Aica Kogyo Company,Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥121.35B
• Operating Income: ¥13.35B
• Net Income: ¥9.71B
• EPS: ¥151.29

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Aica Kogyo (TSE:4206) delivered steady H1 FY2026 (Q2 YTD) results under JGAAP with modest top-line growth and slight operating leverage. Revenue rose 1.0% YoY to ¥121.35bn, while operating income increased 1.5% to ¥13.35bn, implying incremental margin improvement. Net income grew faster at 6.4% YoY to ¥9.42bn, supported by non-operating contributions as ordinary income (¥14.67bn) outpaced operating income. Gross profit of ¥32.25bn translates to a 26.6% gross margin, reflecting stable input cost pass-through and product mix resilience. Operating margin stands at 11.0%, and EBITDA margin is 14.1%, indicating a solid cost structure with controlled SG&A. The DuPont bridge shows a net margin of 7.77%, asset turnover of 0.433x, and financial leverage of 1.47x, yielding an ROE of 4.96% for the period—adequate but below double-digit levels typical for higher-return chemical peers. Liquidity is strong: current ratio 286% and quick ratio 258.5%, supported by sizable working capital (¥116.78bn). Leverage is conservative with total liabilities to equity at 0.52x and interest coverage a robust 97.4x, suggesting minimal refinancing risk. Operating cash flow of ¥11.49bn exceeds net income (OCF/NI = 1.22x), indicating decent earnings quality and non-cash discipline; however, lack of disclosed investing cash flow prevents meaningful free cash flow assessment. The reported effective tax rate metric (0.0%) appears uninformative; using income tax expense and net income implies a tax burden likely in the low-30% range, subject to extraordinary items and minority interests. Inventory at ¥17.29bn appears reasonable versus H1 cost of sales, though full turnover analysis is constrained by disclosure. Dividend data are not disclosed in this snapshot (DPS and payout show as zero placeholders), so we cannot assess distributions or policy adherence. Equity ratio is not disclosed (shows 0.0%), but total equity is ¥190.16bn against assets of ¥279.95bn, implying an equity ratio around 68% on a rough basis. Overall, fundamentals point to stable demand, disciplined cost control, and a fortress balance sheet, with the main analytical gap being capex/FCF and dividend detail. Outlook hinges on raw material trends, construction activity, and FX, with scope for incremental margin gains if costs remain benign.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.77%
• asset_turnover: 0.433
• financial_leverage: 1.47
• calculated_ROE: 4.96%
• commentary: ROE is driven primarily by modest net margin and conservative leverage. Asset turnover of 0.433x reflects a capital-intensive and working-capital-reliant model typical of building materials/chemicals. margin_quality: Gross margin at 26.6% and operating margin at 11.0% show stable pricing and cost control. Ordinary income exceeding operating income suggests supportive non-operating items (e.g., financial income or equity-method gains), enhancing net profit but adding some non-core contribution. EBITDA margin of 14.1% indicates adequate operating efficiency. operating_leverage: Revenue grew 1.0% YoY while operating income rose 1.5%, implying mild positive operating leverage. Incremental margins are positive but not broad-based; further SG&A discipline and mix upgrades could lift operating margin toward mid-teens over time.

Growth Assessment

revenue_sustainability: Top-line growth of 1.0% YoY is modest but resilient, consistent with a stable demand environment in core segments. No segment disclosure is provided, limiting visibility on volume vs. price contributions. profit_quality: Net income growth of 6.4% outpaces revenue due to operating leverage and non-operating gains. OCF/NI at 1.22x supports earnings quality. The implied tax burden appears normalizing (low-30% range if assuming minimal extraordinary items), which anchors sustainable net profitability. outlook: Assuming raw material costs remain stable and construction-related demand holds, Aica can maintain low-single-digit sales growth with slight margin expansion. Upside risks include mix improvement and FX tailwinds; downside risks stem from input cost volatility and project timing.

Financial Health

liquidity: Current ratio 286% and quick ratio 258.5% signify strong short-term solvency. Working capital totals ¥116.78bn, supported by substantial current assets. Cash and equivalents are undisclosed in this snapshot. solvency: Total liabilities to equity at 0.52x and interest coverage at 97.4x indicate conservative leverage and ample debt service capacity. capital_structure: Total assets ¥279.95bn vs. equity ¥190.16bn implies an equity ratio around 68% (company-reported equity ratio not disclosed here). Financial leverage (Assets/Equity) is 1.47x, reinforcing balance sheet strength.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥11.49bn exceeds net income of ¥9.42bn (OCF/NI 1.22x), suggesting solid accrual quality and working capital discipline. FCF_analysis: Investing cash flow is undisclosed; therefore, Free Cash Flow cannot be reliably computed. Depreciation & amortization is ¥3.77bn, a useful proxy for maintenance needs, but actual capex could differ materially. working_capital: Inventories are ¥17.29bn; with H1 cost of sales at ¥87.89bn, inventory levels appear reasonable, though full turnover and receivables/payables dynamics cannot be assessed without additional disclosure.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed in this dataset (zeros indicate non-reporting). With EPS at ¥151.29 and solid OCF, the capacity for distributions appears intact, but precise payout cannot be assessed. FCF_coverage: Free cash flow is not computable due to missing investing cash flows; hence, FCF dividend coverage cannot be evaluated. policy_outlook: No policy information provided in this period. Given conservative leverage and stable cash generation, a sustainable dividend framework would be plausible, contingent on capex plans and strategic uses of cash.

Risk Assessment

Business Risks:

• Raw material price volatility (resins, chemicals) impacting gross margin
• Exposure to construction and renovation cycles affecting demand
• Product mix shifts and pricing power constraints in competitive segments
• Supply chain and logistics disruptions affecting lead times and costs
• FX fluctuations influencing import costs and overseas earnings translation

Financial Risks:

• Potential capex upcycles reducing free cash flow (capex not disclosed)
• Working capital swings impacting OCF despite reported strength
• Non-operating income variability influencing ordinary income
• Tax rate normalization vs. implied estimates affecting net profit

Key Concerns:

• Lack of disclosed investing cash flow and cash balance impedes FCF assessment
• Dividend and equity ratio figures not reported in this snapshot
• Dependence on non-operating gains to bridge ordinary vs. operating income

Investment Implications

Key Takeaways:

• Stable H1 with modest growth and slight operating leverage
• Margins are healthy: 26.6% gross, 11.0% operating, 14.1% EBITDA
• ROE at 4.96% reflects solid profitability but conservative leverage
• Balance sheet is strong with low leverage (0.52x liabilities/equity) and high liquidity
• OCF exceeds net income (1.22x), supporting earnings quality
• Non-operating contributions lift ordinary income above operating income
• Data gaps on capex, cash, and dividends constrain FCF and payout analysis

Metrics to Watch:

• Operating margin progression and SG&A efficiency
• Raw material cost trends and gross margin resilience
• Asset turnover and inventory levels vs. sales
• Operating cash flow conversion and working capital turns
• Capex disclosure and investing cash flow to gauge FCF
• Actual equity ratio and any changes in leverage
• Dividend announcements and payout guidance

Relative Positioning: Within Japanese building materials/chemical peers, Aica exhibits above-average balance sheet strength and solid margin discipline, with returns tempered by conservative leverage and moderate 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
• 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