MORISHITA JINTAN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.52B
• Operating Income: ¥274M
• Net Income: ¥182M
• EPS: ¥52.97

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

Morishita Jintan (45240) delivered steady topline growth in FY2026 Q2 with revenue of ¥6.516bn, up 2.1% YoY, while demonstrating solid cost control that lifted operating income 12.2% YoY to ¥274m. Gross profit of ¥2.817bn implies a robust gross margin of 43.2%, indicating healthy product mix and pricing in core businesses. Operating margin improved to approximately 4.2%, evidencing moderate operating leverage despite only modest revenue growth. Ordinary income of ¥298m and net income of ¥216m translate to a net margin of 3.31%, in line with a stable consumer health/OTC profile but still leaving room for efficiency gains. EBITDA reached ¥555m (8.5% margin), supported by ¥281m of D&A, which suggests continued investment in production capacity and/or intangibles. Balance sheet strength is a clear positive: total assets of ¥18.085bn against total equity of ¥12.454bn yield financial leverage of 1.45x and a debt-to-equity ratio of 0.46x, indicating conservative gearing. Liquidity appears ample with a current ratio of 288.7% and quick ratio of 247.6%, underpinned by ¥8.187bn in current assets versus ¥2.836bn in current liabilities. Interest expense is minimal at ¥2m, and interest coverage is very strong at roughly 137x (operating income basis), mitigating refinancing risk. However, operating cash flow of -¥117m contrasts with positive earnings (OCF/NI = -0.54), indicating working capital absorption or timing effects; this is a key area to monitor for earnings quality. Free cash flow is not derivable due to unreported investing cash flows; therefore cash conversion cannot be fully assessed this quarter. The provided “effective tax rate 0.0%” metric appears inconsistent with reported taxes of ¥79m and net income of ¥216m (implying an effective rate near the mid‑20s% based on pretax income), suggesting a reporting placeholder rather than true zero. Equity ratio shown as 0.0% and cash and equivalents of 0 are also likely undisclosed rather than actual values; overall leverage and liquidity inferred from other disclosed items remain sound. Dividend is indicated as DPS ¥0.00 with a 0% payout, but without share data or policy disclosure we treat this as non-disclosure rather than confirmation of no dividend. DuPont analysis shows a calculated ROE of 1.73% driven by a 3.31% net margin, asset turnover of 0.36x, and low leverage, implying returns are primarily a function of margin and turnover rather than gearing. Outlook-wise, modest revenue growth combined with disciplined costs supports stable profitability, but the negative OCF and reliance on financing inflow in the period (¥222m) warrant caution on near-term cash dynamics. Given the data limitations, we focus on the core positives of strong gross margin, healthy liquidity, and low financial risk, balanced against cash conversion uncertainty and moderate ROE.

Profitability Analysis

ROE_decomposition: Calculated ROE 1.73% = Net margin 3.31% × Asset turnover 0.360 × Financial leverage 1.45. The ROE is restrained primarily by modest asset turnover and conservative leverage; margin is reasonable but not high enough to compensate. margin_quality: Gross margin at 43.2% is strong, suggesting favorable mix and pricing. Operating margin of ~4.2% reflects good expense discipline but indicates room for SG&A efficiency. Ordinary margin of ~4.6% benefits from negligible interest expense. Net margin at 3.31% is consistent with a branded healthcare/OTC profile. operating_leverage: Operating income grew 12.2% on 2.1% revenue growth, indicating positive operating leverage from cost control and scale. EBITDA margin at 8.5% vs operating margin ~4.2% points to material non-cash D&A; sustaining leverage will require continued volume growth or SG&A efficiency.

Growth Assessment

revenue_sustainability: Topline grew 2.1% YoY to ¥6.516bn, indicating stable demand but not rapid expansion. Without segment or regional disclosure, sustainability appears moderate and likely tied to steady core product performance. profit_quality: Operating income outpaced sales growth, implying underlying cost improvements. However, negative OCF suggests earnings did not convert to cash in the period, raising questions about working capital intensity or timing. outlook: Base case is for continued low-single-digit growth with focus on margin protection. Upside depends on mix upgrades or new product traction; downside risks include input cost inflation and slower consumer demand. Cash conversion improvement is a key determinant of earnings quality trajectory.

Financial Health

liquidity: Current assets ¥8.187bn vs current liabilities ¥2.836bn yields a current ratio of 2.89x and quick ratio of 2.48x, indicating strong short-term liquidity. Working capital stands at ¥5.351bn. solvency: Total liabilities ¥5.743bn vs equity ¥12.454bn implies a debt-to-equity of 0.46x and financial leverage of 1.45x, reflecting conservative balance sheet risk. capital_structure: Limited interest burden (¥2m) and 137x coverage indicate low debt service risk. Equity ratio was reported as 0.0% but is clearly undisclosed; inferred equity ratio would be roughly 68.9% (¥12.454bn/¥18.085bn) based on provided totals.

Cash Flow Quality

earnings_quality: OCF/Net income is -0.54, signaling poor cash conversion this period likely due to working capital absorption or timing differences. D&A (¥281m) is substantial relative to operating income, supporting EBITDA but non-cash. FCF_analysis: Free cash flow cannot be reliably calculated because investing cash flows (and thus capex) are undisclosed; the reported FCF of 0 should be treated as unreported, not zero. Financing CF of ¥222m indicates net inflow, partially offsetting negative OCF. working_capital: Inventories reported at ¥1.165bn; with insufficient comparative data, we cannot determine build or draw. The negative OCF suggests increases in receivables and/or inventories or reductions in payables; monitoring working capital turns is critical.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% with DPS ¥0.00, which likely reflects non-disclosure rather than a confirmed absence of dividends. With EPS of ¥52.97 and positive net income, capacity exists, but policy is unclear. FCF_coverage: Given unreported investing cash flows and negative OCF in the period, FCF coverage of dividends cannot be assessed. Any prospective distributions should be evaluated against normalized OCF and capex needs. policy_outlook: No explicit guidance disclosed. Given conservative leverage and strong liquidity, the balance sheet could support distributions, but priority may be on reinvestment if growth initiatives are underway. Confirmation of dividend policy is needed.

Risk Assessment

Business Risks:

• Slower consumer demand in OTC/healthcare categories affecting volume growth
• Input cost inflation (raw materials, packaging) pressuring margins
• Product concentration risk if revenue is reliant on key SKUs
• Competitive pricing and promotional intensity in domestic market
• Regulatory or quality control risks in healthcare-related products

Financial Risks:

• Negative operating cash flow indicating working capital strain or timing issues
• Potential inventory obsolescence risks if demand softens
• FX exposure if inputs or sales have non-JPY components (not disclosed)
• Dependence on financing inflows in the period (¥222m) to offset negative OCF

Key Concerns:

• Cash conversion: OCF/NI at -0.54 despite positive earnings
• Data limitations: unreported cash balance, investing CF, and equity ratio hinder full assessment
• Moderate ROE (1.73%) constrained by low asset turnover and conservative leverage

Investment Implications

Key Takeaways:

• Stable revenue growth (+2.1% YoY) with stronger operating profit growth (+12.2% YoY)
• Strong gross margin (43.2%) and disciplined costs support operating leverage
• Conservative balance sheet: D/E 0.46x, leverage 1.45x, ample liquidity
• Earnings quality caution: OCF negative (¥-117m), OCF/NI -0.54
• Interest burden minimal (¥2m) with 137x coverage
• ROE modest at 1.73% due to low turnover and conservative leverage

Metrics to Watch:

• Operating cash flow and working capital turns (DSO, DIO, DPO) to confirm cash conversion
• Capex and investing cash flows to evaluate true FCF
• Gross and operating margin trajectory amid input cost movements
• Revenue growth by segment/brand to assess sustainability
• Inventory levels and obsolescence risk
• Tax rate normalization (vs placeholder metrics)

Relative Positioning: Within Japan small-cap healthcare/OTC peers, the company exhibits above-average gross margins and strong liquidity with below-average leverage, but lags on ROE and cash conversion in the current period.

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