Mochida Pharmaceutical Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥54.98B
• Operating Income: ¥4.97B
• Net Income: ¥2.83B
• EPS: ¥108.79

Income Statement

Balance Sheet

Cash Flow Statement

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

Mochida Pharmaceutical (4534) delivered solid FY2026 Q2 consolidated results under JGAAP, with topline growth translating into outsized operating profit expansion. Revenue rose 7.6% year over year to ¥54.99bn, evidencing steady demand and/or favorable product mix. Gross profit was ¥25.29bn, implying a gross margin of 46.0%, which is healthy for a specialty pharma profile. Operating income increased 31.0% YoY to ¥4.97bn, lifting the operating margin to roughly 9.0%, indicating meaningful operating leverage and disciplined cost control. Ordinary income reached ¥5.18bn, and net income expanded 36.5% YoY to ¥3.86bn, driving a net margin of 7.0%. EPS for the period was ¥108.79. Cash generation was strong: operating cash flow of ¥8.52bn exceeded net income by 2.21x, signaling high earnings quality and favorable working capital movements in the half. The balance sheet is conservative, with total equity of ¥135.21bn against total assets of ¥165.72bn, implying an equity ratio of about 81.6% (the reported 0.0% equity ratio in the data table should be treated as undisclosed rather than zero). Liquidity appears robust with a current ratio of 481% and quick ratio of 398%, supported by sizeable current assets of ¥119.67bn and working capital of ¥94.77bn. Leverage is modest with a debt-to-equity ratio of 0.22x, and interest expense is negligible (¥1m), yielding an extraordinary interest coverage ratio of ~4,967x. The effective tax rate indicator shown as 0.0% is not meaningful; using income tax expense of ¥1.24bn against ordinary income as a proxy suggests an approximate effective tax rate around 24%. EBITDA was ¥6.39bn (margin ~11.6%), consistent with the improvement in operating profitability. Inventory stood at ¥20.69bn; relative to H1 cost of sales, this implies annualized inventory turns of roughly 2.5x and about ~146 days on hand, which is reasonable for pharmaceuticals but merits monitoring for obsolescence risk. Financing cash outflows of ¥1.43bn likely reflect shareholder returns and/or lease/other payments; investing cash flows and cash/equivalents were not disclosed, limiting free cash flow and liquidity runway analysis. Dividend data show 0 as placeholders for undisclosed items; DPS and payout ratios cannot be reliably inferred from the provided table. Overall, the company exhibits strong margin expansion, high cash conversion, and a fortress balance sheet, but several disclosures (investing CF, cash, share count metrics, equity ratio, DPS) are missing, tempering precision in certain assessments. We therefore view the earnings quality as high based on OCF and margins, while acknowledging data gaps in capex, FCF, and capital allocation specifics.

Profitability Analysis

ROE of 2.85% (per the DuPont summary provided) decomposes into: net margin of 7.01%, asset turnover of 0.332x, and financial leverage of 1.23x. The primary driver is margin expansion rather than leverage, as balance-sheet leverage is low and asset turnover is modest, typical for pharma with substantial cash and R&D assets. Operating margin improved to ~9.0% (¥4.97bn OI on ¥54.99bn sales), outpacing revenue growth (7.6% YoY) with operating income up 31.0% YoY, indicating positive operating leverage from opex discipline and/or richer product mix. Gross margin is robust at 46.0%, supporting the improved operating margin despite ongoing R&D and SG&A intensity (line-item details not disclosed). EBITDA margin of ~11.6% reinforces that the profit uplift was not solely accounting-driven; D&A was ¥1.42bn, modest relative to revenue. Ordinary margin is ~9.4%, slightly above operating margin, with minimal financial costs (¥1m interest). The effective tax rate proxy is roughly 24% (¥1.24bn tax / ¥5.18bn ordinary income as a surrogate for pre-tax), contradicting the 0.0% indicator, which is an undisclosed placeholder. Overall, profitability is trending favorably with healthy margin structure and limited reliance on financial leverage.

Growth Assessment

Revenue growth of 7.6% YoY to ¥54.99bn suggests steady core demand and/or incremental contributions from mix or new indications/products. The 31.0% YoY rise in operating income shows that growth is not purely volume-driven; cost discipline and mix are likely contributing. Net income rose 36.5% YoY, outpacing operating income, aided by negligible interest expense and a tax burden consistent with domestic norms. Asset turnover of 0.332x is typical for the sector and consistent with a capital-light model; the growth in profits relative to assets reflects margin-driven expansion. With inventories at ¥20.69bn and healthy liquidity, the company appears well-positioned to support continued sales without supply constraints, though inventory efficiency should be monitored. Absent disclosure on R&D and SG&A breakdowns, we cannot parse growth investment intensity, but the OCF outperformance supports the quality of earnings growth. Near-term outlook hinges on sustaining gross margin and operating efficiency; pricing revisions and competitive dynamics remain key exogenous variables. Overall, the growth profile appears sustainable near term, with quality characterized by cash conversion rather than leverage.

Financial Health

The balance sheet is very strong: total equity of ¥135.21bn versus total assets of ¥165.72bn implies an equity ratio of ~81.6% and low financial risk (reported 0.0% equity ratio is undisclosed, not zero). Total liabilities are modest at ¥29.43bn (D/E ~0.22x). Liquidity is ample: current assets of ¥119.67bn versus current liabilities of ¥24.90bn yield a current ratio of ~4.81x and a quick ratio of ~3.98x, reflecting a large buffer even after inventories. Working capital is ¥94.77bn, supporting operational flexibility. Interest expense is negligible (¥1m), and interest coverage is ~4,967x, indicating minimal solvency risk. Cash and equivalents are not disclosed, which limits precise liquidity runway analysis; however, the scale of current assets suggests a substantial cash and marketable securities position consistent with peers. No information on long-term debt composition or covenants is provided, but overall solvency risk appears low given the equity-heavy structure.

Cash Flow Quality

Operating cash flow of ¥8.52bn is 2.21x net income (¥3.86bn), indicating strong cash conversion and positive working capital contribution and/or non-cash add-backs. EBITDA of ¥6.39bn and D&A of ¥1.42bn are consistent with the OCF outperformance, suggesting earnings are not overly reliant on accruals. Investing cash flow is undisclosed (reported as 0), preventing a reliable free cash flow estimate; we therefore refrain from presenting FCF. Financing cash outflow of ¥1.43bn suggests capital returns and/or lease or other financing payments, but specifics are not provided. Inventories of ¥20.69bn relative to H1 COGS imply annualized inventory turns of ~2.5x (~146 days), reasonable for pharma but warrants monitoring to avoid obsolescence and working capital drag. Receivables and payables detail is not provided, limiting a granular working capital analysis. Overall, cash flow quality appears high based on OCF strength and minimal financial expense, but the lack of investing CF and capex detail is a key limitation.

Dividend Sustainability

Dividend information is not disclosed in the provided data (DPS shown as 0.00 is an undisclosed placeholder). The payout ratio and FCF coverage shown as 0.0% and 0.00x are therefore not meaningful. From a capacity standpoint, OCF of ¥8.52bn in H1 and a strong net-cash-like balance sheet (low leverage, large current assets) suggest ample room to fund dividends if policy supports it. However, without actual DPS, capex, and investing CF disclosures, we cannot assess coverage or policy changes. Financing CF outflow of ¥1.43bn could include dividends, but the breakdown is not available. We therefore characterize dividend sustainability as indeterminate based on the dataset, albeit backed by strong underlying cash generation capacity.

Risk Assessment

Business Risks:

• Drug price revisions and reimbursement changes in Japan potentially pressuring margins
• Pipeline execution and clinical/regulatory outcomes affecting future growth
• Competitive dynamics (generics and branded competitors) impacting volumes and pricing
• Product concentration risk if a few key products drive a large share of revenue
• Supply chain and quality/compliance risks specific to pharmaceutical manufacturing
• Inventory obsolescence risk given ~146 days on hand
• Potential FX and procurement cost volatility for imported APIs and materials

Financial Risks:

• Investing cash flows and capex not disclosed, creating uncertainty around true free cash flow
• Cash and equivalents not disclosed, limiting visibility on immediate liquidity runway
• Potential working capital normalization reducing OCF conversion in subsequent periods
• Limited transparency on lease liabilities and debt maturity profile (if any)
• Earnings sensitivity to NHI pricing cycles without commensurate cost flexibility

Key Concerns:

• Data gaps: equity ratio, DPS, cash balance, investing CF, and share metrics are undisclosed in the table
• Sustainability of margin gains if mix tailwinds fade or price cuts materialize
• Inventory build risks if demand slows, potentially impacting future OCF
• ROE remains modest at 2.85% given a large equity base; capital efficiency focus may be needed

Investment Implications

Key Takeaways:

• Topline up 7.6% YoY with operating income up 31.0%, evidencing operating leverage
• Healthy gross margin at 46.0% and operating margin ~9.0%
• High earnings quality with OCF/NI of 2.21x in H1
• Very strong balance sheet: implied equity ratio ~81.6%, D/E ~0.22x
• Interest expense negligible; coverage ~4,967x
• Inventory levels reasonable but should be monitored (~146 days on hand)
• Several disclosures are missing (investing CF, cash, DPS), constraining FCF and payout analysis

Metrics to Watch:

• Gross and operating margin trends through FY2026 Q4
• Operating cash flow conversion and working capital movements (inventories, receivables, payables)
• Capex and investing cash flows to derive true FCF
• Impacts from NHI drug price revisions on pricing and volumes
• R&D intensity and SG&A efficiency (when disclosed)
• Inventory turnover and potential obsolescence risk

Relative Positioning: Within the domestic pharma peer set, Mochida appears conservatively financed with stronger-than-average liquidity and negligible interest burden; profitability has improved and cash conversion is robust, though capital efficiency (ROE) is modest due to a large equity base.

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