Future Innovation Group,Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥9.94B
• Operating Income: ¥565M
• Net Income: ¥299M
• EPS: ¥20.79

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

FIG Co., Ltd. (4392) reported FY2025 Q3 consolidated results under JGAAP showing solid topline growth and strong profit momentum. Revenue reached ¥9.936bn, up 12.8% YoY, indicating demand resilience and/or contribution from growth initiatives. Operating income rose 77.9% YoY to ¥565m, implying significant operating leverage and improved cost discipline. Net income surged 113.4% YoY to ¥630m, outpacing operating profit growth, suggesting non-operating tailwinds and/or one-off items under JGAAP. Gross profit margin is presented at 28.2%, consistent with the disclosed gross profit figure, supporting a narrative of stable-to-improving unit economics. Operating margin of roughly 5.7% (¥565m/¥9.936bn) indicates profitability expansion versus the prior year, given the sharper growth in operating income over revenue. The DuPont-based ROE of 7.29% is driven by a 6.34% net margin, 0.631x asset turnover, and 1.82x financial leverage, indicating returns primarily supported by improved margins rather than excessive leverage. Liquidity is strong with a current ratio of 210.8% and a quick ratio of 165.7%, backed by sizeable current assets of ¥10.71bn. The capital structure is balanced with total liabilities of ¥7.722bn and total equity of ¥8.643bn, equating to a debt-to-equity ratio of 0.89x and an equity ratio implied at approximately 54.9% (computed), despite a reported equity ratio of 0.0% that appears to be an unreported placeholder. Interest coverage stands at a healthy 19.5x, reflecting manageable financing costs (¥29m) relative to operating earnings. Inventory of ¥2.291bn represents roughly 21.4% of current assets, warranting monitoring of turnover as growth persists. Cash flow data (OCF/ICF/FCF) are unreported, limiting earnings quality assessments; consequently, the OCF/Net Income ratio and FCF coverage metrics shown as zero are not indicative of underlying cash generation. Dividend payout is reported as zero with no DPS, implying retained earnings are being prioritized, though the absence of FCF data precludes coverage analysis. There is an internal inconsistency between the reported cost of sales (¥6.003bn) versus revenue and gross profit figures; given the provided gross margin (28.2%) aligns with gross profit, the margin metric appears more reliable for analysis. Overall, FIG demonstrates improving profitability, solid balance sheet health, and favorable ROE dynamics, but confirmation via cash flow disclosures and clarification on non-operating and extraordinary items will be key to assessing sustainability.

Profitability Analysis

ROE of 7.29% is decomposed into a net profit margin of 6.34%, asset turnover of 0.631x, and financial leverage of 1.82x, indicating returns are margin-led with moderate balance sheet leverage. Operating margin is approximately 5.7% (¥565m/¥9.936bn), materially higher YoY given operating income growth of 77.9% against 12.8% revenue growth. Gross margin is 28.2%, suggesting stable pricing and/or procurement efficiency; however, there is a discrepancy between the disclosed cost of sales (¥6.003bn) and the implied cost of sales derived from the margin, so we anchor on the provided gross margin. Ordinary income of ¥557m is close to operating income, implying limited net non-operating drag despite ¥29m in interest expense; interest coverage is robust at 19.5x. Net income at ¥630m exceeds ordinary income, implying positive net extraordinary items and/or tax effects under JGAAP. The effective tax rate printed as 0.0% is inconsistent with reported income tax of ¥212m; this likely reflects data limitations in the calculated metric rather than actual tax expense. EBITDA is shown as zero due to unreported depreciation/amortization; actual EBITDA is therefore understated in the provided metrics, and operating profitability is better assessed via operating income. Overall margin quality appears to have improved, and the degree of operating leverage is high given the spread between revenue and operating income growth.

Growth Assessment

Revenue growth of 12.8% YoY to ¥9.936bn indicates healthy demand and/or increased project deliveries. Operating income growth of 77.9% YoY and net income growth of 113.4% YoY highlight significant margin expansion and potential scale benefits. The improvement in ROE to 7.29% is consistent with better profitability at the net level, not solely balance sheet leverage. Absent segment or order-backlog disclosure, sustainability must be inferred from margin trends and working capital posture; current assets growth versus liabilities suggests capacity to support ongoing growth. The gap between operating and net income trends points to non-operating contributions or extraordinary items; sustainability should be benchmarked against normalized ordinary income. Inventory at ¥2.291bn within current assets requires monitoring to ensure growth is not inventory-led without corresponding sell-through. With cash flow data unreported, we cannot corroborate revenue quality via cash collections or working capital release; therefore, profit quality is assessed primarily via income statement metrics. Outlook hinges on maintaining gross margin discipline and operating efficiency while managing financing costs and working capital. If revenue momentum persists with controlled opex growth, operating leverage can continue to support earnings, but normalization of non-operating gains could temper net profit growth.

Financial Health

Total assets are ¥15.755bn against total equity of ¥8.643bn and total liabilities of ¥7.722bn, implying an equity ratio of roughly 54.9% and financial leverage (assets/equity) of 1.82x. Liquidity is strong: current assets of ¥10.71bn versus current liabilities of ¥5.08bn yield a current ratio of 210.8% and a quick ratio of 165.7%. Working capital stands at ¥5.63bn, providing a buffer for growth and seasonal needs. Debt-to-equity is 0.89x when using total liabilities, indicating moderate leverage and comfortable solvency. Interest expense is modest at ¥29m, and coverage by operating income is 19.5x, suggesting low refinancing risk in the near term. The reported equity ratio of 0.0% appears to be an unreported placeholder; we rely on computed ratios from disclosed totals. No cash balance is reported in the cash flow section; however, this is an unreported item rather than an actual zero balance. Overall, the balance sheet supports ongoing operations and selective investment, contingent on maintaining working capital discipline.

Cash Flow Quality

Operating, investing, and financing cash flows are unreported, preventing a direct assessment of cash conversion. The OCF/Net Income ratio displayed as 0.00 is not meaningful due to missing OCF data. Free cash flow is also unreported, so earnings quality cannot be triangulated with cash generation. Working capital analysis is limited by the absence of receivables and payables detail; we note inventories at ¥2.291bn but cannot compute turnover or DIO. With operating income at ¥565m and interest expense of ¥29m, the income statement suggests adequate capacity to service financing costs; however, without OCF, we cannot validate cash interest coverage or underlying collection efficiency. Depreciation and amortization are unreported, implying EBITDA metrics shown as zero are not decision-useful; thus, any cash EBITDA inferences are constrained. We recommend monitoring subsequent disclosures for OCF trends, changes in inventories and receivables, and capex intensity to assess FCF durability.

Dividend Sustainability

Annual DPS is reported as zero with a payout ratio of 0.0%, indicating earnings retention. FCF coverage is shown as 0.00x due to unreported FCF and should not be interpreted as a shortfall. Given net income of ¥630m and a solid balance sheet, potential capacity for shareholder returns exists, but sustainability cannot be evaluated without OCF and capex disclosure. Under JGAAP, extraordinary items can inflate net profit; given net income exceeds ordinary income, a normalized profit base should be used when assessing policy. Absent a stated dividend policy, we assume a conservative stance prioritizing reinvestment, working capital, and balance sheet flexibility. Confirmation of cash generation and capital allocation priorities in subsequent quarters will be important to gauge dividend prospects.

Risk Assessment

Business Risks:

• Potential reliance on non-operating or extraordinary items, as net income exceeds ordinary income
• Margin sensitivity to input costs and pricing power, given a 28.2% gross margin profile
• Execution risk in scaling operations while sustaining a 5–6% operating margin
• Working capital intensity, with inventories at ¥2.291bn requiring disciplined turnover
• Demand volatility affecting revenue growth sustainability (12.8% YoY may normalize)

Financial Risks:

• Limited visibility on cash generation due to unreported OCF and FCF
• Potential normalization of tax and one-off items impacting net profit
• Moderate leverage (0.89x liabilities-to-equity) could amplify earnings volatility if profitability softens
• Data inconsistency between cost of sales and gross profit introduces uncertainty in cost structure analysis

Key Concerns:

• Absence of cash flow disclosures prevents verification of earnings quality
• Net income outpacing ordinary income suggests one-offs that may not recur
• Inconsistency in cost of sales vs. gross profit requires clarification to validate margin trends

Investment Implications

Key Takeaways:

• Top-line growth of 12.8% YoY with pronounced operating leverage (operating income +77.9% YoY)
• ROE at 7.29% driven by improved net margin and moderate leverage (1.82x)
• Strong liquidity (current ratio 210.8%, quick ratio 165.7%) and solid interest coverage (19.5x)
• Margins appear to be improving, but cost structure data inconsistency needs reconciliation
• Cash flow data are unreported, limiting confirmation of profit quality and FCF

Metrics to Watch:

• Operating cash flow and free cash flow conversion relative to net income
• Gross and operating margins, with focus on cost of sales disclosure reconciliation
• Inventory levels and turnover to assess working capital efficiency
• Ordinary income versus net income to gauge recurrence of one-off items
• Equity ratio and debt metrics to monitor balance sheet resilience

Relative Positioning: Based on disclosed metrics, FIG combines mid-teens revenue growth with improving profitability and a conservative balance sheet, positioning it favorably on quality and solvency within small-to-mid cap peers; however, incomplete cash flow disclosure and apparent cost data inconsistencies constrain comparative confidence.

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