ASAHIPEN CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥8.02B
• Operating Income: ¥319M
• Net Income: ¥442M
• EPS: ¥98.52

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

Asahipen (TSE:4623) reported FY2026 Q2 consolidated results under JGAAP showing revenue of ¥8,015 million, down 11.9% YoY, indicating demand softness and/or channel destocking in its DIY paints and coatings lines. Gross profit was ¥2,809.7 million, implying a gross margin of roughly 35.1%, which is decent for a consumer-oriented paint maker but not enough to offset volume decline and cost stickiness. Operating income fell to ¥319 million (-36.2% YoY), compressing the operating margin to about 4.0%, highlighting operating deleverage as sales declined. Ordinary income of ¥354 million exceeded operating income, suggesting non-operating gains (e.g., financial income or FX) partially cushioned operating weakness. Net income was ¥383 million (-13.2% YoY), and the net margin stood at 4.78%, aided by non-operating items and possibly special gains. The DuPont decomposition shows net margin of 4.78%, asset turnover of 0.354x, and financial leverage of 1.52x, leading to a calculated ROE of 2.58%, which is modest for the sector. EBITDA was ¥485.8 million with a 6.1% margin, underscoring limited operating scale and modest profitability versus larger paint peers. Liquidity remains strong: the current ratio is 264.8% and quick ratio 190.2%, underpinned by ¥6,047.8 million in working capital and relatively low leverage. Total assets were ¥22.66 billion and total equity ¥14.867 billion, implying an equity ratio around 65.6% (the provided equity ratio metric is unreported), and a debt-to-equity ratio of 0.50x, signaling a conservative balance sheet. Interest expense was only ¥11.0 million, yielding a robust interest coverage of 29.1x on current earnings power. Operating cash flow of ¥506.2 million exceeded net income (OCF/NI = 1.32x), indicating acceptable earnings quality this period. Investing cash flow is shown as zero (not disclosed), so free cash flow cannot be reliably calculated from the provided dataset. Financing cash outflow of ¥199.3 million points to shareholder returns and/or debt service, though detailed breakdown is not available here. Annual DPS is shown as zero (not disclosed), so dividend policy assessment relies on historical behavior rather than current-period data. Overall, Asahipen demonstrates solid liquidity and solvency but faces top-line pressure and operating deleverage; cash generation remains adequate relative to earnings, albeit with incomplete disclosure on capex. Data gaps (e.g., cash and equivalents, capex, equity ratio, and share count fields) limit some ratio precision, but available figures support the view of a conservatively financed company managing through a cyclical soft patch.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 4.78% × Asset turnover 0.354 × Financial leverage 1.52 = ROE 2.58%. The margin component is subdued for a coatings business, reflecting pricing/mix pressure and fixed cost absorption on lower volumes. Operating margin is ~4.0% (¥319m / ¥8,015m), down sharply YoY due to revenue decline and cost stickiness, indicating meaningful operating leverage. Ordinary income (¥354m) exceeds operating income, implying non-operating gains (e.g., FX or securities) aided profitability; this raises questions about the sustainability of the net margin if such gains normalize. Gross margin of approximately 35.1% indicates a reasonable spread over cost of sales, but EBITDA margin at 6.1% suggests SG&A intensity remains high relative to scale. Interest burden is minimal: interest expense of ¥11.0m with 29.1x coverage means financing costs are not a constraint on profitability. Overall profitability is modest, with ROE at 2.58% limited primarily by low asset turnover (0.354x) and margin compression in the quarter.

Growth Assessment

Revenue declined 11.9% YoY to ¥8,015m, indicative of softer DIY/end-market demand or channel inventory corrections. Operating income fell 36.2% YoY to ¥319m, a greater decline than sales, evidencing operating deleverage as fixed costs were spread over a smaller revenue base. Net income decreased 13.2% YoY to ¥383m, outperforming operating income due to non-operating tailwinds; this gap may not be structurally repeatable. Gross margin at ~35.1% provides some cushion, but EBITDA margin of 6.1% shows limited scale efficiencies. Asset turnover of 0.354x (based on provided metrics) underscores slow capital turns, typical of distributors/consumer paint lines with sizable inventories. Near-term outlook depends on stabilization in retail/DIY channels and the company’s ability to manage input costs (resins, solvents, packaging) amid FX volatility. Without disclosed order/backlog data or segment detail, sustainability of revenue remains uncertain; however, the strong balance sheet provides capacity to navigate demand volatility.

Financial Health

Liquidity is strong with a current ratio of 264.8% and quick ratio of 190.2%, supported by ¥6,047.8m in working capital. Current assets total ¥9,716.9m, including inventories of ¥2,738.1m (about 28% of current assets), which appears manageable but should be monitored for obsolescence risk if demand remains weak. Total liabilities are ¥7,380.1m versus total equity of ¥14,867.0m, implying an equity ratio near 65.6% (computed from the balance sheet; the reported equity ratio field is unreported). Debt-to-equity is 0.50x, indicating moderate leverage; with interest expense at ¥11.0m and coverage of 29.1x, solvency risk is low. Asset base totals ¥22.66bn, anchored by equity, reflecting a conservative capital structure. Absence of disclosed cash and equivalents (shown as zero, i.e., not reported) limits precise liquidity buffers assessment, but overall ratios point to a healthy financial position.

Cash Flow Quality

Operating cash flow of ¥506.2m exceeds net income of ¥383.0m (OCF/NI = 1.32x), signaling decent earnings quality and working capital discipline this period. Depreciation and amortization were ¥166.8m, consistent with the gap between EBITDA (¥485.8m) and operating income (¥319.0m). Free cash flow cannot be reliably computed because investing cash flow is shown as zero (unreported), and capex detail is not provided. Working capital appears a source of stability given strong current and quick ratios, but without a cash flow bridge we cannot isolate the contribution from receivables, payables, or inventories. Financing cash outflow of ¥199.3m suggests some combination of dividends, buybacks, or debt repayment, though line-item detail is unavailable. Overall, cash conversion looks acceptable, but the lack of capex disclosure constrains a full FCF assessment.

Dividend Sustainability

Annual DPS is listed as 0.00 (not disclosed), and the payout ratio is shown as 0.0% based on the provided dataset. With OCF of ¥506.2m and limited interest burden, the company appears capable of supporting modest dividends if policy permits; however, absent capex data we cannot assert FCF coverage. Financing CF of -¥199.3m may include shareholder returns, but this cannot be confirmed from the data. Policy outlook is therefore indeterminate from this release; historically, sustainability would hinge on maintaining positive OCF and avoiding inventory build in a soft-demand environment. Until capex and DPS are disclosed, dividend affordability should be evaluated conservatively using OCF as a proxy.

Risk Assessment

Business Risks:

• Demand softness in DIY/home improvement channels leading to sales volatility
• Raw material cost inflation (resins, solvents, packaging) and FX-driven input volatility
• Operating deleverage from fixed SG&A on declining volumes
• Competitive pricing pressure from domestic and imported paint brands
• Inventory obsolescence risk if sell-through slows
• Concentration risk to home center/retail distribution

Financial Risks:

• Lower ROE (2.58%) limiting internal capital generation
• Potential working capital swings impacting OCF in downturns
• Limited disclosure on cash position and capex impeding FCF visibility
• Exposure to interest rate or FX impacts on non-operating income components

Key Concerns:

• Double-digit YoY revenue decline (-11.9%) with significant operating income drop (-36.2%)
• Dependence on non-operating gains to support net income
• Incomplete disclosure of cash, capex, and dividend details constraining analysis

Investment Implications

Key Takeaways:

• Top line contracted 11.9% YoY to ¥8.0bn, pressuring operating leverage
• Operating margin compressed to ~4.0%; EBITDA margin at 6.1% reflects scale limits
• Net margin of 4.78% benefited from non-operating items; sustainability uncertain
• Strong balance sheet with ~65.6% equity ratio and 0.50x D/E mitigates solvency risk
• OCF/NI of 1.32x indicates acceptable earnings quality; FCF not assessable due to undisclosed capex

Metrics to Watch:

• Revenue trajectory and sell-through in DIY channels
• Gross and operating margin progression, especially input cost pass-through
• OCF/NI ratio and cash conversion cycle (inventories/receivables turnover)
• Capex and investing cash flows to gauge FCF and growth investment
• Non-operating income components influencing ordinary-to-net income gap
• Inventory levels (¥2.74bn) relative to sales to monitor obsolescence risk

Relative Positioning: Versus larger domestic paint peers, Asahipen exhibits a more conservative balance sheet and lower operating margins, with greater exposure to consumer DIY demand variability; profitability is modest but financial resilience is comparatively strong.

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