt trajectory and interest coverage once disclosed
• ROIC versus 7–8% benchmark and drivers (NOPAT, invested capital)
• Dividend policy clarity (ordinary vs special) and payout discipline

Relative Positioning: Within diversified small/mid-cap IFRS filers, the company shows above-peer revenue/OP growth momentum but lags on capital efficiency (ROIC 2.1%) and carries higher financial risk due to leverage and short-term debt reliance; visibility is further constrained by limited cash flow disclosure.

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