IPS HOLDINGS CO.,LTD. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥742M
• Operating Income: ¥60M
• Net Income: ¥18M
• EPS: ¥15.03

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

IPS Holdings Co., Ltd. (consolidated, JGAAP) reported FY2026 Q1 revenue of ¥742.0 million, down 7.5% year over year, but delivered a sharp recovery in profitability with operating income up 125.1% to ¥60.0 million. Gross profit was ¥196.44 million, implying a gross margin of 26.5%, supporting an operating margin of approximately 8.1%. Ordinary income of ¥59.0 million was broadly in line with operating income, indicating minimal non-operating impacts; reported interest expense was only ¥18 thousand. Net income rose 95.4% YoY to ¥34.0 million, translating to a net margin of 4.6% and EPS of ¥15.03. The DuPont bridge shows ROE at 2.09%, driven by a 4.58% net margin, 0.277x asset turnover, and 1.65x financial leverage. Total assets were ¥2.683 billion and total equity was ¥1.626 billion; despite the reported equity ratio field showing 0.0%, the implied equity ratio is approximately 60.6% (calculated), reflecting a conservative balance sheet. Liquidity is strong with a current ratio of 298.6% and working capital of ¥1.565 billion, suggesting ample short-term flexibility. Leverage appears modest with total liabilities/ equity of about 0.76x, and interest burden is negligible given the 3,333x interest coverage. While the top line declined, the large increase in operating income indicates effective cost control and operating leverage benefits. Based on net income (¥34.0 million) and income tax expense (¥8.477 million), an implied effective tax rate is roughly 20%, not 0% as the summary line suggests. Cash flow data (operating, investing, financing), depreciation and amortization, and share counts were not disclosed in the XBRL, limiting deeper analysis of earnings quality, asset intensity, and per-share metrics. Dividend information shows DPS at ¥0 and payout at 0%, offering no visibility on capital returns this quarter. Overall, the quarter reflects improving profitability on a softer revenue base, with a solid balance sheet underpinning resilience, but the absence of cash flow disclosure and several zero-tagged items constrains confidence in assessing cash conversion and capital allocation capacity. We focus on the sustainability of the margin gains, working-capital discipline given high current assets, and confirmation of operating cash inflows in subsequent filings. Near-term outlook hinges on revenue stabilization and the company’s ability to maintain gross margin while controlling SG&A. Data limitations (notably cash flow and depreciation) warrant caution when interpreting EBITDA-based metrics or cash conversion ratios.

Profitability Analysis

roe_decomposition: ROE 2.09% = Net margin 4.58% × Asset turnover 0.277 × Financial leverage 1.65. Net income ¥34.0m on revenue ¥742.0m; assets ¥2,683.0m; equity ¥1,626.0m. margin_quality: Gross margin 26.5% (gross profit ¥196.44m). Operating margin about 8.1% (operating income ¥60.0m). Net margin 4.6%. The YoY operating income increase (+125.1%) despite a 7.5% revenue decline suggests tighter cost control and/or favorable mix. Ordinary income closely tracking operating income indicates limited non-operating noise; interest expense is immaterial (¥18k). An implied effective tax rate near 20% (¥8.477m tax on ~¥42.5m pre-tax) appears reasonable under JGAAP. operating_leverage: Negative sales growth (-7.5% YoY) paired with significant operating profit growth implies meaningful operating leverage from SG&A discipline. Sustaining an 8%+ operating margin at reduced scale suggests fixed-cost absorption improved or variable costs declined; confirmation requires SG&A detail not provided.

Growth Assessment

revenue_sustainability: Revenue fell 7.5% YoY to ¥742.0m. With inventories unreported and no segment disclosure, visibility into volume versus price/mix is limited. Sustainability will depend on order intake and client activity recovery in coming quarters. profit_quality: Profit growth was driven by margin expansion rather than top-line growth. Low non-operating items and a reasonable implied tax rate support earnings quality at the income-statement level, but the absence of depreciation and cash flow statements prevents validation of non-cash items and cash conversion. outlook: If the company can stabilize revenue while retaining current gross/operating margins, earnings should improve further given operating leverage. Watch for potential normalization of SG&A and potential pressure on gross margin if revenue softness persists.

Financial Health

liquidity: Current assets ¥2,352.3m vs current liabilities ¥787.8m imply a current ratio of 2.99x and working capital of ¥1,564.6m, indicating strong short-term coverage. Quick ratio equals current ratio given inventories are unreported. solvency: Total liabilities ¥1,235.0m vs equity ¥1,626.0m suggest modest leverage (Liabilities/Equity ≈ 0.76x). Interest coverage is exceptionally strong at ~3,333x, reflecting minimal interest burden. capital_structure: Implied equity ratio ≈ 60.6% (equity/assets), despite the reported equity ratio field showing 0.0% (likely not disclosed). Financial flexibility appears sound with low reliance on interest-bearing debt inferred from minimal interest expense.

Cash Flow Quality

earnings_quality: Net income ¥34.0m appears supported by operating performance, but lack of depreciation/amortization disclosure and absent cash flow statements limit assessment of non-cash components and accrual intensity. fcf_analysis: Operating CF, investing CF, and financing CF were not disclosed; Free Cash Flow cannot be calculated. Consequently, OCF/NI and FCF-based coverage ratios shown as zero should be treated as not available rather than actual zeros. working_capital: High current assets relative to current liabilities suggest a working-capital-heavy profile. Without a breakdown (receivables, payables), we cannot assess DSO/DPO trends or potential cash needs from growth.

Dividend Sustainability

payout_ratio_assessment: DPS is reported at ¥0 and payout ratio at 0%; with earnings of ¥34.0m, there is no payout this quarter. Historical policy and full-year guidance are not provided. fcf_coverage: FCF data not disclosed; hence, we cannot evaluate dividend coverage by free cash flow. policy_outlook: Given strong liquidity and low interest burden, capacity for dividends may exist, but without OCF visibility and management guidance, payout trajectory is uncertain.

Risk Assessment

Business Risks:

• Revenue contraction (-7.5% YoY) indicating potential demand softness or project timing shifts
• Dependence on cost control to sustain margins amid lower scale
• Limited disclosure on segment mix and backlog/order visibility
• Potential client concentration risk (not disclosed) that could amplify volatility
• Macroeconomic slowdown affecting client spending

Financial Risks:

• Cash flow visibility is limited due to non-disclosure of OCF/ICF/FCF
• Working-capital intensity could pressure cash if receivables expand
• Potential mismatch between accounting earnings and cash generation cannot be ruled out
• Equity ratio field not disclosed; reliance on calculated metrics may mask changes in interest-bearing debt

Key Concerns:

• Absence of cash flow and depreciation data impairs earnings quality assessment
• Sustainability of margin expansion with declining revenue
• Verification of low leverage via detailed debt breakdown is not possible from current data

Investment Implications

Key Takeaways:

• Top line down 7.5% YoY to ¥742.0m but operating income surged 125.1% to ¥60.0m
• Gross margin 26.5% and operating margin ~8.1% demonstrate improved cost discipline
• Net margin 4.6% yields ROE of 2.09% with 0.277x asset turnover and 1.65x leverage
• Balance sheet appears strong: implied equity ratio ~60.6%, current ratio 2.99x, interest coverage ~3,333x
• Cash flow statement and depreciation are not disclosed; cash conversion remains unverified
• Dividend currently nil; policy outlook unclear pending cash flow visibility

Metrics to Watch:

• Revenue growth trajectory and order/backlog trends
• Gross margin and SG&A ratio to confirm margin sustainability
• Operating cash flow and OCF/NI to validate earnings quality
• Receivables and payables movements (DSO/DPO) to gauge working-capital needs
• Debt breakdown and interest-bearing debt levels
• Full-year guidance updates and dividend policy commentary

Relative Positioning: Relative to small-cap Japan peers, IPS appears to combine improving profitability with a conservative balance sheet and minimal interest burden, but lags on disclosure completeness (notably cash flows), which tempers confidence in cash conversion and capital return capacity.

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