Immuno-Biological Laboratories Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥485M
• Operating Income: ¥142M
• Net Income: ¥142M
• EPS: ¥15.21

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

Verdict: A very strong FY2026 Q2 with sharp profit growth, robust margins, and solid cash generation, underpinned by a pristine balance sheet. Revenue rose 9.3% YoY to 4.85, while operating income surged 109.0% YoY to 1.42, demonstrating significant operating leverage. Ordinary income climbed 133.4% YoY to 1.49 and net income nearly doubled (+98.0% YoY) to 1.41, indicating broad-based profit improvement beyond core operations. Gross margin stands at a high 70.2%, and the operating margin is approximately 29.3%, signaling effective cost control and favorable mix. Net profit margin is 29.1%, supported by a very low effective tax rate of 5.5% and minimal non-operating drag. While prior-period margin figures are not disclosed, the scale of profit growth versus revenue growth strongly implies substantial margin expansion (exact bps change not calculable from the provided data). Cash flow quality is high with operating cash flow of 1.74 exceeding net income (OCF/NI = 1.23x), indicating good earnings convertibility. Capex was modest at 0.29, implying strong proxy FCF (OCF – Capex) of roughly 1.45 and ample internal funding capacity. The balance sheet is very strong: current ratio 554.8%, quick ratio 535.6%, and D/E of 0.19x, with cash and deposits of 9.55 covering all short-term loans of 1.40 multiple times. Interest coverage is extremely high at 205.2x, reflecting low financial risk. ROE prints at 8.5%, driven by high margins but tempered by low asset turnover and conservative leverage. ROIC is reported at 15.6%, comfortably above common cost-of-capital benchmarks, suggesting value creation. Earnings quality appears robust this quarter; however, the unusually low effective tax rate may not be sustainable and could normalize. Dividend information is not disclosed, but the company has the balance sheet and cash flow to support distributions if it chooses. Forward-looking, the key questions are sustainability of the current margin structure, potential normalization of the tax rate, and topline durability given the company’s small scale. Overall, the quarter signals operational momentum, improving profitability, and healthy cash dynamics, albeit with some normalization risks ahead.

Profitability Analysis

DuPont breakdown: ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 29.1% × 0.247 × 1.19 ≈ 8.5%. The dominant driver is the elevated net margin (29.1%), while asset turnover (0.247) is low and leverage (1.19x) is conservative. The component that changed the most versus typical small-cap life science norms is likely the margin, inferred from profit growth (+98–133% YoY) far outpacing revenue growth (+9.3%), although exact YoY bps change is not available from the data provided. Business drivers likely include favorable product mix, improved pricing and utilization, and tight SG&A control (SG&A 1.99 vs gross profit 3.41, yielding a ~29% operating margin). The very low 5.5% effective tax rate also boosted net margin and ROE. Sustainability: Operating margin improvements tied to cost structure and mix could be partially sustainable; however, the unusually low tax rate is likely non-recurring and may normalize, reducing net margin. Concerning trends: none apparent in costs; however, the small revenue base and low asset turnover imply high sensitivity to demand fluctuations. SG&A growth versus revenue growth cannot be benchmarked YoY due to missing YoY SG&A disclosure, but current SG&A intensity (1.99/4.85 ≈ 41%) appears manageable given gross margin of 70.2%.

Growth Assessment

Topline grew 9.3% YoY to 4.85, a healthy but modest pace relative to profit expansion. Operating income rose 109.0% YoY and ordinary income 133.4% YoY, indicating strong operating leverage and likely improved gross-to-operating conversion. Net income rose 98.0% YoY to 1.41, aided by a low effective tax rate and minimal non-operating expenses. Current margins: gross ~70.2%, operating ~29.3%, net ~29.1%. Margin expansion in basis points cannot be quantified due to lack of prior-period margin data, but the spread between revenue and profit growth confirms expansion. Revenue sustainability depends on order visibility in core immuno/biologics lines (not disclosed); the small base enhances volatility risk. Mix and pricing appear favorable; however, normalization of the tax rate would trim net growth. Near-term outlook hinges on maintaining high gross margins and disciplined SG&A, with capex needs modest, supporting reinvestment and R&D flexibility.

Financial Health

Liquidity is exceptionally strong: current ratio 554.8% and quick ratio 535.6%, with cash and deposits of 9.55 greatly exceeding current liabilities of 2.70. No warning on current ratio (<1.0) or D/E (>2.0): D/E is conservative at 0.19x. Maturity profile: short-term loans of 1.40 vs cash 9.55 indicate negligible near-term refinancing pressure; accounts receivable 1.78 and inventories 0.52 further support coverage. Long-term loans are modest at 0.22. Equity of 16.55 provides a sizable buffer against asset fluctuations (equity ratio not provided, but equity/asset ≈ 84%). No off-balance sheet obligations were disclosed in the data set. Overall solvency and liquidity risks are low.

Cash Flow Quality

OCF of 1.74 exceeds net income of 1.41 (OCF/NI = 1.23x), indicating good earnings quality and positive working capital dynamics. With capex at 0.29, proxy FCF (OCF – Capex) is approximately 1.45, suggesting capacity to fund growth and potential shareholder returns. Financing CF was -0.15, implying modest debt service or related cash outflow with minimal strain. Working capital accounts (AR 1.78, AP 0.08, inventory 0.52) suggest conservative payables; there is no indication of aggressive working capital pull-forward. No signs of manipulation from the disclosed data. The sustainability of OCF should track operating margin resilience and revenue stability.

Dividend Sustainability

Dividend data (DPS, payout) is unreported, so we cannot assess actual payout behavior. From capacity standpoint, proxy FCF of ~1.45 and cash of 9.55 vs low debt imply ample room to fund dividends if policy supports it. Retained earnings of 5.68 provide further cushion. In absence of disclosed dividend policy, we assume a conservative stance; payout sustainability would be high if instituted at modest levels, contingent on maintaining current margins and OCF. Key swing factor is potential normalization of the tax rate, which could slightly reduce distributable profit.

Risk Assessment

Business Risks:

• Revenue concentration risk typical for small-cap life science companies (customer or product dependence)
• Demand volatility risk given small scale (revenue 4.85) and low asset turnover (0.247)
• Margin sustainability risk if mix/pricing tailwinds fade
• Regulatory and quality/compliance risks inherent to immuno/biologic products
• Pipeline and R&D execution risk (R&D details unreported)

Financial Risks:

• Tax rate normalization risk from current 5.5% to more typical levels, reducing net margin
• Interest rate risk on short-term loans (1.40), though mitigated by strong cash
• Currency risk if there is export or import exposure (not disclosed)

Key Concerns:

• Unusually low effective tax rate inflating net margin and ROE
• Small revenue base amplifying operating leverage in both directions
• Limited disclosure granularity (SG&A breakdown, R&D, dividend policy) constraining visibility

Investment Implications

Key Takeaways:

• Strong quarter with profit growth far outpacing revenue (+98–133% vs +9.3%)
• High-quality earnings with OCF/NI at 1.23x and proxy FCF ~1.45
• Robust margins: gross 70.2%, operating ~29.3%, net 29.1%
• Balance sheet strength: cash 9.55, D/E 0.19x, current ratio 554.8%
• ROE 8.5% supported by margin; ROIC 15.6% indicates value creation
• Tax rate normalization is a key downside to net margin
• Scale and concentration risks persist given low asset turnover

Metrics to Watch:

• Gross and operating margin trajectory (bps changes as data becomes available)
• Effective tax rate normalization path
• Order intake and revenue visibility indicators
• Working capital turns (AR and inventory days) and OCF consistency
• Capex needs versus growth opportunities
• Any disclosed dividend policy or capital allocation updates

Relative Positioning: Versus typical small-cap biotech/diagnostics peers, the company presents stronger liquidity, modest leverage, high gross margins, and superior cash conversion this quarter; however, its small scale and potential tax normalization temper the durability of net profitability.

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