MIZUHO MEDY CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥6.23B
• Operating Income: ¥2.19B
• Net Income: ¥1.59B
• EPS: ¥83.42

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

Mizuho Medy (45950) reported FY2025 Q3 standalone results under JGAAP showing top-line and profit contraction versus the prior year, consistent with a normalization phase after elevated demand periods. Revenue was ¥6.226bn, down 22.1% YoY, while operating income declined 37.0% YoY to ¥2.194bn, indicating operating deleverage as fixed costs weighed on profits amid lower sales. Net income was ¥1.588bn (-37.7% YoY), yielding an EPS of ¥83.42 and a net margin of 25.5%, which is still robust for the diagnostics/testing tools space. DuPont analysis indicates ROE of 9.43%, driven primarily by high margins and low financial leverage (assets/equity 1.16x) but constrained by low asset turnover (0.318x). The balance sheet is very strong: equity of ¥16.847bn against assets of ¥19.595bn suggests an equity ratio around 86% (reported 0% is clearly an unreported placeholder), and current ratio of 7.87x reflects ample liquidity. Working capital is ¥15.711bn, supported by large current assets (¥17.998bn) and modest current liabilities (¥2.287bn). Inventory of ¥566m is modest versus current assets, implying cash and receivables dominate the short-term asset base. Ordinary income (¥2.183bn) is close to operating income, suggesting limited non-operating distortions; however, the income tax charge of ¥1.007bn appears high relative to ordinary income, implying either a high effective tax burden or other below-the-line items. Gross profit data are internally inconsistent: reported gross profit of ¥5.729bn implies a 92% margin, whereas revenue and cost of sales imply a gross margin near 36%; therefore, gross margin conclusions should be treated cautiously. Cash flow statement items are not disclosed (zeros indicate unreported), so cash generation, FCF, and dividend coverage cannot be verified from this dataset. Despite the YoY contraction, profitability remains healthy in absolute terms, and the capital structure is conservative, providing resilience. The company’s ROE is moderate given the low leverage and subdued asset turnover; maintaining margins will be key to sustaining returns. Given the likely post-pandemic normalization in diagnostics demand, revenue cyclicality and inventory/pricing discipline are focal points. Dividend information is not disclosed; with strong equity and net profits, the capacity appears intact, but policy and cash flows are unknown from this data. Overall, the company exhibits solid profitability and strong financial health, with principal near-term risks centered on demand normalization, pricing, and cost absorption.

Profitability Analysis

ROE_decomposition: ROE 9.43% = Net margin 25.51% × Asset turnover 0.318 × Financial leverage 1.16. Returns are margin-led, with low balance-sheet leverage and low turnover dampening overall ROE. margin_quality: Operating margin ≈ 35.2% (¥2.194bn/¥6.226bn) and net margin 25.5% are strong. Gross margin is unreliable: reported GP implies ~92% while revenue–COGS implies ~36.3% (=(6.226-2.260)/6.226). We rely more on operating/net margins until gross profit disclosure is clarified. operating_leverage: Operating income fell 37.0% on a 22.1% revenue decline, implying a degree of operating leverage of roughly 1.7x, indicative of meaningful fixed-cost absorption effects in a downswing.

Growth Assessment

revenue_sustainability: Revenue declined 22.1% YoY to ¥6.226bn, consistent with normalization from prior elevated demand in rapid diagnostics. Sustainability hinges on maintaining core test volumes and product breadth offsetting post-pandemic declines. profit_quality: Operating income decreased faster than sales (-37% vs -22%), reflecting operating deleverage; however, the still-strong operating margin (~35%) and proximity of ordinary to operating income suggest limited non-operating noise. The high tax charge relative to ordinary income reduces after-tax profitability. outlook: Expect continued normalization with potential stabilization as baseline demand reverts to pre-peak levels. Margin trajectory will depend on pricing power, product mix (e.g., influenza/respiratory seasonality), and cost structure flexibility. New product introductions and channel mix will be key to offsetting volume/pricing pressure.

Financial Health

liquidity: Current assets ¥17.998bn vs current liabilities ¥2.287bn yield a current ratio of 7.87x and quick ratio of 7.62x (inventory ¥566m minimal), indicating very strong short-term liquidity. solvency: Total liabilities ¥3.375bn vs equity ¥16.847bn implies a debt-to-equity of 0.20x and an equity ratio of ~86% (computed; reported 0% is unreported). Balance sheet strength is high with ample equity cushion. capital_structure: Low leverage (assets/equity 1.16x) supports resilience but moderates ROE. Interest expense is undisclosed (0 placeholder), but given low liabilities, interest burden is likely immaterial.

Cash Flow Quality

earnings_quality: OCF is undisclosed (reported as 0), preventing verification of earnings-to-cash conversion (OCF/NI shown as 0.00 is not meaningful). The proximity of operating and ordinary income suggests clean P&L, but cash corroboration is unavailable. FCF_analysis: Investing and financing cash flows are undisclosed; Free Cash Flow is reported as 0 (unreported). Without OCF and capex, FCF strength cannot be assessed. working_capital: Working capital is sizeable at ¥15.711bn, with low inventory relative to current assets (inventory ¥566m). Receivables and cash likely dominate but are not itemized; monitoring receivable days and inventory turns is important as revenue normalizes.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are undisclosed (zeros reflect missing data). With EPS of ¥83.42 and strong equity base, capacity appears present, but absence of OCF/FCF data limits assessment. FCF_coverage: Not assessable due to unreported OCF and capex; the listed FCF coverage of 0.00x is not meaningful. policy_outlook: No dividend policy data provided. If the company targets stable dividends, sustainability would hinge on maintaining current profitability and cash conversion amid revenue normalization.

Risk Assessment

Business Risks:

• Demand normalization post-pandemic for rapid diagnostic test kits reducing volumes and ASPs
• Pricing pressure and reimbursement constraints in domestic diagnostics market
• Seasonality and epidemiological variability (e.g., influenza/respiratory waves) impacting sales volatility
• Product concentration and lifecycle risk if key assays face competition or obsolescence
• Regulatory and quality compliance requirements for IVD products

Financial Risks:

• Operating deleverage if sales decline further, pressuring margins
• Potential tax volatility given high reported tax charge relative to ordinary income
• Working capital swings (receivable collection, inventory management) during demand shifts
• Limited visibility on cash flows due to undisclosed OCF/FCF data

Key Concerns:

• 22.1% YoY revenue decline and 37.0% YoY operating profit decline
• Inconsistency in gross profit disclosure (GP vs COGS and reported gross margin)
• High implied tax burden (income tax ¥1.007bn vs ordinary income ¥2.183bn) compressing net margins
• Lack of cash flow disclosure hindering assessment of earnings quality and dividend coverage

Investment Implications

Key Takeaways:

• ROE of 9.43% is margin-led but constrained by low asset turnover and low leverage
• Operating margin remains strong (~35%) despite notable operating deleverage
• Balance sheet is very conservative with an estimated equity ratio around 86% and current ratio 7.9x
• Revenue and profit declines reflect normalization; future trajectory depends on demand stabilization and mix
• Data gaps (cash flows, dividend) and GP inconsistency require caution in interpreting margin structure

Metrics to Watch:

• Top-line trend by product category and ASPs to gauge normalization trajectory
• Operating margin and SG&A/COGS control to manage deleverage
• Cash conversion (OCF/NI) and capex once disclosed
• Working capital efficiency (DSO, inventory turns) amid demand fluctuations
• Effective tax rate drivers and any one-offs affecting net income
• Asset turnover progress via utilization and sales execution

Relative Positioning: Relative to peers in Japanese IVD/diagnostics, Mizuho Medy shows above-average margins and a stronger-than-average balance sheet, but faces sharper normalization headwinds and lower asset turnover; sustained ROE will depend on preserving margins and improving capital efficiency.

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
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