LONSEAL CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥10.84B
• Operating Income: ¥575M
• Net Income: ¥252M
• EPS: ¥93.36

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

ロンシール工業株式会社 (42240) FY2026 Q2 consolidated results show solid top-line growth and a sharp recovery in profitability. Revenue rose 4.6% YoY to ¥10.84bn, while operating income surged 76.4% YoY to ¥0.58bn, indicating meaningful operating leverage and improved cost control. Gross profit reached ¥3.63bn, implying a gross margin of 33.5%, which, together with the operating margin of roughly 5.3%, signals better pricing and/or input cost normalization. Ordinary income of ¥0.60bn exceeded operating income, reflecting minimal non-operating drag and very low interest burden. Net income increased 70.1% YoY to ¥0.43bn, with an implied net margin of 3.97%. DuPont metrics indicate a calculated ROE of 2.25%, driven by a 3.97% net margin, asset turnover of 0.416x, and financial leverage of 1.37x. Liquidity is very strong, with a current ratio of 341.5% and quick ratio of 286.8%, supported by current assets of ¥18.05bn versus current liabilities of ¥5.29bn. The balance sheet is conservative: total liabilities of ¥6.89bn versus equity of ¥19.09bn yields a low debt-to-equity of 0.36x; the implied equity ratio is approximately 73.2% despite the equity ratio field being unreported. Operating cash flow was robust at ¥0.78bn, 1.8x net income, suggesting good earnings quality and cash realization. Interest expense is negligible at ¥5m, and interest coverage is a very comfortable 115x. Investing cash flow is unreported, limiting visibility on current capex and free cash flow; consequently, the reported FCF field is not meaningful. Dividend data (DPS, payout, FCF coverage) are not disclosed for the period, so dividend capacity must be inferred from earnings and cash flow rather than explicit policy. Overall, the company demonstrates improving profitability, healthy cash generation, and a strong balance sheet, albeit with limited disclosure on investment cash flows and shareholder returns in this release. The durability of margin improvement will depend on cost pass-through, raw material trends, and demand in core end-markets. With low financial risk and strong liquidity, near-term solvency risk appears limited. Data limitations (e.g., equity ratio, cash/equivalents, investing CF, shares) constrain precision on per-share and capital allocation analysis.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.97%
• asset_turnover: 0.416x
• financial_leverage: 1.37x
• calculated_ROE: 2.25%
• commentary: ROE improvement is primarily margin-led, as modest asset turnover and conservative leverage cap overall ROE expansion. margin_quality:
• gross_margin: 33.5% (GP ¥3,630m / Revenue ¥10,838m)
• operating_margin: 5.3% (OI ¥575m / Revenue ¥10,838m)
• ordinary_margin: 5.6% (OIrd ¥603m / Revenue ¥10,838m)
• net_margin: 3.97% (NI ¥430m / Revenue ¥10,838m)
• ebitda_margin: 7.9% (EBITDA ¥857m)
• observations: Significant YoY operating income growth (+76.4%) on +4.6% revenue indicates cost relief and/or pricing actions. Minimal interest burden (¥5m) supports clean margin translation. Implied effective tax rate based on reported income tax (¥94m) and pre-tax income suggests mid-teens, despite the calculated metric field showing 0.0%. operating_leverage: High in the period: operating income grew ~16.6x faster than revenue, implying meaningful fixed-cost absorption and improved mix/pricing. Sustainability depends on volume stability and input cost trends.

Growth Assessment

revenue_sustainability: Revenue +4.6% YoY to ¥10.84bn indicates steady demand. Sustainability hinges on end-market conditions in construction/interiors and industrial applications, plus pricing discipline. profit_quality: Profit growth outpaced sales (OI +76.4%, NI +70.1%), driven by margin expansion. The improvement appears quality-backed, given OCF/NI of 1.8x, low interest expense, and stable working capital positioning. outlook: Key drivers for 2H include cost pass-through retention, raw material price stability, and project demand. With strong liquidity and low leverage, the company is positioned to navigate demand variability, though growth may normalize as cost tailwinds fade.

Financial Health

liquidity:

• current_assets: ¥18,051m
• current_liabilities: ¥5,286m
• current_ratio: 341.5%
• quick_ratio: 286.8%
• working_capital: ¥12,765m
• commentary: Very strong liquidity with sizable buffer against short-term obligations. solvency:
• total_assets: ¥26,072m
• total_liabilities: ¥6,888m
• total_equity: ¥19,092m
• equity_ratio_implied: ≈73.2% (equity/assets), field unreported
• debt_to_equity: 0.36x
• interest_coverage: 115x (EBIT/Interest)
• commentary: Low leverage and high equity cushion indicate low solvency risk. capital_structure: Conservative balance sheet with minimal financial expenses. Capacity to fund operations internally appears strong; deployment into capex or returns depends on cash allocation priorities (investing CF not disclosed).

Cash Flow Quality

earnings_quality: OCF of ¥776m vs NI of ¥430m (OCF/NI 1.80x) suggests strong cash conversion and low accrual intensity in the period. free_cash_flow: Not determinable: investing cash flow and capex are unreported, so FCF cannot be reliably computed from the provided data. working_capital: Inventories at ¥2,889m provide context for production and demand; overall working capital is ample (¥12,765m). No evidence of adverse working capital build from the disclosed snapshot.

Dividend Sustainability

payout_ratio_assessment: Payout and DPS are unreported for the period (payout field shows 0.0% but should be treated as undisclosed). With EPS of ¥93.36 and strong OCF, capacity exists, but actual policy cannot be inferred from this dataset. fcf_coverage: FCF coverage cannot be assessed due to missing capex/investing CF. Cash-based coverage metrics are therefore inconclusive. policy_outlook: Without disclosure on DPS or policy, visibility is limited. Future distributions will depend on sustained cash generation, capex needs, and management’s capital allocation priorities.

Risk Assessment

Business Risks:

• End-market demand fluctuations in construction and interior-related segments affecting volumes and pricing.
• Raw material cost volatility (e.g., petrochemical-derived inputs) impacting gross margin if not fully passed through.
• Competitive pricing pressure that could erode the recent margin gains.
• Project timing and mix shifts that influence operating leverage and utilization.

Financial Risks:

• Limited visibility on capex due to unreported investing cash flows, creating uncertainty around future FCF.
• Potential working capital swings impacting cash conversion despite current strength.
• Currency exposures if procurement or sales have FX components (not disclosed).

Key Concerns:

• Sustainability of margin expansion achieved in H1 amid possible normalization of input costs.
• Lack of disclosed investing cash flows obscures true FCF and reinvestment intensity.
• Dividend policy and shareholder return framework are not visible in the provided data.

Investment Implications

Key Takeaways:

• Healthy top-line growth (+4.6% YoY) with outsized profit recovery (OI +76.4%).
• Strong balance sheet and liquidity (current ratio 341.5%, D/E 0.36x).
• High earnings quality (OCF/NI 1.8x) and negligible interest burden (115x coverage).
• Limited disclosure on investing CF/FCF and dividends constrains capital allocation visibility.
• ROE at 2.25% remains modest, reflecting conservative leverage and mid-single digit operating margin.

Metrics to Watch:

• Gross and operating margin trajectory in 2H (cost pass-through vs. input cost trends).
• Capex and investing cash flows to frame true FCF and reinvestment needs.
• Working capital turns (inventory and receivables) to validate cash conversion durability.
• Order visibility/end-market demand indicators for volume sustainability.
• Tax rate normalization versus implied mid-teens level.

Relative Positioning: The company presents a low-risk balance sheet and improving profitability relative to typical small-to-mid cap Japanese industrial/material peers, though ROE is still modest; clarity on capex/FCF and a defined return policy would strengthen the equity story.

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