TOKYO OHKA KOGYO CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥172.78B
• Operating Income: ¥31.89B
• Net Income: ¥18.62B
• EPS: ¥184.28

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

Verdict: Strong Q3 FY2025 with double-digit top-line growth translating into outsized profit expansion and a solid mid-teens operating margin profile. Revenue rose 17.9% YoY to 1,727.8, supported by a sharp 37.2% YoY increase in operating income to 318.9 and a 41.1% YoY increase in net income to 220.6. Gross profit reached 529.7, implying a gross margin of 30.7%, while operating margin printed at roughly 18.5%. SG&A was 297.3, implying an SG&A ratio of about 17.2%; operating income exceeded gross profit minus SG&A, indicating a positive contribution from other operating items. Ordinary income was 327.6, modestly above operating income, driven by net non-operating income (13.6 of income vs 5.7 of expenses), while interest expense remained minimal at 0.64, yielding an interest coverage of ~498x. Net income of 220.6 implies a net margin of 12.8%, and the effective tax rate was 24.4%. ROE (DuPont) stands at 9.8%, built on 12.8% net margin, 0.577x asset turnover, and 1.33x financial leverage—showing a returns profile driven primarily by profitability rather than leverage. Balance sheet quality is high: current ratio 296%, quick ratio 267%, D/E 0.33x, and cash/deposits of 547.7 comfortably exceeding short-term borrowings of 3.6. Working capital is ample at 990.7, and the company maintains significant receivables (468) and manageable inventories (146.9) versus payables (274.3). Operating cash flow was unreported, so we cannot verify earnings-to-cash conversion this quarter. Margin trajectory appears favorable given profit growth outpacing revenue; while exact basis-point expansion versus last year is not computable due to missing prior-period margins, directionally margins expanded. There may be extraordinary items or mapping differences between ordinary income and profit before tax; the reported PBT is lower than ordinary income, suggesting special items, so the net bridge warrants caution. The payout ratio is calculated at 36.5%, implying room to maintain or gradually raise dividends if cash generation supports it, though FCF data are missing. Overall, the quarter signals cyclical recovery in end-markets (likely semiconductors) and good cost discipline, but the lack of cash flow disclosure and potential extraordinary items are key areas to monitor. Forward-looking, continued demand normalization and disciplined opex should support earnings leverage, with ROIC already strong at 12.9%.

Profitability Analysis

ROE decomposition: 9.8% ROE = 12.8% Net Profit Margin × 0.577x Asset Turnover × 1.33x Financial Leverage. The dominant driver of ROE is the healthy net margin, with modest asset turnover and conservative leverage. Compared with typical chemical/semiconductor-material peers, leverage is low, so incremental ROE improvements must come from margin and turnover. The biggest change this quarter versus revenue growth is operating income growing 37.2% vs revenue 17.9%, indicating margin expansion (exact bps vs prior period not available). Business explanation: higher mix of leading-edge products, improved utilization, and disciplined SG&A (17.2% of sales) alongside beneficial non-operating items (net +7.9) likely supported profitability. Sustainability: margin gains tied to mix and utilization are partially sustainable if semiconductor demand recovery persists; any extraordinary items in the P/L are non-recurring. Watch for SG&A growth outpacing revenue in future periods; this quarter, profit growth outpaced revenue, suggesting positive operating leverage.

Growth Assessment

Top-line growth was robust at +17.9% YoY to 1,727.8, consistent with a cyclical upturn in semiconductor materials demand. Operating income surged +37.2% to 318.9, showing operating leverage and favorable mix; ordinary income growth (+36.3%) corroborates underlying strength beyond one-time items. Net income grew +41.1% to 220.6, aided by strong operating performance and low interest burden. Gross margin of 30.7% and operating margin of ~18.5% reflect improved pricing/mix and cost control; SG&A ratio at ~17.2% is contained. Non-operating income (dividends 3.63, interest 2.60) added modestly, with limited non-operating expenses (5.67). With ROIC at 12.9% (above the 8% excellence benchmark), current investment returns are attractive. Outlook depends on the sustainability of semiconductor demand recovery, inventory normalization at customers, and currency effects; absent segment data, we assume continued mid-teens margin potential if demand holds. Key unknown is cash flow conversion (OCF unreported), which is critical to fund capex for capacity and R&D.

Financial Health

Liquidity is strong: current ratio 295.9% and quick ratio 266.9% far exceed benchmarks; no warning triggers. Solvency is conservative with D/E of 0.33x and interest coverage of ~498x. Cash and deposits (547.7) plus receivables (468.0) comfortably exceed current liabilities (505.7), indicating no maturity mismatch; short-term loans are only 3.6. Long-term loans are 161.0 versus total equity of 2,254.0, underscoring low leverage. Assets are balanced between current (1,496.4) and noncurrent (1,498.9), supporting ongoing operations and investment. No off-balance sheet obligations were reported in the provided data. Equity ratio is not provided, but with equity at 2,254.0 against assets of 2,995.3, implied equity ratio is roughly 75%, signaling a very solid capital structure.

Cash Flow Quality

OCF, FCF, and capex were unreported, so we cannot compute OCF/Net Income (benchmark >1.0) or assess FCF sustainability quantitatively. As a proxy, strong profitability and low interest burden suggest potential for healthy operating cash generation, but working capital movements (receivables 468.0, inventories 146.9, payables 274.3) could swing OCF in either direction during a recovery. Without OCF, we cannot flag OCF/NI <0.8; earnings quality assessment remains incomplete. No signs of aggressive working capital manipulation are evident from point-in-time balances, but absence of period-to-period deltas limits detection.

Dividend Sustainability

The calculated payout ratio is 36.5%, below the 60% benchmark for sustainability, implying room to maintain or moderately increase dividends if cash flows are supportive. Total dividends paid, FCF, and capex are unreported, so FCF coverage cannot be verified. The balance sheet’s strength (net cash position on a short-term basis and low leverage) supports dividend capacity under normal conditions. Policy outlook cannot be inferred from disclosures here; monitor full-year guidance and capital allocation commentary.

Risk Assessment

Business Risks:

• Semiconductor cycle volatility affecting photoresist and electronic materials demand
• Customer concentration risk with leading foundries/IDMs
• Pricing pressure and competitive intensity in advanced resist chemistries
• Raw material cost volatility and supply chain constraints
• Export controls and regulatory changes impacting shipments to certain regions
• Product mix and technology transition risk (node migration timing)

Financial Risks:

• FX exposure (USD/JPY, KRW/JPY) impacting both revenue and input costs
• Potential extraordinary items affecting P/L comparability (PBT vs ordinary income gap)
• Limited visibility on cash generation due to unreported OCF/FCF
• Rising capex needs for advanced materials could pressure FCF in downcycles

Key Concerns:

• OCF unreported: inability to confirm earnings-to-cash conversion
• Possible special items between ordinary income and PBT complicate margin quality assessment
• Inventory and receivable levels need monitoring for potential working capital drag if demand softens
• Sustainability of current operating margin if mix tailwinds fade

Investment Implications

Key Takeaways:

• Strong revenue growth (+17.9% YoY) with outsized operating profit growth (+37.2%) indicates margin expansion
• Healthy profitability profile: 30.7% gross margin and ~18.5% operating margin
• ROE 9.8% driven by net margin; leverage remains conservative at 1.33x assets/equity
• Balance sheet is robust with current ratio ~296% and D/E 0.33x
• Non-operating items provided a small net tailwind; interest burden is negligible
• ROIC at 12.9% is well above management benchmarks for value creation
• Cash flow visibility is limited this quarter; FCF and capex not disclosed

Metrics to Watch:

• Operating cash flow and free cash flow versus net income
• Gross and operating margin trend (bps) as semiconductor cycle evolves
• Working capital turns: receivables and inventory days versus sales/COGS
• Capex intensity and R&D spending to support advanced nodes
• FX impacts on revenue and costs
• Extraordinary gains/losses bridging ordinary income to net

Relative Positioning: Within semiconductor materials, the company exhibits superior balance sheet strength and currently strong ROIC, with profitability benefiting from demand recovery and disciplined costs; key differentiator versus peers will be sustaining margins and cash conversion through the cycle.

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