DaikyoNishikawa Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥81.70B
• Operating Income: ¥4.83B
• Net Income: ¥3.45B
• EPS: ¥55.76

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

DaikyoNishikawa (4246) FY2026 Q2 consolidated results under JGAAP show resilient profitability despite a mild top-line decline. Revenue was ¥81.7bn, down 2.2% YoY, indicating a soft demand backdrop or program mix shifts. Gross profit of ¥11.8bn implies a gross margin of 14.4%, which, while modest for an automotive plastics supplier, remains stable enough to support operating profitability. Operating income declined 15.1% YoY to ¥4.84bn, compressing operating margin to 5.9%, reflecting cost pressure and/or operating deleverage on slightly lower sales. Ordinary income of ¥5.24bn exceeded operating income, pointing to positive non-operating contributions offsetting some operating weakness. Net income rose 19.7% YoY to ¥3.90bn, a strong rebound attributable to non-operating gains and potentially tax or minority interest effects. DuPont analysis yields ROE of 4.47% (net margin 4.77% × asset turnover 0.516 × leverage 1.82), indicating modest equity returns consistent with the industry’s capital intensity. Liquidity appears sound with a current ratio of 170% and quick ratio of 164%, underpinned by ¥30.1bn of working capital. Leverage is moderate at 0.74x debt-to-equity, and interest coverage is comfortable at 6.8x, indicating manageable financial risk. Operating cash flow of ¥6.87bn exceeds net income (OCF/NI = 1.76x), signaling decent earnings quality and cash conversion. EBITDA was ¥10.45bn (12.8% margin), and depreciation/amortization was ¥5.61bn, highlighting ongoing capital intensity typical of tooling-heavy auto components. Financing cash flow was an outflow of ¥5.77bn, implying debt repayment or other shareholder-related uses, though dividends are not disclosed for the period. Several line items are unreported (e.g., investing cash flows, cash balance, equity ratio, shares), which limits the depth of valuation and capital allocation analysis. Reported effective tax rate metric appears anomalous relative to disclosed income tax expense, so tax-related inferences should be made cautiously. Overall, the company demonstrates adequate operating resilience, satisfactory liquidity, and improving bottom-line momentum despite revenue softness and margin pressure. The key watchpoints are operating leverage amid volume trends, ability to pass through resin and energy costs, and capital allocation given moderate leverage and healthy OCF.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.77%
• asset_turnover: 0.516
• financial_leverage: 1.82
• calculated_ROE: 4.47%
• commentary: ROE is driven primarily by modest net margins and low asset turnover inherent to the capital-intensive auto parts sector; leverage is moderate and not the principal driver. margin_quality: Gross margin at 14.4% supports a 5.9% operating margin, indicating controlled SG&A but some operating deleverage versus prior-year levels. Ordinary margin at ~6.4% implies beneficial non-operating factors (e.g., financial or affiliate income). Net margin at 4.77% improved YoY despite lower operating income, suggesting below-the-line tailwinds. operating_leverage: A 2.2% decline in revenue coincided with a 15.1% drop in operating income, indicating negative operating leverage in the period. This likely reflects fixed-cost absorption pressure and/or cost inflation not fully offset by pricing/mix.

Growth Assessment

revenue_sustainability: Top line declined 2.2% YoY to ¥81.7bn, suggesting softer production volumes or program mix changes. Without segment or regional detail, sustained demand visibility is limited. profit_quality: Operating income fell to ¥4.84bn while net income grew 19.7%, implying reliance on non-operating gains or tax/minority effects. EBITDA margin of 12.8% indicates underlying operating cash earnings remain solid, but the dilution from depreciation underscores capital intensity. outlook: Near-term growth hinges on auto production schedules, new program launches, and cost pass-through. Stabilization in resin/energy prices and a normalization of start-up costs could aid margins; conversely, further volume softness would exert additional operating leverage pressure. Absent disclosed backlog or guidance, the outlook is cautiously neutral with a focus on execution and cost control.

Financial Health

liquidity: Current ratio 169.9% and quick ratio 164.2% reflect ample short-term liquidity. Working capital stands at ¥30.07bn, offering a buffer against production volatility. solvency: Debt-to-equity is 0.74x with interest coverage of 6.8x, indicating manageable leverage and adequate debt service capacity. capital_structure: Total assets ¥158.5bn and equity ¥87.1bn yield assets/equity of 1.82x. The reported equity ratio is undisclosed (shown as 0.0%), limiting precision on balance sheet strength metrics, but the leverage indicators suggest a balanced capital structure.

Cash Flow Quality

earnings_quality: OCF/Net Income of 1.76x indicates solid cash conversion and disciplined working capital. EBITDA of ¥10.45bn vs. operating income of ¥4.84bn shows substantial non-cash depreciation consistent with asset intensity. FCF_analysis: Investing cash flow is undisclosed (reported as 0), preventing calculation of free cash flow and capex intensity. Given D&A of ¥5.61bn, maintenance capex is likely meaningful; thus, true FCF may be below OCF. working_capital: With inventories reported at ¥2.44bn and strong quick ratio, the period likely benefited from stable receivables/ payables dynamics; however, lack of turnover days data constrains deeper diagnostics.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.0%, indicating non-disclosure rather than confirmed zero distributions. Therefore, payout sustainability cannot be assessed from the provided data. FCF_coverage: FCF is not computable due to undisclosed investing cash flows, so dividend coverage by FCF cannot be evaluated. policy_outlook: Without stated policy or historical payout data in this set, we cannot infer policy direction. Liquidity and OCF are supportive of potential distributions, but moderate leverage and sector cyclicality argue for a balanced stance between debt management, capex, and shareholder returns.

Risk Assessment

Business Risks:

• Automotive production cycle exposure and program timing risk
• Raw material (resin) and energy price volatility and pass-through timing
• Customer concentration typical of tier-1/2 suppliers
• EV transition affecting component mix and tooling requirements
• Start-up costs and launch quality risks for new programs
• Global supply chain disruptions impacting volumes and logistics costs
• FX exposure from overseas operations and procurement

Financial Risks:

• Operating leverage to volumes amid high fixed-cost base
• Moderate leverage (D/E 0.74x) subject to refinancing cost changes
• Potential working capital swings tied to OEM production schedules
• Interest rate risk affecting interest coverage if rates rise further
• Limited visibility on capex due to undisclosed investing cash flows

Key Concerns:

• Negative operating leverage evidenced by larger decline in operating income vs. revenue
• Dependence on non-operating items to support net income growth
• Insufficient disclosure on investing cash flows and cash balance, impeding FCF and liquidity runway analysis

Investment Implications

Key Takeaways:

• Revenue softness (-2.2% YoY) alongside margin compression at the operating level
• Net income growth (+19.7% YoY) driven by below-the-line support
• ROE at 4.47% reflects moderate profitability and capital intensity
• Healthy liquidity with current ratio ~170% and interest coverage 6.8x
• Strong cash conversion (OCF/NI 1.76x), but FCF unknown due to missing capex data

Metrics to Watch:

• Operating margin trajectory and cost pass-through effectiveness
• Capex and investing cash flows to gauge true FCF
• Working capital turns (DSO/DIO/DPO) and OCF sustainability
• Leverage and interest coverage amid potential rate fluctuations
• Ordinary vs. operating income mix to assess reliance on non-operating items
• Order pipeline/new program launches and volume recovery

Relative Positioning: Within auto components peers, profitability is mid-tier with modest ROE and EBITDA margin, balanced by solid liquidity and manageable leverage; visibility on capex/FCF is below peers due to disclosure gaps.

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